Business Model Innovation, by Gigi Wang

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Business Model InnovationGigi WangBoard Member & Chair Emeritus, VLABFuture Enterprise Webinar24 November 2015About Me Born in Taiwan, grew up in US Stanford University BS/MS Engineering, UC Berkeley MBA Started career at 3 Fortune 100s Exxon, Pepsi, AT&T Moved to founding or early stage teams of start-ups InterNex (acquired), Pacific Internet (IPO, NASDAQ),Ascend (acquired), UptimeOne, QALA (acquired), Runa(acquired for $70m, 2013), and several FAILURES Currently:o Board Member/Chair Emeritus, MIT/Stanford VentureLab (VLAB)o Industry Faculty, UC Berkeley Center for Entrepreneurshipo Managing Partner, MG-Team, entrepreneurship & innovation, international biz development consulting How to make money!!??? Not just generate revenues, but be a profitable business. From Value Proposition to Value Extraction. Many historical business models to reference. Historical: Buy, License Software, Rent, Advertising Innovative models catch investors attentions. Innovative: Transforms processes, identifies new revenue The Digital World enables a whole new realm.Business ModelsMarket Trends1950s 1960s 1970s 1980s 1990sMass production, speedy serviceAggregation Specialization,door-to-door transportationBuilt to order, just in time manufacturing,direct to consumer salesInternet revolution, consumers as storefronts, online bookingMarket Trends New Business Models1950s 1960s 1970s 1980s 1990sMass production, speedy serviceAggregation Specialization,door-to-door transportationBuilt to order, just in time manufacturing,direct to consumer salesInternet revolution, consumers as storefronts, online bookingNew types of companies emerged1950s 1960s 1970s 1980s 1990sIdentify Who Has the $$ Plant-based organic pesticide for worms developed by Chao Yang Technology University in Taiwan Farmers had no money, and couldnt afford it CYUT identified the tea companies as the buyers who then provided it to the farmers to usehttp://www.google.nl/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http%3A%2F%2Fen.wikipedia.org%2Fwiki%2FChaoyang_University_of_Technology&ei=rc7XVJuZOar6ygPco4LoAg&bvm=bv.85464276,d.bGQ&psig=AFQjCNEeqCT8mmZ9Qwb9hFadpZ5INSdGWQ&ust=1423515679350412http://www.google.nl/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http%3A%2F%2Fen.wikipedia.org%2Fwiki%2FChaoyang_University_of_Technology&ei=rc7XVJuZOar6ygPco4LoAg&bvm=bv.85464276,d.bGQ&psig=AFQjCNEeqCT8mmZ9Qwb9hFadpZ5INSdGWQ&ust=1423515679350412Basic Business MathPROFITS = REVENUES - COSTSBusiness Model Challenges In 1998, no obvious way for free Internet Search to make money. The invention of Google Adwords changed everything. Adwords generates majority of Googles revenues.http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=YrP4eHkXXxK9zM&tbnid=9FjbhtfAKRPQDM:&ved=0CAUQjRw&url=http://en.wikipedia.org/wiki/History_of_Google&ei=GwQ4UqmBEoTKsgbTtIDgCA&bvm=bv.52164340,d.Yms&psig=AFQjCNFKy36NeGN2a-pSS8mtLQv853rXCw&ust=1379489171496407http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=YrP4eHkXXxK9zM&tbnid=9FjbhtfAKRPQDM:&ved=0CAUQjRw&url=http://en.wikipedia.org/wiki/History_of_Google&ei=GwQ4UqmBEoTKsgbTtIDgCA&bvm=bv.52164340,d.Yms&psig=AFQjCNFKy36NeGN2a-pSS8mtLQv853rXCw&ust=1379489171496407http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=31n7hczaSDqhPM&tbnid=Q89TXfsGc12ZyM:&ved=0CAUQjRw&url=http://www.targetedinternetmarketing.ca/&ei=0AQ4UuabCYTNswadsIHwCg&bvm=bv.52164340,d.Yms&psig=AFQjCNFx5AZ7rGm4Ent2_YoFZ33BYppr_g&ust=1379489351219432http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=31n7hczaSDqhPM&tbnid=Q89TXfsGc12ZyM:&ved=0CAUQjRw&url=http://www.targetedinternetmarketing.ca/&ei=0AQ4UuabCYTNswadsIHwCg&bvm=bv.52164340,d.Yms&psig=AFQjCNFx5AZ7rGm4Ent2_YoFZ33BYppr_g&ust=1379489351219432 In 1992, HP LaserJet III printer cost >$2000 HP made money from the hardware marginBusiness Models Can ChangeRecurring revenue has longer lifetime value In 2015, HP printer cost < $100 HP makes money on repeated sales of inkhttp://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=YTNzGIgBi58QtM&tbnid=ijCtel56Zh4eLM:&ved=0CAUQjRw&url=http://pchardwarepro.com/tips-for-installing-new-hp-printer-on-your-computer/&ei=W4I3UrqQJcnvswaeroHgDg&bvm=bv.52164340,d.Yms&psig=AFQjCNF8HARZD8gmcqEZrj1LgGZichGDlQ&ust=1379455941376642http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=YTNzGIgBi58QtM&tbnid=ijCtel56Zh4eLM:&ved=0CAUQjRw&url=http://pchardwarepro.com/tips-for-installing-new-hp-printer-on-your-computer/&ei=W4I3UrqQJcnvswaeroHgDg&bvm=bv.52164340,d.Yms&psig=AFQjCNF8HARZD8gmcqEZrj1LgGZichGDlQ&ust=1379455941376642http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=JK7xgtsklx2YFM&tbnid=3EhOa-SUjOP7VM:&ved=0CAUQjRw&url=http://printer-scannernews.blogspot.com/2010_05_01_archive.html&ei=qYI3Up_EMYjesgbyv4CADg&bvm=bv.52164340,d.Yms&psig=AFQjCNF4SGnXz3J-m0EBr75FCYHuhxkL0A&ust=1379456025166417http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=JK7xgtsklx2YFM&tbnid=3EhOa-SUjOP7VM:&ved=0CAUQjRw&url=http://printer-scannernews.blogspot.com/2010_05_01_archive.html&ei=qYI3Up_EMYjesgbyv4CADg&bvm=bv.52164340,d.Yms&psig=AFQjCNF4SGnXz3J-m0EBr75FCYHuhxkL0A&ust=1379456025166417Nothing is Really FreeWho are the Customers?UserBuyerPartnerMake It Easy to Collect $$Overcoming Barriers to Adoption Wholesale Solar sells solar power systems to homes. Big up-front costs to customer ($50K) huge barrier to adoption. Solar City overcame barrier to adoption with: Buy option OR Lease option which is $0 down, monthly lease price less than price of energy than from utility. SolarCity revenue from lease AND revenue from excess solar generated energy sold back to utility.Free Accelerates AdoptionPremium Price for Full ProductCollaborative Consumption People can rent their homes, apartments, or rooms to anyone else Across 190 countries, over 15 million nights have been booked Rent your car when youre not using it (and make $$) Services handles payment and insurance elementsCrowdsourcing In a world with too little time, too few resources, harness the power of the crowd for Content, Processes, Brainpower, and Funding, moreLet the Crowd Evaluate Crowd/ community provides ratings for the buyers and sellers People choose to make a transaction or not based on ratings eBay no longer has to provide the services to hold funds in escrow til product is received satisfactorily (Reduces COSTS)User Generated ContentCrowdsource Brain-PowerCrowd FundingMonetizing Datahttp://blog.fundinggates.com/2013/01/monetizing-data-the-holy-grail-of-21st-century-businesses/http://blog.fundinggates.com/2013/01/monetizing-data-the-holy-grail-of-21st-century-businesses/ Shopping app for dealsby merchants, by location, and more Business model is NOT traditional referral fee or revenue share BK is packaging and selling aggregate consumer dataTransaction-based to Data-basedGoogle All About Collecting DataGoogle services are all free (or are they??). Nothing is free in this worldThey are collecting our behavior data, analyzing it, and then monetizing it, primarily by delivering targeted advertising.Selling Data is Not A New Concept Safeway Stores originally installed bar code scanners for inventory control. Then, started aggregating data, analyzing it, and selling it as market research as early as 1990.Skin Vision database of cancersLargest melanomaDatabase worldwide Portfolio of >100Kdownloads >1.000 professionallydiagnosed pictures ofSuspicious moles Monetizing dataLicensing Tech vs Selling Licenses Bell Labs developed holographic storage solutions Licenses technology to Akonia One-time, monthly, yearly Akonia is the startup launching the commercial product to the market Norton has developed an anti-virus software Sells licenses to users Yearly, multi-package license Provides recurring revenuePaid to Work or Play@!!?$1800/month$2000/monthPlay games Make money!Berkeley Method of EntrepreneurshipCome join the BMOE Bootcamp @ UC Berkeley (January 11 14, 2016)http://scet.berkeley.edu/bmoe-bootcamp/mailto:Gigi.wang@mg-team.comGigi WangBoard Member, MITEF/Stanford Venture LabIndustry Fellow, UC Berkeley Sutardja Center for EntrepreneurshipManaging Partner, MG-Team LLCTHANK YOU!