Ann Miura-Ko: Rapid Business Model Testing | Summary and Q&A

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November 23, 2010
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Stanford eCorner
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Ann Miura-Ko: Rapid Business Model Testing

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Summary

This video discusses the second element of the democratization of innovation, which is the ability to quickly test business models. It highlights the importance of not only having a good idea or product, but also being able to create a successful business around it. The video explores how the internet enables startups to test different facets of their business models, such as directly interacting with customers, leveraging social networks for demand creation, and utilizing flexible pricing structures like subscription pricing. These advancements have led to new and powerful ways of acquiring customers and reducing buying cycles.

Questions & Answers

Q: Why is it important for startups to test their business models quickly?

Startups need to test their business models quickly to determine if their idea or product can actually be turned into a successful business. This involves assessing if the ecosystem, customers, channels, and manufacturers will support it.

Q: How does the internet enable startups to interact with customers directly?

The internet allows startups to have a direct dialogue with customers, which was previously not possible. For example, through web startups, students can conduct interviews with hundreds of people in a short period of time to gather feedback on a product's attractiveness to a specific group.

Q: How can social networks help with demand creation?

Social networks, like Facebook, provide a platform for companies to leverage demand creation. They can have customers post offers on their Facebook walls, which spreads the word to all their friends. Incentives can also be provided for others to join and sign up for those offers. This has been proven successful in companies like Groupon and ModCloth.

Q: What is crowd generation of customer acquisition?

Crowd generation of customer acquisition is the ability to generate a large number of customers through crowdsourcing and leveraging social networks. It is an incredibly powerful tool that has only recently become possible due to the internet. This allows companies to reach a wider audience and acquire customers more effectively.

Q: How does flexible pricing structure play a role in testing business models?

Flexible pricing structures, like subscription pricing, allow startups to experiment with different pricing strategies. They can change the pricing structure for different segments of customers and perform AB testing to see what works best. This kind of infrastructure has never existed before, providing startups with more options for revenue generation.

Q: How does subscription pricing benefit startups?

Subscription pricing has become a popular choice for startups due to its ability to be easily changed and tested. By offering low subscription prices, startups can directly sell their products to users without going through intermediaries like CIOs or executives. This reduces buying cycles and gives the power of purchasing to the users themselves.

Takeaways

The democratization of innovation has allowed startups to test their business models more rapidly than ever before. The internet enables direct customer interaction, leveraging social networks for demand creation, and exploring flexible pricing structures. These advancements have led to a crowd generation of customer acquisition and reduced buying cycles. Startups now have powerful tools at their disposal to validate their ideas and create successful businesses.

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