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How to Develop a Business Idea: Crash Course Business - Entrepreneurship #2 - YouTube
Channel: CrashCourse
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Whether itâs the classic lightbulb above
our heads or a âEureka!â moment, we imagine
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ideas bursting out of creative peopleâs
brains -- like we all live in some cartoon
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universe, and a lucky few of us get struck
with inspiration.
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Maybe youâre wondering whether entrepreneurship
is for you, because you donât think youâve
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had any great ideas, but just WAIT!
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Because we can all get them.
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Or maybe you have an idea and youâre not
sure what to do next.
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How do you feed, water, and nurture this tiny
seed so it grows into a whole business?
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Donât worry, weâve got you.
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Iâm Anna Akana and this is Crash Course
Business: Entrepreneurship.
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[Opening Music Plays]
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Entrepreneurs arenât a special group of
people gifted with all the good ideas.
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They believe in themselves and the value of
their idea enough to take a financial risk
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to make it a reality.
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Looking back at the people we now think of
as great entrepreneurs, these people were
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just looking to make life easier or better
in some way -- from inventing the wheel to
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dreaming up the dishwasher.
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But what sparked their imagination?
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What was their apple falling from a tree?
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Innovative ideas can be traced to three main
sources: our passions, our complaints, and
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our egos.
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Letâs start with the exciting one: our passions.
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If you werenât working at your current job
or going to school, what would you do?
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Many ideas come from us being excited about
something and wanting to share it with the
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world.
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It could be Grandmaâs hot sauce recipe,
video game walkthroughs, or upcycled yard
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sale furniture.
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Sometimes you start doing something as a hobby,
like art.
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But then you might get commission requests
from people you donât even know.
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So, if you take a risk, that hobby could become
a full-time job.
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Next, there are complaints.
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There must be something that bugs you, whether
itâs tangled headphones or a lack of movies
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directed by women.
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Dropbox was founded because someone was annoyed
they kept forgetting their thumb drive.
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Under Armour was founded because someone got
tired of their shirt getting so sweaty they
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had to change it multiple times during one
workout.
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So if youâve ever found yourself thinking,
âWow, I really wish someone would do something
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about that,â guess what?
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You can do something about it!
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And, of course, there are the âI can do
it betterâ ideas.
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Everyone has them!
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Our egos are a great place to find innovation
and motivation.
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Maybe you visit the same coffee shop every
morning and after the thousandth cup of hot
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sludge, you are so done.
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You could make a much better cup of coffee!
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And the cups would be compostable!
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And the tip jar would have a witty joke!
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And youâd have fresh scones!
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Let the outrage fuel you.
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Think of something that needs freshening up.
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Uber and Lyft looked at the taxi industry
and saw something outdated and clunky.
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So they made sleek apps with automated payments
and directions.
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Now, obviously, there can be overlap between
these three motivations.
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You might be able to make a better cup of
coffee than the big chain in town -- thatâs
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ego.
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But thatâs only because youâre into coffee
and experiment with techniques and âblendsâ
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at home -- thatâs passion.
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And maybe that hobby started because there
werenât any coffee shops in your neighborhood
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-- thatâs complaint.
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Whether or not you have an idea notebook filled
to the brim, you do have experiences, opinions,
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and a whole complicated life.
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And these are the building blocks of entrepreneurial
innovation.
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So the first step is acknowledging you have
an idea.
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Step two is understanding the problem at the
root of your idea.
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Think of your idea as the beginning.
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You may have your own experience of a certain
problem, but by understanding what others
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think, your idea can grow and affect more
people.
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So when youâre chatting about that big chain
coffee shop with your friends, listen to what
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they say.
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Have they been there?
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What do they like?
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What do they hate?
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Maybe they complain, âThat place is a health
hazard and their service SUCKS.â
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Or they say, âI never go there because I
only drink tea.â
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So, use that quick insight to make your idea
better.
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Maybe your coffee shop will focus on excellent
staff training to ensure high quality coffee,
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cleanliness, and customer service.
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And youâll offer lots of teas alongside
those artisanal lattes.
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Even after you understand the problem, thereâs
more talking to do.
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Letâs look at my latest big idea.
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Itâs great, right?
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But now that Iâve told you, Iâm going
to have to kill you!
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Sorry, I got a little dramatic there.
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When we have exciting new ideas, our first
instinct is to squirrel them away so no one
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can steal them.
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But thatâs bad.
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When we keep things to ourselves, we end up
thinking shoe umbrellas are the next big thing.
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We have to share our ideas with the people
who are actually going to use the product
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or service.
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Otherwise, our solutions inherit our blind
spots and biases.
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They might not actually solve the problem,
or they might only be useful for a few people.
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Letâs explore this in the Thought Bubble.
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My friend Mary Cherry is deeply passionate
about cream puffs.
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She also happens to be allergic to gluten.
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Mary was complaining that there were no cream
puff bakeries in her whole city, so she launched
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a gluten-free pastry shop called Dream Puffs
on her block.
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Now, Mary was so enthusiastic about bringing
her dream to life that she didnât talk to
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potential customers or even her friend and
fellow cream puff connoisseur Paul before
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launching.
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She put in lots of time and money to set up
her shop, complete with color-coordinated
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mixers, a chic logo, and a few flavors of
gluten-free cream puff recipes.
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During the grand opening, Dream Puffs gets
some buzz -- no soggy bottoms here!
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But as the first week goes on, many potential
customers donât actually buy her gluten-free
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cream puffs.
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Most of the people who show up have more than
one allergy.
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Maryâs cream puffs are gluten-free, but
all of her luscious fillings have cream -- she
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didnât think about using dairy-free options
for people with dairy allergies or lactose
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intolerance.
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And her non-basic flavors involve nuts like
pistachios and almonds, but a lot of her potential
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customers have nut allergies.
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These are pretty huge setbacks.
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So now Mary has to spend more time and money
to develop new recipes and make sure that
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the quality -- and her star-baker reputation
-- is maintained.
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And she has to retrain her staff.
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If Mary had been willing to share her menu,
she could have optimized her cream puff ideas
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for potential customers before launching.
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And she couldâve stirred up even more hype
and brand recognition for Dream Puffs on her
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opening day.
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Thanks, Thought Bubble!
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Itâs easy for us to judge a story, but who
would you share an idea with?
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Your mom?
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Your trusted friends?
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Everyone on your morning bus ride?
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After all, a bus is just a limo full of friends
you havenât met yet!
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It depends on the idea, but generally at this
early stage, we want to target two main types
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of people.
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First, customers who might have the problem
weâre trying to solve.
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And second, people who can help us think through
our idea.
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We can also look to professionals who might
be able to connect us to established entrepreneurs
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in the field or available resources.
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For example, we could look for a college campus
with professors in entrepreneurship or entrepreneurial
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consulting.
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Or turn to entrepreneurial networking groups,
like those in co-working spaces.
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And in the U.S., we have Small Business Development
Centers.
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Around the world, you can check with your
local government for similar organizations
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that provide education and financing for budding
entrepreneurs.
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All these options are well-connected in the
entrepreneurial community and itâs their
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goal to mentor, consult, and connect fledgling
entrepreneurs.
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Donât be afraid to reach out and ask for
help!
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BUT before we get carried away, we have to
remember: weâre still making sure our idea
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is good and talking with potential customers.
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This is NOT the finance stage.
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We arenât asking people for seed moneyâŠ
yet.
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The next step in workshopping an idea is to
think big about the fundamental pieces of
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your business.
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And a great way to do that is with a business
plan tool like the Business Model Canvas,
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a lean startup template created by a company
called Strategyzer.
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Ok cool, yeah, Iâll fill that out in a second.
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Iâm just finishing page 22 of my business
plan where I discuss exactly which bees will
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provide the honey I use to sweeten the tea
in my swanky cat cafe.
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Hate to break it to you, but the days of 30-page
business plans are pretty much over -- even
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if someday you need financing from a bank
or a venture capitalist.
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Most lenders care about your story, proof
your idea works and is wanted, an
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understanding of your customers, and your
financial plan, which often takes only 5-10
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pages tops.
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And the Business Model Canvas has sections
for all those things!
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Really, filling out a business plan or Business
Model Canvas lets you collect all your thoughts
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about your idea and visualize how your business
might exist.
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Letâs explore the canvas using a little
company youâve probably never heard of:
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Netflix.
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For each section, we need to answer a key
question.
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Weâll start with Value Proposition: What
is the value we deliver to our customers?
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Basically, why do they want whatever weâre
selling?
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Netflix leverages technology for global audiences
who want on-demand, customized entertainment.
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Next, we move to the cluster for customers.
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Letâs think about our people in three pieces.
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First, who even are they?
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All the types of people interested in our
product form the Customer Segments section.
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In 2019, over 50% of Netflixâs business
came from subscribers outside the U.S.
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They use internal algorithms to predict and
offer certain programs to certain demographics.
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Once we decide who our customers are, itâs
time to define the relationship in the Customer
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Relationships section.
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What type of relationship do our customers
expect us to establish?
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Netflix customers expect quality programming,
good predictive suggestions, excellent customer
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service, and high-end technology performance.
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And then, through what Channels are we going
to speak to them?
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How are we reaching our customers?
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Netflix uses email, streaming apps, and social
media campaigns to communicate with customers
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(theyâre even on SnapChat.)
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Now that we know the âwho,â we need to
describe the infrastructure of our business,
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which also has three pieces.
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To start with the basics, what do we actually
do?
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These are our Key Activities.
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Netflix licenses existing content and creates
their own that they deliver through an online
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platform.
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And they do all the usual business things
like sales and marketing.
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After that, we have to decide what do we need
to do those things?
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These are our Key Resources.
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Netflix relies on SO MANY resources to keep
their massive wheels turning.
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They have people making content including
their in-house studios, engineers to make
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sure their website and apps work, customer
service to troubleshoot, attorneys to deal
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with licensing, internal teams for promotion,
and a global network of data storage facilities
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-- to name a few.
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Then, remember, we donât have to do this
alone.
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We need to look for Key Partners and ask:
Who do we need to team up with in order to
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deliver our value proposition?
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Netflix partners with law firms, studios,
agents of actors, and other companies who
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want to co-promote products -- like Comcast
Xfinity or T-Mobile.
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Finally, after weâve figured out the who
and the what of our business model, we have
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to think about the money.
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Half of that is our Revenue Streams.
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Where are we making money?
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What are customers willing to pay for each
product or service?
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As of 2019, Netflix uses three membership
subscriptions: Basic ($7.99/month), Standard
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($10.99/month), and Premium ($13.99/month).
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Unfortunately, entrepreneurship isnât free.
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There are Costs involved in doing Things for
your People.
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So where are we spending money?
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For Netflix, examples of costs are employees,
licensing and production fees for content,
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servers for data storage, brick and mortar
workplace locations, DVD production and mail,
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and R&D.
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And⊠thatâs Netflix in a nutshell.
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This is exactly the goal of the Business Model
Canvas: to provide a framework for anyone
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to break down the pieces of a business -- especially
your future business!
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Today, we grew the tiny seed of an idea into
a full business model.
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So remember that everyone has ideas, and the
real work of an entrepreneur is in sharing
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them and getting lots of feedback!
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Next time, weâll figure out what youâre
worth.
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And by that I mean, weâll delve into Value
Propositions and how to make something that
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potential customers will think has inherent
value and is worth monetary investment.
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Thanks for watching Crash Course Business.
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If you want to help keep Crash Course free
for everybody, forever, you can join our community
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on Patreon.
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And if you want to learn more about biases
that affect how we do business, check out
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our Soft Skills video about making decisions
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