Whether it’s the classic lightbulb above
our heads or a “Eureka!” moment, we imagine
ideas bursting out of creative people’s
brains -- like we all live in some cartoon
universe, and a lucky few of us get struck
with inspiration.
Maybe you’re wondering whether entrepreneurship
is for you, because you don’t think you’ve
had any great ideas, but just WAIT!
Because we can all get them.
Or maybe you have an idea and you’re not
sure what to do next.
How do you feed, water, and nurture this tiny
seed so it grows into a whole business?
Don’t worry, we’ve got you.
I’m Anna Akana and this is Crash Course
Business: Entrepreneurship.
[Opening Music Plays]
Entrepreneurs aren’t a special group of
people gifted with all the good ideas.
They believe in themselves and the value of
their idea enough to take a financial risk
to make it a reality.
Looking back at the people we now think of
as great entrepreneurs, these people were
just looking to make life easier or better
in some way -- from inventing the wheel to
dreaming up the dishwasher.
But what sparked their imagination?
What was their apple falling from a tree?
Innovative ideas can be traced to three main
sources: our passions, our complaints, and
our egos.
Let’s start with the exciting one: our passions.
If you weren’t working at your current job
or going to school, what would you do?
Many ideas come from us being excited about
something and wanting to share it with the
world.
It could be Grandma’s hot sauce recipe,
video game walkthroughs, or upcycled yard
sale furniture.
Sometimes you start doing something as a hobby,
like art.
But then you might get commission requests
from people you don’t even know.
So, if you take a risk, that hobby could become
a full-time job.
Next, there are complaints.
There must be something that bugs you, whether
it’s tangled headphones or a lack of movies
directed by women.
Dropbox was founded because someone was annoyed
they kept forgetting their thumb drive.
Under Armour was founded because someone got
tired of their shirt getting so sweaty they
had to change it multiple times during one
workout.
So if you’ve ever found yourself thinking,
“Wow, I really wish someone would do something
about that,” guess what?
You can do something about it!
And, of course, there are the “I can do
it better” ideas.
Everyone has them!
Our egos are a great place to find innovation
and motivation.
Maybe you visit the same coffee shop every
morning and after the thousandth cup of hot
sludge, you are so done.
You could make a much better cup of coffee!
And the cups would be compostable!
And the tip jar would have a witty joke!
And you’d have fresh scones!
Let the outrage fuel you.
Think of something that needs freshening up.
Uber and Lyft looked at the taxi industry
and saw something outdated and clunky.
So they made sleek apps with automated payments
and directions.
Now, obviously, there can be overlap between
these three motivations.
You might be able to make a better cup of
coffee than the big chain in town -- that’s
ego.
But that’s only because you’re into coffee
and experiment with techniques and “blends”
at home -- that’s passion.
And maybe that hobby started because there
weren’t any coffee shops in your neighborhood
-- that’s complaint.
Whether or not you have an idea notebook filled
to the brim, you do have experiences, opinions,
and a whole complicated life.
And these are the building blocks of entrepreneurial
innovation.
So the first step is acknowledging you have
an idea.
Step two is understanding the problem at the
root of your idea.
Think of your idea as the beginning.
You may have your own experience of a certain
problem, but by understanding what others
think, your idea can grow and affect more
people.
So when you’re chatting about that big chain
coffee shop with your friends, listen to what
they say.
Have they been there?
What do they like?
What do they hate?
Maybe they complain, “That place is a health
hazard and their service SUCKS.”
Or they say, “I never go there because I
only drink tea.”
So, use that quick insight to make your idea
better.
Maybe your coffee shop will focus on excellent
staff training to ensure high quality coffee,
cleanliness, and customer service.
And you’ll offer lots of teas alongside
those artisanal lattes.
Even after you understand the problem, there’s
more talking to do.
Let’s look at my latest big idea.
It’s great, right?
But now that I’ve told you, I’m going
to have to kill you!
Sorry, I got a little dramatic there.
When we have exciting new ideas, our first
instinct is to squirrel them away so no one
can steal them.
But that’s bad.
When we keep things to ourselves, we end up
thinking shoe umbrellas are the next big thing.
We have to share our ideas with the people
who are actually going to use the product
or service.
Otherwise, our solutions inherit our blind
spots and biases.
They might not actually solve the problem,
or they might only be useful for a few people.
Let’s explore this in the Thought Bubble.
My friend Mary Cherry is deeply passionate
about cream puffs.
She also happens to be allergic to gluten.
Mary was complaining that there were no cream
puff bakeries in her whole city, so she launched
a gluten-free pastry shop called Dream Puffs
on her block.
Now, Mary was so enthusiastic about bringing
her dream to life that she didn’t talk to
potential customers or even her friend and
fellow cream puff connoisseur Paul before
launching.
She put in lots of time and money to set up
her shop, complete with color-coordinated
mixers, a chic logo, and a few flavors of
gluten-free cream puff recipes.
During the grand opening, Dream Puffs gets
some buzz -- no soggy bottoms here!
But as the first week goes on, many potential
customers don’t actually buy her gluten-free
cream puffs.
Most of the people who show up have more than
one allergy.
Mary’s cream puffs are gluten-free, but
all of her luscious fillings have cream -- she
didn’t think about using dairy-free options
for people with dairy allergies or lactose
intolerance.
And her non-basic flavors involve nuts like
pistachios and almonds, but a lot of her potential
customers have nut allergies.
These are pretty huge setbacks.
So now Mary has to spend more time and money
to develop new recipes and make sure that
the quality -- and her star-baker reputation
-- is maintained.
And she has to retrain her staff.
If Mary had been willing to share her menu,
she could have optimized her cream puff ideas
for potential customers before launching.
And she could’ve stirred up even more hype
and brand recognition for Dream Puffs on her
opening day.
Thanks, Thought Bubble!
It’s easy for us to judge a story, but who
would you share an idea with?
Your mom?
Your trusted friends?
Everyone on your morning bus ride?
After all, a bus is just a limo full of friends
you haven’t met yet!
It depends on the idea, but generally at this
early stage, we want to target two main types
of people.
First, customers who might have the problem
we’re trying to solve.
And second, people who can help us think through
our idea.
We can also look to professionals who might
be able to connect us to established entrepreneurs
in the field or available resources.
For example, we could look for a college campus
with professors in entrepreneurship or entrepreneurial
consulting.
Or turn to entrepreneurial networking groups,
like those in co-working spaces.
And in the U.S., we have Small Business Development
Centers.
Around the world, you can check with your
local government for similar organizations
that provide education and financing for budding
entrepreneurs.
All these options are well-connected in the
entrepreneurial community and it’s their
goal to mentor, consult, and connect fledgling
entrepreneurs.
Don’t be afraid to reach out and ask for
help!
BUT before we get carried away, we have to
remember: we’re still making sure our idea
is good and talking with potential customers.
This is NOT the finance stage.
We aren’t asking people for seed money…
yet.
The next step in workshopping an idea is to
think big about the fundamental pieces of
your business.
And a great way to do that is with a business
plan tool like the Business Model Canvas,
a lean startup template created by a company
called Strategyzer.
Ok cool, yeah, I’ll fill that out in a second.
I’m just finishing page 22 of my business
plan where I discuss exactly which bees will
provide the honey I use to sweeten the tea
in my swanky cat cafe.
Hate to break it to you, but the days of 30-page
business plans are pretty much over -- even
if someday you need financing from a bank
or a venture capitalist.
Most lenders care about your story, proof
your idea works and is wanted, an
understanding of your customers, and your
financial plan, which often takes only 5-10
pages tops.
And the Business Model Canvas has sections
for all those things!
Really, filling out a business plan or Business
Model Canvas lets you collect all your thoughts
about your idea and visualize how your business
might exist.
Let’s explore the canvas using a little
company you’ve probably never heard of:
Netflix.
For each section, we need to answer a key
question.
We’ll start with Value Proposition: What
is the value we deliver to our customers?
Basically, why do they want whatever we’re
selling?
Netflix leverages technology for global audiences
who want on-demand, customized entertainment.
Next, we move to the cluster for customers.
Let’s think about our people in three pieces.
First, who even are they?
All the types of people interested in our
product form the Customer Segments section.
In 2019, over 50% of Netflix’s business
came from subscribers outside the U.S.
They use internal algorithms to predict and
offer certain programs to certain demographics.
Once we decide who our customers are, it’s
time to define the relationship in the Customer
Relationships section.
What type of relationship do our customers
expect us to establish?
Netflix customers expect quality programming,
good predictive suggestions, excellent customer
service, and high-end technology performance.
And then, through what Channels are we going
to speak to them?
How are we reaching our customers?
Netflix uses email, streaming apps, and social
media campaigns to communicate with customers
(they’re even on SnapChat.)
Now that we know the “who,” we need to
describe the infrastructure of our business,
which also has three pieces.
To start with the basics, what do we actually
do?
These are our Key Activities.
Netflix licenses existing content and creates
their own that they deliver through an online
platform.
And they do all the usual business things
like sales and marketing.
After that, we have to decide what do we need
to do those things?
These are our Key Resources.
Netflix relies on SO MANY resources to keep
their massive wheels turning.
They have people making content including
their in-house studios, engineers to make
sure their website and apps work, customer
service to troubleshoot, attorneys to deal
with licensing, internal teams for promotion,
and a global network of data storage facilities
-- to name a few.
Then, remember, we don’t have to do this
alone.
We need to look for Key Partners and ask:
Who do we need to team up with in order to
deliver our value proposition?
Netflix partners with law firms, studios,
agents of actors, and other companies who
want to co-promote products -- like Comcast
Xfinity or T-Mobile.
Finally, after we’ve figured out the who
and the what of our business model, we have
to think about the money.
Half of that is our Revenue Streams.
Where are we making money?
What are customers willing to pay for each
product or service?
As of 2019, Netflix uses three membership
subscriptions: Basic ($7.99/month), Standard
($10.99/month), and Premium ($13.99/month).
Unfortunately, entrepreneurship isn’t free.
There are Costs involved in doing Things for
your People.
So where are we spending money?
For Netflix, examples of costs are employees,
licensing and production fees for content,
servers for data storage, brick and mortar
workplace locations, DVD production and mail,
and R&D.
And… that’s Netflix in a nutshell.
This is exactly the goal of the Business Model
Canvas: to provide a framework for anyone
to break down the pieces of a business -- especially
your future business!
Today, we grew the tiny seed of an idea into
a full business model.
So remember that everyone has ideas, and the
real work of an entrepreneur is in sharing
them and getting lots of feedback!
Next time, we’ll figure out what you’re
worth.
And by that I mean, we’ll delve into Value
Propositions and how to make something that
potential customers will think has inherent
value and is worth monetary investment.
Thanks for watching Crash Course Business.
If you want to help keep Crash Course free
for everybody, forever, you can join our community
on Patreon.
And if you want to learn more about biases
that affect how we do business, check out
our Soft Skills video about making decisions
