“If you build it, they will come.” Unfortunately I have learned, the hard way, that this only happens in the movies. Startups feel very comfortable with building technology. Getting that technology to market, profitably, is often an area where they don’t feel as comfortable. And it’s not as easy as releasing your product and sitting back while the users (and money) rush in.
I listened to Alexander Osterwalder speak about his business model canvas at Stanford University in January 2012. At a high level, his model provides a way to define the value proposition to a market segment, the methods by which that market segment can be best reached and supported, and then document and understand the costs and assumptions involved in creating and maintaining that model.
At Whit.li, we were close to finishing our MVP when we sat down to use the business model canvas. The first thing that we identified was the different market segments and the corresponding value propositions. This was the most challenging part, for us. In the end we settled on exploring three different market segments. Once we had the market segments we took each segment and worked through the canvas for each one.
Working through the canvas helped us understand how much we didn’t understand about some of the market segments. As Dick Cheney would say, the known unknowns. After we did some additional research, we prioritized the market segment we wanted to start with and developed targets for testing the business model in that market. We missed three of the first four.
What we learned. This market segment wasn’t ready for us, by and large, because the companies were too young and focused on getting *their* MVP out.
The good news: we learned this in a couple of months, not a couple of years. We have revisited our models with this information and are focusing our efforts on a more beneficial market. This tool has help us focus our business approach as much as Eric Ries' Lean Startup focused our product development approach.