Master Class on Business Model iHUB Accelerator Bhubaneswar Feb 2019

1. Dr. Shivananda (Shivoo) R Koteshwar
Group Director, Synopsys
shivoo.koteshwar@gmail.com/ Facebook: shivoo.koteshwar
SLIDESHARE: www.slideshare.net/shivoo.koteshwar
iHUB
Feb 2019

2.  You achieve something significant when you
do something insignificant (as seen by
others)
 Its not just about taking risks. Its about
managing risks. Its about minimizing lot of
smaller risks within that bigger risk
 Data shows it takes 5-7 years for an
entrepreneur to make a mark
 Breaking Inertia – Comfortable job to
entrepreneur vs. Comfortable job to student
to entrepreneur
 Luck plays a significant role in success. With
right attitude, you can learn to be lucky!
 Market is not just when you have a willing
buyer but also an able buyer is required
 First make it work , then make it better
 Costs are like fingernails ..cut them
constantly

4. Don’t Give up

5. Challenges in each step of Entrepreneurship..
① Identifying and using the opportunities that exist in the market
✓ Market Research, Interviews,Test Bed
② Converting the ideas into action
✓ Team formation, Money, FullTime vs. PartTime
③ Undertaking promotional activities to launch an enterprise
✓ Logo, Registration, Location, Structure, Protocol, Advisory Members,
Share Holding
④ Striving for excellence in his/her field of work
✓ Quality, Product Completeness, Documentation, Packaging, Pricing,
Selling
⑤ Bearing the risk and uncertainties involved
✓ Money,Team, Partners, Distributors, Multiple pull from different directions
⑥ Harmonizing
✓ How,When ,Who ?

7. NOVEL CUSTOMERCENTRICITY
INNOVATE PURPOSE

8. PACKAGING
MESSAGING
SIEZINGTHE OPPORTUNITY

9.  Slide1
▪ Company Name
▪ In one sentence tell how your business proposition is useful to mankind
 Slide2 -The CoreTeam
▪ Names of the members of the core team
▪ Name the brain child
▪ Name the support members of the CoreTeam with their functionality
 Slide3 – Customer Perspectives
▪ Define the current Customer pain areas and how your business proposition will help them
 Slide 4 – Market Size
▪ Define the market size both in units and value terms where ever applicable
▪ If it is new concept then work out the estimated market
 Slide 5 – Company’sValue Proposition
▪ Define the companyValue proposition
▪ If you have some customer case studies you can exhibit here
 Slide 6 – All about the product
▪ Describe the Product (Functionality, features, architecture, what core IP do you have)
▪ Show your Product Development Roadmap

10.  Slide7 – Business Model
▪ Revenue Model
▪ Pricing
 Slide8 - Business Model
▪ Sales and Distribution model
▪ Customer/Pipeline list
 Slide9 - Competition
▪ Detail in brief on the completion with the names of the key players and their brands
 Slide10 -Financials
▪ Financials during the Incubation Period
▪ Period of incubation = ? Months
▪ Revenues during incubation
▪ Costs during incubation
▪ Net Burn
▪ Sources of Funds- own=?And Borrowed =? (Give Details)
▪ If it is new concept then work out the estimated market
 Slide 11 –Why incubate @ IHUB
▪ Give your reasons for choosing the IHUB for incubating your business

11.  MOTEPPCABE
▪ MO: Market Opportunity
▪ TE:Team
▪ PP: Profit Potential
▪ CA: Comparative Advantage
▪ BE: Barriers to Entry

12.  Investment
 Revenue
 Expense
 Profit
 Loss
 Business Plan
 Preference Shares and
Equity Shares
 Convertible Shares
 Performance Milestone
 Tranche
 Cumulative compulsory
convertible Preferential
share
 Preferential Dividend
 Cumulative coupon rate
 Pre MoneyValuation
 Post MoneyValuation
 Voting Power
 IPO
 Observer, Promoter’s
Director, Investor’s
Director
 Termsheet
 Due Diligence
 Liquidation, Dissolution
and winding up
 Deemed Liquidation
(Merger)
 Conversion Form
 TagAlong Rights
 DragAlong Rights
UPGRADE REQUIREDLIMITED DICTION

13.  Goal:To determine whether the business case is ‘investment grade’
▪ Gathering and detailed analysis of documentation
▪ Business plan and related documentation
▪ Additional requests for information from management
▪ Market analysis (top down and bottom up)
▪ Search for comparable businesses and business plans
▪ All market and industry information readily available on internet
▪ Consultations with industry contacts/technical experts
 In person visits to confirm business case with
▪ Actual or potential customers
▪ Actual or potential suppliers or other financing sources
 Decision about next steps
▪ Allocation of tasks, establish project team structure
▪ Fix due diligence/investment timeline
▪ Basic term sheet outline
Basic investment decision is made at this level.

14.  Current Business
▪ To confirm the current state of the company
▪ To determine and manage risks to the current value of the Company
▪ Existing
▪ Contingent
 Future Business:
▪ To confirm the business plan in detail
▪ To determine and manage risks to the business plan in detail
▪ Market (External)
▪ Organizational (Internal)
 Questions to Answer:
▪ Am I buying what I think I am buying?
▪ Is it worth as much as I believe?
▪ What risks exist to the my acquisition and its value, and can these be
managed?
▪ Is there any reason not to do this deal?

15.  If the chemistry is not right, arithmetic will never work
▪ TEAM
 Are you producing a vitamin or a headache tablet
▪ PROBLEM you are solving (Nature, big/small, Market size)
 Competition –Who else is doing? How are you better?
 Entry Barrier
 Value is created in market and not in xls sheet
▪ Financing Risk : Capital Intensity -Capital required for company to
reach infliction point (Breakeven or sustainable growth or non linear
growth)
 Regulation

16. A business model describes the rationale of
how an organization creates, delivers, and
captures value. It’s the story that explains how
an enterprise works
Canvas is a shared language for describing,
visualizing, assessing, and changing business
models
References from the book: Business Model Generation
ISBN: 978-0470-87641-1

17.  FROM Product/Market Segment Oriented
Approach
▪ Product and/or service at its center that focuses on a
customer’s job-to-be-done – Value Proposition
 TO a Holistic Business Model Approach to
achieve long term competitive advantage

18. Customer
SegmentationValue
Proposition
Channels
Customer Relationship

19. Cost Structure
Revenue
Key Resources
Key Activities
Key Partners

20. Cost Structure
Revenue
Key Resources
Key Activities
Key Partners
Customer
Segmentation
Value
Proposition
Channels
Customer Relationship

24.  For your idea/company, write down the
business 9 essential pieces of a business
model
 Fill the canvas

27.  Mass Market
▪ Consumer Electronics
 Niche Market
▪ Car part manufacturers depend heavily on purchases from major
automobile manufacturers
 Segmented
▪ Citi Bank Platinum and Regular customers : Both segments have
similar but varying needs and problems
 Diversified
 2006Amazon decided to diversify its retail business by selling “cloud computing”
services: online storage space and on-demand server usage.Thus it started
catering to a totally different Customer Segment—Web companies—with a totally
differentValue Proposition
 Multi sided platform/markets
▪ A credit card company, for example, needs a large base of credit card
holders and a large base of merchants who accept those credit cards

28.  Newness
▪ Cellphone companies
 Performance
▪ Computers
 Customization
 Getting the job done
▪ Rolls-Royce airline customers rely
entirely on them to manufacture and
service their jet engines.This
arrangement allows customers to focus
on running their airlines. In return, the
airlines pay Rolls-Royce a fee for every
hour an engine runs
 Design
▪ Fashion and consumer electronics
Industry
 Brand/Status
▪ Rolex or LV
 Price
▪ No frill airlines or a Nano car
 Cost Reduction
 Salesforce sells a hosted CRM which
relieves buyers from the expense and
trouble of having to buy, install, and
manage CRM software themselves
 Risk Reduction
 For a used car buyer, a one-year service
guarantee reduces the risk of post-
purchase breakdowns and repairs
 Accessibility
 NetJets popularized the concept of
fractional private jet ownership service
previously unaffordable to most customer
 Convenience/Usability
 With iPod and iTunes,Apple offered
customers unprecedented convenience
searching, buying, downloading, and
listening to digital music

29.  Partner or own
 Indirect or direct
▪ Direct: Own Stores, Web stores, Sales force
▪ Indirect:Wholesaler, Partner Sales

30.  Personal Assistance
▪ May happen onsite at the point of sale, through call centers, by e-mail,
or through other means.
 Dedicated personal assistance
▪ In private banking services, for example, dedicated bankers serve high
net worth individuals
 Self Service
 Automated Services
▪ Personal online profiles giving customers access to customized
services
 Communities
 Co Creation
▪ Amazon invites customers to write reviews and thus create value for
other book lovers.
▪ YouTube solicit customers to create content for public consumption.

31.  Asset Sale
 Usage Fee
 Subscription Fee
 Lending/Renting/Leasing
 Licensing
 Brokerage
 Advertising

32.  Physical
▪ Manufacturing facilities, buildings, vehicles, machines, systems,
point-of-sales systems, and distribution networks
▪ Walmart
 Intellectual
▪ Brands, proprietary knowledge, patents and copyrights,
partnerships, and customer databases
▪ Qualcomm (Patent)
 Human
▪ Crucial in knowledge-intensive and creative industries
 Finance
▪ Cash, lines of credit, or a stock option pool for hiring key
employees.
▪ Apartment Selling with preapproved bank loans

33.  Production
▪ Manufacturing Firms
 Problem Solving
▪ consultancies, hospitals, and other service organizations are
typically dominated by problem solving activities.Their
business models call for activities such as knowledge
management and continuous training
 Platform/Network
▪ Microsoft’s business model requires managing the interface
between other vendors’ software and itsWindows. operating
system platform
▪ Key Activities in this category relate to platform management,
service provisioning, and platform promotion

34.  Optimization and economy of scale
▪ Formed to reduce costs, and often involve outsourcing or
sharing infrastructure
 Reduction of risk and uncertainty
▪ Blu-ray is an optical disc format jointly developed by a group of
the world’s leading consumer electronics, personal computer,
and media manufacturers.
▪ The group cooperated to bring Blu-ray technology to market,
yet individual members compete in selling their own Blu-ray
product
 Acquisition of particular resources and activities
▪ A mobile phone manufacturer, licensing an operating system
for its handsets rather than developing one in-house
▪ An insurer may choose to rely on independent brokers to sell its
policies rather than develop its own sales force.

35.  Broad classes of business model Cost Structures
▪ Cost Driven
▪ low priceValue Propositions, maximum automation, and extensive outsourcing.
▪ No frills airlines
▪ Value Driven
▪ Characteristics: PremiumValue Propositions and a high degree of personalized service
 Characteristics:
▪ Fixed Costs: Costs that remain the same despite the volume of goods or
services produced. Examples include salaries, rents, and physical
manufacturing facilities.
▪ Variable Costs:Vary proportionally with the volume of goods or services
produced
▪ Economies of Scale: Cost advantages that a business enjoys as its output
expands. Larger companies, for instance, benefit from lower bulk purchase
rates.
▪ Economies of Scope:Cost advantages that a business enjoys due to a larger
scope of operations. In a large enterprise, for example, the same marketing
activities or Distribution Channels may support multiple products

37. 1. How much do switching costs prevent your
customers from churning?
2. How scalable is your business model?
3. Does your business model produce recurring
revenues?
4. Do you earn before you spend?
5. How much do you get others to do the work?
6. Does your business model provide built-in
protection from competition?
7. Is your business model based on a game
changing cost structure?

38. 1. How much do switching costs prevent your
customers from churning?
“Thousand songs in a pocket”
That was more than a product innovation
focusing on storage. It was a business model
strategy to get customers to copy all their
music into iTunes and their iPod, which would
make it more difficult for them to switch to
competing digital music players.

39. 2. How scalable is your business model?
How easy it is to expand a business model without
equally increasing its cost base ? Of course software-
and Web-based business models are naturally more
scalable than those based on bricks and mortar
By building games like Farmville
or Cityville on Facebook, the
world’s largest social network,
they could benefit from
Facebook’s reach (& scale)
without having to build it
themselves

40. 3. Does your business model produce recurring
revenues?

41. 4. Do you earn before you spend?
By assembling on order after selling directly
they managed to escape the terrible
inventory depreciation costs of the hardware
industry

42. 5. How much do you get others to do the work?
In the bricks and mortar world IKEA gets us
to assemble the furniture we buy from them.
We do the work.They save money.
Facebook gets us to post photos, create and participate in
conversations, and “like” stuff. That’s the real value of
Facebook, entirely created by users, while they simply
provide the platform. We do the work. They earn the sky-
high valuations of their shares.

43. 6. Does your business model provide built-in
protection from competition?
Apple’s main competitive advantage arises more
from its powerful business model than purely from
its innovative products. It’s easier for Samsung, for
instance, to copy the iPhone than to build an
ecosystem like Apple’s appstore, which caters to
developers and users alike and hosts hundred
thousands of applications

44. 7. Is your business model based on a game
changing cost structure?
Bharti Airtel has modified its cost structure by getting rid of their
entire network and IT. By buying in network capacity on a variable
cost basis from network equipment manufacturer Ericsson and
IBM, they can now offer among the lowest prices for mobile
telephony globally.
Skype provides calls and communication almost like a
conventional telecom company, but for free or for a very low cost.
They can do this because their model is based on the economics of
a software company, while a telecom provider’s model is based on
the economics of a network company

46. All pictures are from flickr.
with either no copyright or
common creatives

47. Visit my slideshare to
view all these
presentations

48. Dr. Shivananda (Shivoo) R Koteshwar
Group Director, Synopsys
shivoo.koteshwar@gmail.com/ Facebook: shivoo.koteshwar
SLIDESHARE: www.slideshare.net/shivoo.koteshwar