MHR Module 5, 6, 7

A "series A" funding event is likely to be:

$2 million to $10 million

You have invented a new treatment for sick cows that will save farmers $1000/treatment. The cost of producing each treatment is $20. Assume you are following a 'value-based pricing' strategy. Which of the following is your best pricing option for maximizing your profits?

$300

A seed round of investment from professional investors is most likely to be:

$500,000- $2 million

You have decided to launch a new board game. you estimate the cost per unit to be $12, your selling price will be $20 and you initial investment is $160,000. What is your break even quantity?

20,000 units

Calculate COCA based on the following information for a co-working space: total sales and marketing budget: 1,000 sales and marketing associated with bringing in new customers: 500 number of new customers acquired: 5

COCA= $100

Think about a McDonald's Happy Meal. Which of the following customer type is the best description of an older sibling?

Champion

The author of Disciplined Entrepreneurship describes "A Decision-Making Unit" as being made up of:

Champion, Economic Buyer, and Influencers

In the video on "Building the Minimum Viable Product," Eric Ries argues that the worst fate for any product launch is:

Customers give you no feedback at all

In the video "Principles of Lean," Steve Blank argues that a business plan is good for:

Established companies with successful products that are developing new products

Assuming a venture raises external capital to successfully fund growth, the most common order of funding events would be:

Friends and family, Angels, Venture Capital, Public market via IPO

Lifetime Value is important because it tells you:

How much total profit (value) you can expect from a particular customer, which tells you how much you can spend to acquire that customer

In "Build, Measure, Learn" Eric Ries tells the story of their instant messaging startup IMVU. Eric and his co-founders learned how their target customers used IM systems by:

Inviting them to their office to try the technology

According to the Art of Startups by Bhide, bootstrapping a venture is a good idea because:

It reveals hidden problems and forces the company to solve them

Which part of the Business Model Canvas describes the network of suppliers and partners that make the business model work?

Key partnerships

New Startup Dan.o monthly subscription: $15/customer/month $5/customer/month subscribes for 10 months placing 1000 adds will cost $200 5% see and request more info customers that request more info will receive a call costing 20/call 60% of those become a customer

LTV of a customer at Dan.O= $100

Customers may be resistant to purchasing a new or unfamiliar product. Steps that you can take to overcome this resistance include:

Make it compatible with existing customer behavior

In "build, measure learn" Eric Ries tells the story of their instant messaging startup IMVU. They spend 6 grueling months developing the product, and when they released it:

No one even tried it

All of the following are primary roles in the decision-making unit EXCEPT:

Purchasing agent

If your company is successful, which of the following is the most likely financial exit that generates returns for external investors?

Sale of the company to another business??

After your beachhead market, follow-on markets include:

Selling new versions of your product to the same customers and selling your inital product to markets that are similar to your beachhead

Which of the following would be the best way to test assumptions about a potential new restaurant in downtown Madison

Set up a table on Library Mall or on the capitol square, give away small free samples, and see if you can convince people to buy larger portions

All of the following are good ways to reduce COCA except:

Target the customer segments with the longest sales cycles so you have the most time to close deals

The primary economic buyer is:

The decision maker who will sign off on spending money

In her talk on why business models matter, Ann-Miura-ko of Floodgate Ventures says that she likes to see a business model for a new venture because it shows:

The key assumptions and hypotheses about why the venture could succeed

According to "Fake it til you make it" the biggest problem with building a fully functional product/ service rather than a 90% facade is

The longer you spend working on a prototype or a real product, the more attached you'll becomes, and the less likely you'll be to accept negative test results

In the decision-making unit, a champion is:

The person who wants the customer to purchase the product

In the decision-making unit, an influencer is:

The person with depth of experience whose opinion can affect the rest of the decision-making unit

Cost of Customer Acquisition, also knows as Customer Acquisition Cost , is best defined as

The total sales and marketing cost required to earn a new customer

In "Build, Measure, Learn" Eric Ries suggests that the core question behind lean thinking is:

Which of our efforts create value and which are wasteful?

According to the Mullins article on Customer Cash, a key benefit of getting upfront payments from customers is it:

allows company founders to focus on creating, testing, refining, and proving their business models instead of on courting investors

Convertible debt is best described as

an investment that starts out as a loan but is expected to be converted to equity at some point in the future

In the video on "Debunking the Myths of Entrepreneurship" Eric Ries argues that the goal of entrepreneurship is to:

build an organization that will outlive the founders

In the video on "debunking the myths of entrepreneurship" Eric Ries argues that the goal of entrepreneurship is to:

build an organization that will outlive the founders

All of the following are considered additional or secondary roles in the decision-making unit EXCEPT:

champion

The best types of experiments to run as you prepare to launch your venture are:

cheap, quick, easy

which part of the Business Model Canvas describes all costs incurred to operate a business model

cost structures

Which part of the business model canvas describes the different groups of people or organizations an enterprise aims to reach and serve?

customer segments

Assume you have completed a CoCA/LV analysis for your startup company. You have found that your cost of customer acquisition is greater than the lifetime value of a customer. Based on this finding, what should you focus on?

decreasing the cost of customer acquisition

t/f Selecting your pricing framework is especially important because you should plan to keep it constant as you complete the process of researching and launching your venture

false

t/f: A debt investor cannot lose the entire value of the investment

false

t/f: A debt investor is generally willing to take a risk on a startup company if the innovation or technology appears to have good-long term potential

false

t/f: An asset-based business loan requires that the company identify a specific asset that the company will utilize to generate funds in the event that the company cannot make interest or principal payments on the loan

false

t/f: Banks are the primary source of initial investment dollars for startup companies in the software industry

false

t/f: The 17 business models presented in disciplined entrepreneurship represent the full set of possible business models you should consider for your venture

false

t/f: The MVBP should balance simplicity with the features that customers will pay the most money to acquire

false

t/f: When they first start, most entrepreneurs have a pretty accurate sense of how much it costs to gain a new customer

false

t/f: an equity investor cannot lose the entire value of the investment

false

t/f: generally speaking, angels tend to invest in early stage companies after a VC firm has made an investment

false

t/f: giving away your product or service for free can be a viable business model as long as you sort out how to monetize it later

false

t/f: once you have identified your beachhead market, you should identify 10-12 adjacent markets and calculate TAM for each

false

t/f: the persona for your product is also the primary economic buyer

false

t/f: when identifying key assumptions about your venture, two key areas to consider are team formation and the decision-making unit

false

If your business fails, what happens to the money invested by angels or venture capital firms (equity investments)?

first you pay off any loans or trade payables (suppliers). If there is anything left, it might get paid out to the stockholders

According to the Art of Startups by Bhide, the biggest challenge is not raising money but:

having the wits and hustle to do without it

Price is important in the functioning of an economy because it_____

helps transmit information regarding supply and demand across the entire market

In "A Broken Place," the article about Better Place and entrepreneur Shai Agassi, a key lesson about building a viable business model for a new venture is that:

it is very difficult to get consumers to change their behavior

According to the Mullins article on customer cash, the model that connects buyers and sellers is

matchmaker model

In the video on "Debunking the Myths of Entrepreneurship," Eric Ries argues that what distinguishes successful ventures is:

pivoting from bad ideas to opportunities that have good product-market fit

All of the following are key principles of the "prototype mindset" except:

prototypes are no better than the ideas behind them

According to the Mullins article on customer cash, entrepreneurs can use a scarcity model by:

regularly changing the product specifications to motivate customers to make purchasing decisions quickly

when developing your product plan, you seek to:

serve a different persona with a different set of product or service features

When testing assumptions, even if "the dogs eat the dog food" you will still have to show that:

someone will actually pay for the dog food

Which of the following is NOT one of the 9 building blocks of the Business Model Canvas

technology

In her video on bootstrapping, Heidi Roizen comments that bootstrapping is especially valuable because:

the best assurance that you're going to create shareholder value and have a successful business is to create profit

The vitality coefficient is:

the magnitude of the positive word of mouth your product generates

Assume that a venture has successfully raised capital from outside investors in a seed round of funding. Which of the following is most likely true as it progresses from seed to to a series A round

the perceived risk of the venture should reduce

The lifetime value of a customer (LTV) is:

the total profit associated with a customer

In the video "to raise money or not part 2" the speaker points out that one of the key factors that helped them raise venture capital was:

they got funding from an angel investor who was well connected in industry and with the VC firms

The best way to figure out the decision-making unit is to talk to your potential customers

true

t/f A business loan is substantivey no different than other types of debt such as student loans or a home mortgage

true

t/f: A business model is a framework by which you capture value from customers based on the product or service you sell

true

t/f: An angel is a wealthy individual who is investing his/her own money

true

t/f: Be flexible on pricing for early testers and "lighthouse customers" because you can use them as case examples to help other customers

true

t/f: Because an equity investor is a part-owner of the business, the investor may have a role in management or decision making

true

t/f: Calculating the total addressable market size for follow-on markets helps you stay aware of the long-term potential of your business

true

t/f: Customer acquisition cost analysis should take into account all sales and marketing costs, including salaries of salespeople, printing of brochures, costs of trade show exhibits, advertising and so on

true

t/f: Debt investors are more likely to invest in a company if there is an asset that can be claimed by the investor in the event that the company defaults on the debt

true

t/f: Different types of customers will pay different amounts for the same products or services, depending on how early or late they are buying compared to other customers

true

t/f: Equity investors in early stage companies might expect return rates as high as 50-60% per year

true

t/f: Generally speaking equity investors are willing to take higher risks than debt investors

true

t/f: Hayek argued that knowledge of time and place is more important than scientific knowledge in The Use of Knowledge in Society paper

true

t/f: In the Fake it Chapter 13 reading from "Sprint" creating a facade of a product can quickly get you 90% of the way to something that you can test with customers

true

t/f: In the learn startup framework, the products a startup builds are really just experiments

true

t/f: It is important to carefully consider your new venture's business model because you have many options to choose from and it is difficult to change your business model later

true

t/f: MVP stands for Minimum Viable Product

true

t/f: Mapping the process to acquire a paying customer can help you identify hidden obstacles that inhibit your ability to sell your product

true

t/f: One of the major advantages of crowdfunding is that it allows the entrepreneur to gauge the market's willingness to pre-order a product like a board game, which is a potential indication of whether the product could be a commercial success

true

t/f: The MVBP combines the most important key individual assumptions into one integrated product that can be sold

true

t/f: The cost of customer acquisition (COCA) analysis begins with mapping the process to acquire a paying customer

true

t/f: Valuation of an early stage company is usually at least as much art as science

true

t/f: When a company uses debt financing, it receives capital in exchange for a promise to repay the capital, usually with interest payments as well

true

t/f: When mapping the process to acquire a paying customer, you should note whether payment will come from the customer's yearly operating budget or from the customer's long-term capital budget

true

t/f: an equity investor shares in the upside if the company is successful

true

t/f: identifying key assumptions for you venture requires reviewing each step of the Disciplined Entrepreneurship framework to see what conclusions you made based on your market research

true

t/f: mapping your sales process strategy requires matching specific sales activities at each stage (short term, medium, long term) with the specific type of customer (or segment) that you expect to reach with that activity

true

t/f: the primary goal of your short term sales process is to create demand for your product and fulfill those orders

true

which business model charges customer for the products or services actually used or consumed?

usage-based

Which part of the business model canvas describes the bundle of products and services that create value for a specific customer segment?

value proposition

In her video on bootstrapping, Heidi Roizen comments that bootstrapping used to be the standard way to finance growth, but more entrepreneurs began relying on outside capital when:

venture capital became cheap (because there was more of it)

In Disciplined Entrepreneurship, a "customer" is not always just a customer. Which of the following is an example of a more complex customer situation?

when you have a two-sided market where multiple target customer types are needed