WHAT STARTUP SHOULD KNOW ABOUT BUSINESS MODEL?
Tuesday, 19/04/2022 14:53 (GTM +7)
DEFINITION OF BUSINESS MODEL
Business Models began being interested in the 1990s.
Adam J.Bock and Gerard George defined Business Model as an organizational blueprint to create value. The more complex products, the more critical the Business Model.
Mô hình kinh doanh của Airbnb
Understanding the business model will help founders comprehend businesses’ products, customers, fields,…
THE ROLE OF BUSINESS MODEL
- Investors can realize the potentials and feasibility of projects, thereby making the right decisions to invest in startups.
- Founders can determine their startup’s position against competitors in the market and comprehend what they should do to get there.
- Business Models can expand startups’ views from the outside to understand customers’ essentials and how to provide fundamental values.
- Startups have the foundation to build business strategy, thereby exploiting and expanding their resources.
- Business Models can effectively create value for startups and partners without waste.
LEAN CANVAS BUSINESS MODEL
Lean Canvas (Lean Business Model), which looks like Business Model Canvas, focuses on the execution and feasibility of the idea, making it incredibly relevant for startups.
Mô hình Lean Canvas
Lean Canvas Model consists of 9 elements:
- Problem: Explaining three fundamental issues that startups attempt to solve for customers
- Customer Segments: Defining the primary customer segment startup wants to serve.
- Unique Value Proposition: Expressing typical values with explicit and straightforward criteria.
- Solution: Identifying three solutions that match the value statement.
- Key Metrics: Digitizing key user activities that generate revenue for customers to continue using, and even recommend to others.
- Channels: Listing all communication and distribution channels for products/services, including free and paid.
- Cost structure: Indexing all things that cost the company money.
- Revenue Stream: Determining startup’s income source, making calculations and forecasting profit, break-even point,…
SOME EXAMPLES ABOUT LEAN CANVAS FOR STARTUPS
1. Google
Google has become the technology “giant” with software products, cloud computing services, online advertising,…
Sergey Brin and Larry Page – two co-founders of Google – noticed missing features in Excite and Yahoo. After failing to sell their solutions to competitors, they developed the project into a lean startup.
At that time, Andy Bechtolsheim from Sun Microsystems realized its potential and poured 100.000 USD. In 2018, nearly 20 years later, Google’s market value reached 700 billion USD.
Google and Lean Canvas model (Source: Babuki)
2. Facebook
Facebook was established after the dot.com bubble burst, with the first product being Facemash, a website which ranks students’ images.
Facebook, which received its first investment from Peter Thiel for US$500,000, was incorporated into a new company, and Sean Parker (an early employee of Napster) became its president.
Facebook has become the most popular social network with 1.84 daily active users and earned 28.07 billion ($) in 2020, up 33% year-over-year.
Facebook and the Lean Canvas model (Source: Babuki)
3. Youtube
YouTube was founded by three talented engineers who were core employees at PayPal: Chad Hurley, Steve Chen, and Jawed Karim.
Sequoia Capital was the first investor with $ 3.5 million after ten months of launching the domain name (youtube.com).
In 2006, Google acquired Youtube for up to 1.65 billion USD.
Youtube and Lean Canvas model (Source: Babuki)
4. Amazon
Amazon is considered one of the big four technology giants globally, including Google, Apple, and Facebook. It was a platform that sold books but then expanded to various goods and digital media.
In addition, Amazon also produces useful and familiar electronic devices such as Kindle ebook reader, Kindle Fire, Echo, Fire TV,…
In 2020, the Covid-19 pandemic forced people to stay at home and shop online more. Amazon said it delivered more than 1 billion products to customers globally in the year-end shopping season.
By 2020, Amazon’s net revenue reached nearly 390 billion USD, up 38%. In addition, net profit reached 21.3 billion USD, up almost 84% compared to 2019.
Amazon and the Lean Canvas model (Source: Babuki)
In the early stages, startups need to continuously adjust their business model based on data collected from company operations or customer responses, thereby finding the most suitable model and developing operating plans and financial forecasts.
For more information about Lean Canvas and its applicability, please read the next section.
Source: Collection
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