Week 5

1. Week 5

2. Agenda • Topics: • Introduction to Entrepreneurship • Building a Business • Parts of a Business Model • Case Study: Angry Birds • Activity • Business Model

3. Can you recognize these entrepreneurs?

4. You’re Right! Steve Jobs Oprah Winfrey Mark Zuckerberg Mary Kay Ash

5. Do you know any female entrepreneurs? Sandy Jen is is a co-founder of Meebo, a social media platform Gabrielle "Coco" Bonheur Chanel founded Channel Robin Chase is a co-founder and former CEO of Zipcar Caterina Flake is the founder of Flickr and Hunch

6. Think-Pair-Share: What does it take to be an entrepreneur? • What do you think are the personal characteristics of an entrepreneur? • What do you think it would take for you to become an entrepreneur when you are older? Think-Pair-Share

7. What does it take to build aprofitable business? Elements of a business plan: • Value Proposition • Market Size • Revenue Streams • Cost structure • Distribution Channels

8. Value Proposition • What value do we deliver to the customer? • Which one of your customer’s problems are you helping to solve? • Value propositions look like this: for (target customer) who (statement of the need or opportunity) (product/service name) is (product category) that (statement of benefit). • For example: For people without cars who occasionally need a car to run errands Zipcar is a car rental service that allows them to easily get a nearby car to use

9. Market Size • You want to build a business where there are enough people who would buy the product to make you $$$ • Who are all the people and organizations for which you are creating value? • These can be both paying and non-paying customers.

10. Market Size: Examples • Zipcars’ potential market is all people in the US with drivers licenses who don’t have cars and live near a Zipcar location • Google Search’s potential market is both all people with computers and smartphones that need to find data on the web (non-paying) and advertisers that want to put adds online (paying)

11. Profit = Revenue - Cost • Profit is the extra money that you have made, accounting for any costs incurred, at the end of the day • Lemonade stand example: • If you sell 20 cups of lemonade for $0.50 each, and each cup of lemonade cost you $0.10 (for the paper cup, lemons, and sugar) … • What is your revenue? • What is your cost? • What is your profit?

12. Revenue Streams • To be a business, you have to make money... The question is from whom, and how? • Possible revenue streams • Paid apps: many apps cost money to download • Some of these have both a free version supported by advertising, and a paid version with no ads • Advertising: some apps are free to use but the app maker gets money from advertisers (ex. Words with Friends) • In-game purchases: some apps have bonus items within the game that can be purchased with real money (ex. Farmville)

13. Cost Structure • What are the most important costs in your business? • One cost could be the cost of programming resources, although If programming by yourself, that cost would be your own time • If you were to turn this app into a real business, what else would you have to pay for? • Marketing, so that people know about your application • Costumer Service, in case your customers need help • Others?

14. Distribution Channels • How are you reaching your customers? • Which ones work best? Which are the most cost-efficient?

15. Case Study: Angry Birds • Angry Birds – a mobile phone application puzzle game

16. Think-Pair-Share: Angry Birds • Value proposition: What value do they bring to users? • Market: Who is their market? • Revenue streams: How do they make money? • Cost structure: What does the Angry Birds company (Rovio) have to spend money on? • Distribution channels: How do they distribute their app? (Where are all the different places where you can download/play Angry Birds?) Think-Pair-Share

17. Angry Birds: Value for users • Angry Birds frees people from boring situations and provides entertainment

18. Angry Birds: Market Size • Users that have a suitable device and are looking for entertainment through games • Users can play Angry Birds on iPhone, Android, Windows phones, or on the internet • By making themselves available on different platforms, Angry Birds can reach a very large part of their market

19. Angry Birds Revenue Streams • Advertising: People download the free app onto their phones • Paid application: People can download the ad-free version for $0.99 • In-app purchase: Users can pay $0.99 for the Mighty Eagle to pass certain levels • Angry Bird merchandise: At this point, they make more $ from merchandise than the game

20. Angry Birds Cost Structure • The game took $ 122,880 to program in total • Pay a cost to platforms: • Facebook, App Store, Android, Chrome web store, Google Play, Blackberry App World • Operations: • Rent for office building • Raw materials for merchandise • Salaries for Employees • Computers and Development Software Source: http://www.wired.co.uk/magazine/archive/2011/04/features/how-rovio-made-angry-birds-a-winner?page=all

21. Angry Birds Distribution Channels • December 2009, Angry Birds hit the App Store • Apple App Store, Android Market, Angry Birds Website, Facebook platform, Roku platforms • Stores for Angry Bird merchandise

22. Summary of a BusinessModel • Value Propositions • What value do you deliver to the customer? • Market Size • Needs to be enough people who will buy your app to make $ • Revenue Streams • If your app will be paid, how much will you charge for it? • If you will have in-app purchases, what will you sell and how much will they cost? • Cost structure • What are the most important costs in your business? • Distribution Channels • How are you getting your product to customers?

23. Activity: Business Model • In your workbook, write down the following: • What is your target market? • How big is your market? • What will your revenue streams be? • If your app will be paid, how much will you charge for it? • If you will have in-app purchases, what will you sell and how much will they cost? • Cost Structure? • Distribution Channels? Record your ideas in page 19 of the workbook

24. Task List • Complete the business model for your app. You’ll need it for your business plan. • Continue to work on the functionality of each individual screen in your prototype, starting with the easiest components.