 So like students, let me formally welcome Kausto Dargalkar, a very, very close friend and has been teaching at the Wellinker Institute when I got first in touch with him. Now he is an independent consultant, a design thinking trainer, coach, and an innovation and strategy consultant author of It's Logical is the title, Innovating Profitable Business Models, Sage Publication, and Serial Entrepreneurs since 1990. Founded four companies and now on two more ventures. In 2006, sold commercial interests in his first three companies and plunged into academics and research. Kausto relishes the challenge of enhancing the innovation quotient of an organization by helping create new offerings to tap existing as well as new markets, visualizing unique and sustainable business model. And some of the awards are honored as the Entrepreneurship Educator and Mentor Award by the Ministry of Steel Development. Then worked in the field of Unconditional User Research, was acknowledged by the Wartons School of Business, awarded the Run and Up Award in the Global Wartons Innovation Tournament. And his proposal on clean energy integration with electric vehicles was adjudged as the top seven in the world at the Smart City World Expo. Kausto has been teaching at IDC along with me in some of our courses in design management and product planning. So Kausto, thank you so much. And today, you're the only one who's gonna talk about the business model canvas as a very important, large domain requirement for us. We need to understand the business model, as rightly said, it's an extremely important area for us. All right, so broadly the agenda is these four points I'm going to talk about. How the business model plays an extremely important role in taking a venture forward, keeping it sustainable, keeping it alive for a long time. And then I'm going to try and share some interesting or unique business models, which kind of I have come across over the last 10, 15 years. And a practical kind of framework, a six-question framework, which will help us look at our, your own ventures and see if you can kind of create some unique business models sustainable in the long run. All right. And then we will touch upon the lead canvas and the business model canvas with all these inputs. So let me dive in with an example with a case of some of my students. This is way back in 2013, Cusp of 2013-14. One bunch of students was working on some, something for speech and hearing impaired people. All right. And the target segment I had deliberately given them was very narrow speech and hearing impaired housewives. Not working ladies. All right. So, and then they, you know, through their inquiry visits to those, their households and things like that, they observed some very peculiar things, very simple things on hindsight, very simple things. They went into the house to study the issues that these women face when this lady was alone, deliberately chosen the time when alone because a lot of activities would be happening and there would be no help around. So her real problems would really surface out. Days went on days when even the housemaid was absent and this lady was alone managing her morning chores. 9.30 to 11 o'clock was the time that these students of mine went in to do this observational study and found very simple things. Whenever the doorbell would ring, this lady would not be able to hear. When she would put something in the microwave and would go into some other room to do something else, the microwave timer would time out and this lady would keep beeping. This lady would not be able to hear. Another interesting thing that these kids noticed was whenever she put something in the pressure cooker, she would not leave the kitchen, would pace around in the kitchen, looking at the top of that cooker because if she thought, if she left the room, she would not be able to hear the number of whistles and maybe was worried the food might stay undercooked or get overcooked. So she was constantly pacing around in the kitchen looking at that. Now with these few findings, these kids created, this is the picture of the first prototype that they created, all right? It has a lot of nostalgia value for me because it was the first prototype printed on the 3D printer in my lab way back in 2013. Operation was very simple. They inserted a Bluetooth module in this device and inserted corresponding Bluetooth mobiles and modules in the appliances in the house so that they could communicate with each other in the sense that if the doorbell would ring, the wristband would vibrate and a red colored LED would blow on it corresponding to the doorbell. If the microwave would time out, the wristband would vibrate and a blueish green colored LED would blow on it. If the pressure cooker steamed out for the fourth time or fifth time as per the program, the wristband would vibrate and a blue colored LED would blow on it. So this was a simple first prototype product, all right? Back in 2013, 14 before wearables really became popular. Interesting product created in seven, eight days, crude but serves the purpose, all right? Now two out of these five kids got excited about this idea, this concept. And they came to me one day saying, sir, we want to take it forward, product refine karna hai and we are to take it forward. That means they wanted to create a product out of it and possibly venture around it. So I told them, guys, take about three, four weeks and look at the whole market ecosystem, check it out and see what is the potential and thing like that and kind of create a broad roadmap that some milestones that you would like to meet in the next six months and then we will get going without what to do with it, all right? Two weeks went by, three weeks went by, these kids did not come back to me. After about five weeks, both of them came back one day with me unhappy with themselves. They said, sir, we have analyzed that whole ecosystem. Market is good, numbers are good. Though it's a niche market, there is a, if we refine it in multiple ways, the product will be able to capture some market share. But two major problems. Problem number one is back in 2013, if one had to start a manufacturing unit in India, one needed something like 19 different licenses and it would take anywhere between 15 to 20 months to get there, all right? Problem number one. Problem number two, this product is so damn simple. It can be copied very easily, right? There is no great entry barrier in this. And they said, we might even get those 19 licenses. We might spend those 15, 20 months getting it. We might set up a unit. We might manufacture the first lot of say, 1000 pieces. Maybe we'll be able to sell it in Mumbai and around. But maybe what if the Chinese come in six months or seven months later with this product and they will come in with millions of pieces, at least 100,000 pieces and crash the price completely, right? Half to one-fourth the price. And then we will be left nowhere. Everybody agrees, two major issues? Yeah, yeah. Now I have a question for all of you. Now knowing this, this is a product in front of you, first prototype, first version. And these two major hassles to take this product forward to the market. How many of you would go ahead with it? How many of you would not go ahead? Yes or no? Let's look at it from an entrepreneurial perspective. And let us analyze the reasons. Why yes, why no? Patents, patent, I mean, let us look at this product. I mean, will we get a patent? A technology patent? Utility patent maximum. It's very difficult for a startup to get into all these angles, you know? Look and feel, utility and design. The shape can be registered. So patent, Milega, right? Control costs, yes, doable. Can we really beat the Chinese in terms of cost control? Tough, no? Yeah, probably not. Probably not, yeah. Right? But I think there is a, you know, with the costing and with the Chinese label, I think this has always been known that it's not durable or not reliable. So for someone who's investing, I think we do have a sort of leverage here because reliability and trust would be more as compared to Chinese products. On reliability, all right, all right, cool. Fair enough, yes. But still that Chinese threat looms, right? It's, it might just throw you out to the market. So that that threat always exists. Aggressive marketing promotion, doable. But from a startup perspective, we don't have budgets to do that, right? Marketing aggressively needs a lot of money, right? You do promos on digital media, television, it consumes a lot of money. From a startup perspective, we don't have those kinds of resources, right? So doable, but difficult. Finding the right networks for outsourcing, et cetera. Once again, what is there in it? What stops the outsourcer only to manufacture it? Yeah, use outsourced from China and IPR laws in China are even worse. So there is a lot of iffyness about the whole thing, right? So, you know, these kids did not give up two of them. After about six, seven weeks, they used to come, they used to meet a lot of times they came and after about five, seven weeks, they came jumping into my office saying, sir, problem is not with the market, problem is at our end, we can't manufacture it. So what if we don't manufacture it at all? Let us completely open source this technology. Anybody can manufacture it, who is so simple, anybody can manufacture it. Let's open source it. Provided they use a standard Bluetooth module embedded in it. Then these guys came up with a brilliant idea. They said, forget about manufacturing. We will create a cloud platform. On one side, we will give out APIs to all these RISband manufacturers in the world. And on the other side, we will approach appliance manufacturers like Siemens and LG and Whirlpool, et cetera, and tell them that if your appliance connects to our cloud platform through our API, in the household, your electronic appliance can communicate with a RISband of any manufacturer and can solve the purpose for a deaf and mute individual everywhere in the world. Now that's the power of the business model. And these guys created this cloud platform and now look at it from the business model. Now let us analyze what happened. These guys went to these large corporations. First they cracked Siemens, they took them six, seven months to do it. The proposition, value proposition that these large companies, they proposed to us, with this simple API, you can brand your product as an inclusive product, deaf and mute friendly product. Very true. And at what cost? For API, they charge them something like 1.5 to 2 cents. Now back in 2014-15, dollar was some 60 rupees. So 2 cents is what? What are we talking about? 12 paisa. Get it? Now at that 12 paisa, this big brand gets to call its product a physically challenged inclusive product, big value proposition. And if you remember in 2015-16, there was a huge trend across the world to make products, especially home appliances as inclusive as possible. Right? So these guys very smartly rode that curve and suddenly their offering became a global offering. Then what they did was even better. They first onboarded with Siemens, took them six, seven, eight months to convince them, POC, they took them time. But once Siemens got onboarded, naturally Siemens is the big brand, right? Samsung came on board, Whirlpool came on board, LG came on board. And suddenly they became a global player only through this cloud platform, went away from their hassle of manufacturing completely. Later on, they did not restrict themselves to just connecting with bands for deaf and mute speech and hearing impaired people. But once they had the cloud platform in place, they added modules so that they got into home automation also. I mean through your mobile phone, you can switch the geyser on, air conditioner on, off, whatever you want to do, right? So they kept on upgrading. And in 2017, they were acquired by Siemens' home automation division for a good valuation of about 30, 32 crores, the whole platform that they developed. And so you get my point. So that's the significance of the business model. Their whole success journey began when they looked at the business model sharply by going to the cloud model rather than a manufacturing model, right? And so this is, I would say a classic case of what is typically called as a pivot or in startup jargon that is called as a pivot, but classical case of how you pivot depending on market situation and how you create a win-win situation. It's a win-win situation for everybody. So if you see the successful companies of the last 10, 15 years, most of them have created platforms around their product. They may have started with hardware, but they have soon surrounded their hardware with products, with a cloud platform where more and more services can be plugged in. Get it? So it's a classic case of thinking through the business model, all right? So this I just wanted to put it in perspective, the significance of the business model, all right? So what happened? Let us look at, I mean, they completely shifted their paradigm of thinking. They figured out a different way to reach the same consumer and at a much higher scale, right? So that's one thing. It went from manufacturing to cloud. Think platforms, as I mentioned, once you think about creating a platform around your project, around your product, what happens is typically, now these guys entered that segment, market segment with simple offering and they entered the household automation business, right? And they kept on adding more and more features such that more and more revenue streams started coming in. But if they had not created a platform that that would not have been possible, right? So think beyond just hardware, think what other things you can add and that you can add when you think in terms of platforms, get it? And when you create a platform, what happens is when other manufacturers or other service providers want to reach the same market segment, they also join your platform and you get more avenues for monetization, get it? Let me make it simpler with maybe another example. All of you are aware of PRACTO. PRACTO started with a simple application for fixing appointments with the between doctors and patients, right? Simple, normal application. It benefited the doctor because doctor could get appointments even when his office or dispensary was closed. 24 by seven appointments could be booked. Patients could book appointments 24 by seven, not waiting for that four to seven consulting time when the receptionist would pick up your call, right? So total freedom. Now they entered the doctor market. Then they kept on analyzing what else do doctors need and they came upon a need that especially dentists. Dentists use a lot of material, right? So they carry a lot of inventory. They use different, all those blades, rotors, bars, and plus different materials for filling, cavity filling, et cetera. And it's a nightmare for a doctor whether he or she will focus on his practice or her practice or manage inventory for his office, for his clinical practice. So they introduced an inventory management software onto the practical platform, correct? So naturally loyalty of doctors, they got. Then they also realized that these small nursing homes, you know, 10 bedded or 15 bedded nursing homes which are run by surgeons, they also carry a lot of inventory which the doctor can't possibly spend time managing inventory. It's a specialized job. So they plugged in some inventory management software onto the practical platform for these surgical homes. Then gradually, naturally, their traction from the doctor started increasing. Then later on, they also realized that doctors have a problem keeping accounts, managing their accounts. So they added some accounts management software module onto their platform. See how they're gradually progressing. Now, with this, they're capturing the loyalty of these doctors. Now, once the doctors are on their platform, pharmaceutical companies who want to sell their medicines to doctors also became interested in promoting their products to the practice. Get the point? Which means more avenues for monetization of that platform. Now, today, pharmacies are also there on the practical platform wanting to sell to patients directly. Apollo Pharmacy, Netmeds, Pharmacy, all of that. They want to be there. Plus today, it is now, thanks to the pandemic, they have become a pretty much developed video consultation platform, correct? So what is the lesson to learn from here? They created a platform. They created a loyal customer base and any other company or any other service providers which wants to sell their service to that customer segment doctors, then utilizes the practice platform to reach them, reach to them, right? Because practice has created a channel to reach to that market segment which other service providers also want to reach. And naturally, avenues for monetization keep on increasing. So that's the beauty of scale through platform creation. So think of that in mind when you think about taking your products to market, all right? Though right now, they may be pure hardware, but think about it from the customer side, what else, what else can be done? And leave those modules open so that you can plug in more and more things on the platform. So think platforms. And of course, as design students, you would all know this Venn diagram, right? Design liberty, feasibility, viability. Successful, you have to pivot till you are in the sweet spot. Now, the first wristband guys, when they were thinking of manufacturing the wristband, they had captured the user needs well, they had figured out the operational and tech possibilities. But if they had manufactured the wristband, their business goals would not have been met, right? The moment they tweaked with that cloud model, cloud platform model, they came to the sweet spot. So that's how you should think about a business model, that how can you bring your venture into the sweet spot and keep it there? What technological changes or what operational changes you need to bring about in the way you are going to market? That's where the business model plays a very important role, right? Now, let me share with you, as I mentioned, some little bit of my research of the last 10, 12 years of how some businesses have kind of beaten their competition, not really on the product or not really on the tech, but on the structuring of their business model. First one, which I call as double whammy. Hair Expresso, Javed Habib, a lot of Bollywood celebrities were his customers. Sachin Tendulkar was his customer and other sports people, et cetera. So his claim to fame was, hairstyle is to the rich and famous, all right? Now, if you were in Javed Habib's place, probably by the end of the 90s, that fellow realized that most of my business is restricted to my hand skills. If I'm not present, I don't get these rich and famous customers, right? Correct? My bandwidth is limited. How many hairstyles that I can do in a day? I have 24 hours, seven days a week. I cannot expand beyond a certain point. Though large amount of brand equity Goodwill was created in the 90s, agreed? So as a smart chap, he taught in terms of scale, how can he now utilize his brand equity and create a scalable model? So somewhere in 2001 or 2002, he started his hairstyling academy, if you remember. Javed Habib's hairstyling academy or something he started. So students would enroll to learn hairstyling, would pay a fee to enroll to learn hairstyling. And couple of years later, he started these hair express or salons about a year and a half to two later after he started his hair academy, training academy. Javed Habib is in the middle. Suppose I am Javed Habib. On my left side is my training academy where students pay money, get enrolled, learn hairstyling from my academy. And on the right side, I have these chain of salons where I deploy the same manpower. Some student interns do work for free. So I am in the middle. I am generating revenue from both sides of the value chain from my backend. That is, who's my employee technically in that salon? Majority of the employees, who are they? The students. Students, right? That employee is actually paying me a fee to get trained. I get my point. That's what I call as double family. I am getting paid from both ends of the value chain. Interesting model, no? It's a skill, it's a finger-based personal skill. He can't replicate it very easily. So, but with this, he suddenly was able to scale up. So, getting paid from both ends of the value chain. Interesting model. Think about it. Then let me give you another example. Slightly tech-based example. Duolingo. Everybody is familiar with Duolingo? Yes. Yes. Go to App Store, go to Google Play Store, or wherever you can download it and learn some foreign languages, all right? Now, what is Duolingo's business model? Duolingo is actually a translation company which takes jobs for translation. Suppose I am Duolingo and say one of you, suppose she is a Japanese company wanting to enter India. So, what is one of the main tasks that our company would want to do? Would want to translate certain Japanese documents into Indian languages, right? In the English, whatever, whatever, whatever, all right? So, I am Duolingo. I take up that job of translation. I break down those documents into small little words, pieces with small little sentences. Disjoint, everything is disjointed. And how Duolingo pushes the tutorial into our phone. It's a nice animated, gemmified kind of a tutorial, right? You all of you have seen it. It is fun to play with. Now, all these broken down words and sentences or whatever it is are kind of a fancy, nice animation is created around it and it's pushed down through the app store where hundreds of thousands of people who want to learn the Japanese language, download it and keep on playing with it. Playing with it means what? What are you doing when you're learning a new language? When all these words, sentences are sent in, what are you doing actually? Training, translating. Yeah. You're translating. And as you get better, you climb up level one, level two, level three, level four, whatever, whatever. It's a freemium model. And Duolingo has an intelligent algorithm at the back which picks up the best translations from the crowd, stitches that entire document together and gives it to Ananya's company who pays me, who pays Duolingo. Once again, now being a freemium model in front, you get to download it free. For seven, eight levels, you get to use it free. Then I monetize your presence. Either I make you subscribe to my app or I push some in-app advertising or in-app videos through which I make money. And on the back end, I make money from the company for whom the translation has been done. Which means I can kind of run that whole company without employing a large amount of translators. I need moderators, yes, to check whether the algorithm is generating the best translations but my staff is minimized, correct? It's a very lean model. Once again, revenue from both ends of the value chain, double whammy. Now, in what kinds of situations can you use these? My learning from this is that if you are into some business which you have a certain skill set for which there is a large demand in the market to learn that skill set. Like hairstyling, there was a large demand to learn a skill, learning a new language. There is a large demand to learn that new language, right? In that case, you could possibly use something like this, this kind of a business model, all right? Cool? Don't mistake it with a trader's kind of a model. This double whammy is different, get it? So, Zomato is like a trader's model. Even a real estate broker makes money from the buyer as well as the seller. This is different. This is where a specific skill is in demand and the guy is creating a training academy and at the same time, creating a franchised out store. So, that's not a typical trader's model. Get my point, right? Yeah? Otherwise, technically even a real estate broker is a double whammy, right? I'm not talking about that, I'm not. Javed Habib is outsourcing his labor from his own students, employees from his own students. Whereas Duolingo is crowdsourcing the labor force from people like you and me. Now, this is also interesting. NetJets is a company, means a lot of viewers. Go back about 20 years, they sell private jets, private jets. Now, who buys private jets? The rich and famous. Absolutely. I mean, for want of any nomenclature, let us call them 10 raised to 10 into super into rich. Being an engineer, mathematical nomenclature, right? So, say Ratan, Tata, Mukesh Ambani, et cetera. Now, these guys somewhere in the late 90s, early 2000s realized that, in the world, how many people exist who can afford to buy an aircraft on their own? Not many. So, their revenues were not increasing as much as they would have liked to increase, correct? It's a limited, very small market and it can expand beyond a certain point. So, they said, we need to re-look at the way we operate. So, they kind of did some bit of research and discovered that this 10 raised to 10 into super rich, there is a segment, which is say 10 raised to 8 into rich, a very, very affluent. Say, 10 raised to 10 is Mukesh Ambani and Ratan Tata. 10 raised to 8 into rich is maybe, you know, Harsh Mariwala of Mariko Industries or maybe a Kishore Bihani of Future Group or some people like that. And now, why do people buy an aircraft? It's not just status, right? It is because these guys are really busy and they cannot really afford to wait for the commercial airline's timetable. They want to fly at their back and call, agreed? Clear? So, even these 10 raised to 8 into rich varieties are also equally busy. But they don't have the kind of cash flow in their business that they can, you know, suddenly pull out 300 crores from their business and buy an aircraft. But they need the aircraft. Get the understanding of the market. The need is there, but the means are not quite there. So, these net jets fellows said that we are losing this market. Can we tap this market in an interesting manner? So, they came up with a scheme of fractional ownership in the sense that they would kind of approach, say, five people from the 10 raised to 8 into rich segment. I come to you and ask you, was, okay, you can't shell out 300 crores in one go. How much can you? Somebody says 65, somebody says 70, somebody says 55 and totally 300 crores, all right? And I sell you that aircraft in that proportion. You own that aircraft in that proportion and the number of flying hours that you get per year are distributed according to your ownership. All right, clear? Now, is there a problem with this model? There could be overlaps. Yeah, I have to find a solution for that. I have to give you another aircraft to fly so that your schedule does not get upset, all right? Now, suppose, now this fractional ownership model may, it is not only one group that I have sold one aircraft to. I have sold 300 other aircraft to 300 other groups. Now, from an entrepreneur's perspective, how can you simplify your operations? Instead of having six, seven different types of aircrafts in that fleet of 300, what if I introduce a common aircraft across all the 300? You want to minimize your hassle but you want to give the best customer service, correct? That's what Indigo also did, no? Indigo, what a same type of aircraft. So they got less maintenance, less inventory, less pairs. Absolutely. Yeah, so now with a common fleet, first of all, what is the benefit for you as net jets? Suppose I had a fleet of 300, which had 50 beach crafts and 70 Cessnas and some 100 Dorniers, et cetera. So I will be dealing with three companies for procuring my aircrafts, right? Instead of that, if I'm dealing with only one aircraft company, aircraft manufacturer, and I am negotiating for 300 aircrafts, where will I get a better deal? That will be the better deal. Obviously, bulk negotiation is much easier and 5% saved on aircraft purchase is huge, right? Expensive asset, so that's one benefit. Secondly, as Professor Chakravarty mentioned, maintenance costs when the fleet is uniform goes down. Even cost of maintaining the pilots. Now, these net jets fellows said that gave the offer to these fraction owners that, guys, you don't worry about the pilots. You don't worry about in-flight crew. You don't worry about any kinds of inventory or any kinds of maintenance of the aircraft. We will do the maintenance group of pilots. We will maintain in-flight crew. We will maintain your aircraft, ground maintenance, everything we'll do for which we will charge your service fee. Fair model. These guys don't have to maintain any pilots, nothing. Now, with this model, they cracked open a market segment, which was not looking at them earlier, that 10 raise to eight variety. So, if you are kind of introducing some expensive products in the market, maybe fractional ownership can be looked at and it's not just fractional ownership, but down the line, the entire business model needs to be thought through, right? All the operations, et cetera. Everything needs to be thought through very clearly. Got it? Another one, this is interesting. Xiaomi phones. How did they launch in the market whenever, seven, eight years back, how did they launch? 100% online. No physical stores, right? Because physical stores means you have to have wholesalers, distributors, retailer, and at every place, you have to maintain certain amount of stock. So, there's 100% online, your stocks can be managed better. Another thing they introduced was this flash sale business, flash sales, two-minute window. Today, they will announce on 31st December, our new model will be launched at 12 o'clock and that sale will be over at two minutes past 12. Got it? That's how they launch, no? Flash sales, yes? Now, look at the advantages in terms of the business model, so to say. When today I announce, suppose I'm Xiaomi, I announce my product will be available on Amazon and Flipkart on 31st December between 12 o'clock and 12, two past 12, which means I have made Amazon and Flipkart as my partners in the promotion, equal partners in the promotion, correct? So, naturally my promotional expenses of Xiaomi also get reduced to a certain extent, correct? That's one. Then, at the time of the sale, to catch that two-minute window, a lot of people stay locked in three, four hours in advance to catch that two-minute window. Now, that means there are a lot more eyeballs on that platform of Amazon and Flipkart in those three to four hours. Because of excessive footfall and excessive eyeballs, their banner advertising rates on the platforms get spiked up tremendously. Why have the banner advertisement rates got spiked up because of Xiaomi's two-minute flash sale? So, these spiked up or additional revenue streams which come because of the additional revenue that comes in because of the bumped up advertising rates gets shared with Xiaomi also, because Xiaomi is the cause for these rates getting spiked up, agreed? Yes. Which means Xiaomi has saved on their marketing promotion activity in the beginning by making them partners by Amazon Flipkart partners. Plus, this additional bumped up advertising revenues also shared because of which now you realize why Xiaomi is able to sell an equivalent Android phone as a Samsung Galaxy, whatever, whatever, at probably 60%, 65% of the cost. Get it? So, what did Xiaomi do? They created a perceived shortage in the market. Our goods are available only for two minutes. So, it's not just a marketing gimmick. It's a whole business model structured around creating a perceived shortage, get it? Now, this is a tech company. Let us look at some brick-and-mortar company like Zara. Zara has a 90-day fashion cycle. In 90 days, the fashions change, correct? That's how they run. Now, that is also creating a perceived shortage. There is a study by, you know, there is this agency called Fitch FITCH which publishes a lot of reports on the retail industry. A couple of years back, I remember reading a report by Fitch which said, in Europe, a loyal customer of Zara visits a Zara store 17 times in a year, one seven, 17 times in a year. And who is Zara's competition? Marks and Spencer, H&M, et cetera. Loyal customers of these, Marks and Spencer or H&M, et cetera, visit a Marks and Spencer store on H&M store only seven to eight times in a year as compared to a loyal customer of Zara visiting their store 17 times in a year. Plus, when you or I go into a Zara store and we know that something that we like, suppose we like some piece of, some t-shirt or something or a shirt or something like that. And at the back of the mind, I know that when I come later, maybe 90 days later, this may not be available. So I have a tendency to pick up maybe two in different colors instead of one. Get it? See how that perceive shortage thing creates a completely different revenue stream, a multiplied, the bumped up revenue, et cetera, et cetera. And what they smartly do is the 90 day cycles are not matched everywhere in the world. Whatever is kind of remaining unsold in Europe comes to Asia for the next 90 day cycle. Then goes to Africa. Get it? So now that's what I'm saying. It's a very planned structured business at play. That's the significance of the business, how we think through the business model. And this is not just gimmickery. Zara has perfected this over the last 40 years of their operations. 90 day fashion cycle is not easy to manage, right? So their whole business is based on that. So that's how business models can differentiate you from competition. All right, so I've just shared three, four traits of business models. More maybe you can read up. I have listed out in my book also. If you get time, maybe you can explore that. All these three, four traits I said are about being here in the sweet spot. How to bring your venture in the sweet spot, right? And remain competitive, remain unique in the way you're operating, and possibly beat competition, all right? Competition is going to copy you. So you need to constantly struggle to reach, to remain at the sweet spot. But these are some of the traits that one can experiment to kind of be there, all right? So that's one thing. Now, as I said earlier, is there a framework? I told you these four, five stories, examples, fine. But is there a framework that one can ask oneself when you are trying to create a venture? How can you create a unique and a sustainable business model yourself? So I have these six questions, which if you constantly keep asking yourself, you can maybe differentiate yourselves on the basis of a business model, okay? Let us look at question one. How do we reach the customer? How do I reach the customer? Look at the wristband guys. They reach the same customer in a completely different manner. Instead of manufacturing, they went the cloud platform model. So that's the answer. How can I reach the same customer? I have identified customer discovery, who I actually have identified a need. Will I enter the market the same way that my competitors enter, or should I try to do something else? Can I use some different technology to reach the same customer? Can I use some different channel to reach the same customer? Got it? Next question, how do we optimize our operations? Let us look at Javed Abhim. Did he optimize his operations? By creating that double sided, double whammy business model, he was able to provide labor at practically zero cost. And it's a closed loop kind of a model, right? No outsider can get entry there. Plus the employee is actually paying me a fee to get trained. That's quite optimized. And so this fellow, if you remember, he entered the market in 2005 or six or some time. Other equivalent salons would charge something like 150 rupees a haircut. Whereas this fellow entered the market at 99 rupees a haircut, better quality, low price. So you need to optimize your operations to be able to manage that. Duo-Lingo, same thing. By the crowdsourcing model, they were able to minimize their costs of translation to such a low price that nobody can really beat them at that cost, right? Plus smart use of technology also. Intelligent algorithm to stitch up the docket, right? So crowdsourcing is another way that you can optimize your operations. NetJets, by standardizing their fleet, they optimize their operations. Got it? In the Javed Abhim model, when it was his skill set that he put across and used his brand to optimize his operations. He also, in a way, in the long run, saturated the market in a way because there were also people who copied his model and then it made him go out of the limelight a little bit. So as a business, if I'm looking at such optimizations and if there is a potential threat to my own business in a way where it's getting copied and it's getting multiplied in ways that I cannot control, then how is it benefiting me in the long run? All right. Now, first of all, let us remember one thing. If you introduce something good in the market, it is going to be copied, correct? Yes? Absolutely. Why is it copied? Because it is doing well, correct? Right. If it is not copied, then there are only two possibilities according to me. Either you are technically, technologically very, very superior to everybody else or you are the only fool in the market who continues to be in the market where there is no market existing, where competition doesn't think there is a market. True? So competition is actually a good thing, no? That's a classic case of not staying in a sweet spot and thinking that, once I model business, then lifelong success is guaranteed. It never happens like that. Get it? So you constantly have to explore to always remain in the sweet spot. And what are the questions that you need to ask constantly? These are six questions that you need to ask constantly to remain in that sweet spot, get it? So shall I go to the next point? How do we source our manpower? Right? Let me again go back to Duolingo. How did this source their manpower? Crowd sourcing. How did Javedabib source his manpower? Training Academy, right? How does an Ola or Uber source their manpower? Freelance drivers, right? Freelances. Now, because it is a freelance model, their fixed costs are practically zero. It is purely a variable cost. Driver will give as much money as he drives. So it is linked to the revenue that is generated. Smart way of sourcing manpower. Crowd sourcing by Duolingo. Smart way of sourcing manpower. IKEA also, IKEA. IKEA, by the sheer number of designs that it comes out with, they must be having a solid big design team sitting in Sweden. That's the impression, yes. Now, the kind of designs, the number of designs that IKEA churns out, one can imagine they must be having a huge design team sitting in Sweden, possibly, right? That's the impression. Now, a designer in Sweden, Europe, probably the fifth or the fourth most expensive country in the world, Sweden. If you have a team of 200 designers sitting there, it's gonna be a big cost for IKEA, correct? So how does it source? It has a constant competition that is rolling on their website. For designers from the world to upload their designs, right? Which means they are once again converting their fixed cost into variable costs. Yes or no? Yeah. Manpower, the designs which are coming in large numbers and anybody who wants to have his or her design in the IKEA catalog, anybody and everybody wants, a wannabe designer would want. It's a big thing on the CV of that designer, right? So they attract good folks around. So that's the way they source their manpower. Plus, interestingly, by the DIY model, do-it-yourself model, what has IKEA done? They have been able to eliminate a lot of their back-end carpenters and fitters, right? Who is their labor? The customer, itself. We are their manpower. So that's a smart way of sourcing manpower. And that's also the power of design. Everything is standardized. Any donkey can assemble an IKEA furniture. So they have simplified it, dumped it down to that thing, right? How do we source our inputs? What are the inputs required for the business? Say, Ola, Uber, what is the main input? Vehicle. Vehicle is the main input for their business. Where do the vehicles come from? How do they source the vehicles? Freelance manpower brings in their vehicles. So it becomes an asset-like model in normal terms. Asset-like means I don't invest in physical assets. I source assets and I kind of become an aggregator. So there's a smart way to source inputs, right? How many creative ways can you source your inputs? Ask yourself that question, all right? What kinds of tie-ups should we seek? What kinds of tie-ups should we seek with the customers, with the vendors, with the suppliers? What kind of a tie-up does Uber or an Ola have with the driver? It's a very loose tie-up, no? There's no binding. You have to stay logged in for the whole day, 24 hours, nothing like that. Whenever you feel tired, you can log off. Plus, it is so loose that if an Uber driver wants to shift to the Ola app, that freedom is also there, then what is the kind of tie-up that MedJet's sought with its customers? There is a service level agreement also. We will provide you the service of maintenance. We will provide you pilots. We will provide you inside crew. We will provide you ground maintenance, all of that. For that, you give us a service fee. So that's a different kind of tie-up. Then how do we create an optimal product mix? Optimal product mix means maybe at the beginning, you are a single product company. But as you grow, you have multiple products in your portfolio. And all products will not sell equally. There will be some products which will sell more, some products which will sell less or something like that. And you can't take a decision purely on financial terms. A very crude example. Suppose you're running a restaurant. Your profit margins on butter chicken and paneer butter masala are high. Your profit margins are roti are not as high, suppose. Can you stop manufacturing roti? So there are complementary products. So you have to think about your product mix in an optimal kind of a fashion. Now, let us go back to this IKEA thing. IKEA operates in some 50, 60 countries in the world, probably more. And they are functioning across cultures. They're selling to different cultures. Now, their designs also need to be kind of match the cultural choices, preferences of various regions that they operate in. Now, because of this contest model, naturally, the cultural choices and preferences get embedded into their designs. Because suppose now IKEA wants to, say, enter some new geography. It will pick up designs coming from designers from that region to be included in their catalog. So naturally, that optimal product mix kind of gets embedded into their whole model. So these are six very basic questions that you need to constantly ask while you are thinking about your business model. In fact, not just while you're thinking about your business model, I think all through the life of the venture you should ask these questions. And if you constantly keep asking these questions, if you can get answers which are different from what your competition is doing, then you will be able to create differentiation based on your business model in the market. Get it? All right, cool. Having said all this, now let us come to your Lean Canvas. Now, just one or two subtleties that I want to bring in to this Lean Canvas are customer segments, listing down your customer segments here, then identifying who the early adopter is. I just want to bring in one small nuances into the whole thing. When you're thinking about your early adopters, who are your early adopters? How have you determined your early adopters? People who are in dire need of the product and they don't want it, but they need it. All right. Dire need and who are willing to experiment with the new product, correct? That's a classical definition of any marketing book will tell you. Dire need and willingness to experiment, correct? I'm putting you all into a real situation. Suppose I am manufacturing rainwater harvesting systems, who are my customer segments? Those ones which are where the little water, where it will be like Chennai, Chennai is desperate for water, so... Industry, manufacturing industry especially. I would pay a huge amount of money, water consumption industry. Huge consumption and they pay commercial rate for water. So they will face a lot of expense for water, manufacturing companies, right? By default, I am saying housing complexes, then commercial institutions, hotels, hospitals, blah, blah, blah, yeah? Farmers who have tie-ups with MNCs like McDonald's and are growing cash crops. All right, all right. So these are now my possible market segments, right? Out of them, who will be my early adopters? Now I have to narrow down between the two. As a startup, I possibly can't focus on all market segments. So I have to determine my early adopter, right? Now, out of manufacturing companies and house owners, I have to decide, you have to take a call, right? That's my early adopter, I have to decide today who I will focus my promotional marketing efforts on, who is more experimentative and who has the money to spare to experiment, correct? Manufacturing companies possibly. Now, let me put a slight twist in the story. Suppose I live in a commercial complex with 810 buildings. Each building is probably about 15, 20 stories high. And my father sits on the managing committee of this housing complex. And the housing complex is thinking of the water harvesting system. As a startup, who should be my earlier adopter? Manufacturing company or... I think housing complexes, because even if we take a little bit of money from everyone who's living in the building, it could generate a large amount. Plus, because I have a decision-maker sitting on that building. Yeah, that's a low-hanging fruit. So, from a startup perspective, doesn't this become my... Should this not be my earlier adopter? From a practical perspective? It would be easier to crack when you're approaching the house owners. So, if you think like a startup, I will go with housing complexes because getting that order might not be difficult. And I also see that there are 10 other complexes around where I stay, each with 810 buildings. If I prove my concept in this, that market is waiting for me. Now, if I were to go very theoretically, I would say, no, no, manufacturing companies is my early adopter. But to develop that market, it will take me six months to a year to be able to exploit that market, correct? So, in your ventures also, please take a call based on your reach and the practicality of the situation. Don't just go by theoretical definition, all right? So, that's just one thing I want you to think about when you fill out your lead canvas. Fair enough? As a startup, you want to kind of en-cash or you want to generate cash flow soon enough because we are not sitting on piles of cash. Like Anambani will sit probably, he'll make losses for five years, he won't care a damn about it. And later six years, hence he will think of cash flow. We are not in that position as a startup, agreed? Okay, then you have these three problems to be listed out, Pogara. Then for those three problems, what are the existing alternatives? Who's the competition? How are customers solving their, these problems as of now? How are they solving it? Okay, clear. Then solutions for those problems, taking into account these existing alternatives also, correct? No need of going deeper in that, right? Already done. Now comes the channels part. Now here is somewhere I feel a little more of detailed attention should be given. What are channels? According to me, there are three types of channels. First type of channel is, how will you take your product or service to the customer? That is, what is your sales channel? How will you ensure delivery to the customer? How will you ensure trials of your product before delivery? Important? You have to ensure trials unless people are enabled to try out your product, they will not buy it. And after having bought it, if they are not satisfied, are there any channels that you are thinking about returning the product or service, correct? Second, what will be your marketing channels? That is, how will you generate awareness? How will you ensure discovery of your product? How will you ensure engagement of your customer segment with your product? How will you capture feedback from them? How will you enable them to evaluate your product? So awareness means, do I go via Instagram, do I go via social media, search engine optimization, SMO, SEO, all that kind of stuff. Discovery also is a similar thing on what channels do I use to enable my customer to discover me? Do I go print media? Do I go TV advertising, blah, blah, blah, all that kind of thing. Engagement with the customer segment, right? Engagement can be created in interesting ways in the sense that a bullet infield, they have these clubs of infield owners or Harley-Davidson owners. Does the company spend any money on that? No, sir. No. But that's a classic case of voluntary engagement with the brand because these groups actually do a lot of promotion for you. They will go to Ladakh and say, oh, proud owners of bullet infield, they will flash pictures all along media, et cetera, free promotional activity. Engagement, that's how you create engagement. You create competitions. You create competitions for people to kind of participate free of cost publicity, plus engagement with customers and virality, assume, worry, right? How do you capture feedback from customers? That also, you have to think about the channels also because feedback is very important. And feedback channels where customers can give anonymous feedback, even better, right? Get honest feedback, right? Next third type of channels is how will you make your customer pay? Will you have a subscription model? Will you have a lease model? Will you have a pay-as-you-use model? Will you have a pay-per-use model? Pay-as-you-use means as the customer is like a typical SaaS model, software as a service, cloud models. Pay-per-use is typically subscription models or pay-per-use is like a, if you take a public transport from A to B, you are paying per use. You're not paying as you, but if you take a taxi from A to B, you are paying as you use the number of kilometers traveled, right? So how do you make your customer pay? You could have a combination of these channels. So don't read channels just as, you know, means of reaching out, but think of channels in these three perspectives. You'll be able to get deeper into your business model, all right? And then it is about the metrics, key metrics. This also must have been discussed. Metrics are those performance parameters, which will help you track your business, whether I am successful, am I on the right track or not? So what are these types of metrics? One is your revenue metrics. Am I meeting my revenue targets per month, per quarter or whatever? Then is customer acquisition metrics? How many customers that downloaded my app actually bought my services? So that's acquisition, right? This could be in terms of reach or conversions. How many hits did my page get? How many comments or how many likes did my post get? So these could be metrics to kind of check out customer acquisition, right? And of course, there are operational metrics. That means what is the level of inventory I'm maintaining? Am I maintaining my costs under 20% of the selling price or not? So these are basically parameters that you need to keep on monitoring to remain in that sweet spot. Remember that sweet spot? So what are the metrics that you need to constantly monitor to be able to remain sustainable at all times and be on the right track at all times, right? These were some nuances which I would like to add in the lean canvas. Otherwise, revenue streams, cost structure, fixed cost, operational cost, all that must be already clear to you guys, right? So I'll just repeat. Choose your early adopter properly. Think about channels in these three different channels, three different channels. Think about them in those ways. And as far as metrics are concerned, once again, three types of metrics, revenue metrics, customer acquisition metrics, operational efficiencies, and if there are any other metrics which are specific to your business, all right? As far as the lean canvas is concerned, these are my inputs. And I'm sure you will know that the lean canvas is created only for one customer segment at a time, right? You will, that means the number of customer segments that you are targeting, those many lean canvases you will generate, correct? All right? Now, which means one lean canvas per customer segment, right? Then combine all the lean canvases into one business model canvas, which is the business model canvas, all right? Now, listing out all the customer segments from your various lean canvases, what kinds of relationships do you have with each of these customer segments? That means maybe some customer segments you have a subscription model with. Some customer segments you have a paper use model. You have to combine all those lean canvases into this, right? What is the value proposition for each customer segment? Is it different for different customer segments? So list down all the value propositions here, get it? The channels through which I take the value proposition to the customer segments once again, to be picked up from these channels here, these channels, yes? And combined into this column here, get it? So if you have written down customer segments using different colors, say customer segment one in red color, customer segment two in green color, corresponding entries for relationships, value propositions and channels, green, red, blue, just use that kind of combinations, all right? So it helps you differentiate, got it? Now all this side is done, revenue streams again, cost structure same, combined from different customer segments, right? Now comes this side. To do all these things on the right side to create this value proposition, what are the key activities that you need to perform? What are the key resources that you will need? And who are the key partners that you will need to tie up with? That has to be listed here. Key activities means to say, manufacture XYZ, that's your key activity, setting up a manufacturing plant or tying up with an XYZ source to get it manufactured. So, or I need to promote my product through these channels. So a key activity is creating a proper media plan, social media plan, digital media plan, et cetera. So that's your key activity. Key resources that I need to make this happen. To distribute my product, do I need to tie up with retailers, wholesalers, distributors? To set up a manufacturing plant, I need to identify certain resources that I need to tie up with, et cetera. So basically everything that is required to build this value proposition, right? And key partners means who will you tie up with? Which are the distributors that I will tie up with? Which are the wholesalers that I will tie up with? Which are the e-commerce platforms that I will tie up with? Which are the payment getaways that I will tie up with to enable this payment, these things here? If it is a paper use model, if it is a subscription model, I will have to set up payment getaways and various mechanisms to make it happen. I will, as we looked at, you know, Xiaomi tying up with Flipkart and Amazon. So that Amazon Flipkart become a key partner here. So all these three blocks get dictated by what you do on the right side here. Get it? Now, the business model canvas is of Karnika use kya hai? It kind of depicts your business model on one page. Suppose you are pitching to an investor or pitching to your mentors or pitching to your bosses in a corporate environment. That person doesn't have time to go through multiple lean canvases, right? So this is a tool to visualize your entire business model and depict it on one slide, one single page, single paper. So it's a communication tool. But the lean canvas is more of a tool that enables you to think, right? Get the point? And these questions are really, really the ones that make you think. And those answers that you get, that you can fill up the lean canvas with. Answers to these questions will dictate what you fill up on the lean canvas. And you will combine all of that into a business model canvas. Get it? Yes. So understand, don't get scared about what is a business model canvas. According to me, it's a simple tool which graphically puts your business model on one page and enables the audience to understand it in one glimpse. Lean canvas helps you get into each customer segment deeply. And these questions really make you think about how you should structure your business. So sequence should be first ask these questions, then construct lean canvases for different customer segments and then combine it into one business model canvas. And also when we do a startup, we actually look at one customer segment very closely, do the startup and then go to the other customer segments, right? Yes. So that you at least get to know one very, very closely. Yeah. And also we have a limited resource as a startup, right? We can't possibly carpet bomb. Multiple customers we can't handle, yeah. Also, do we see any one canvas from the students if they have made one lean canvas? Any of you want to share your lean canvas with Kaustubh and one poly volunteer? So basically, sir, when we took this customer consumer feedback and also the target user feedback, so we got to know the maximum of the buying of the backpacks for the kids are happening through a retail store only. Not many people are going for an online thing and there are a lot of reasons for it also, why they are not buying it through online platform. And also there is a lot of confusion regarding the size of the bag. What is the size that actually fits the child when it's carrying? So what we did, we tried to focus on the consumer group that is from three to 12 years of age of a kid, but that will include your play group to fifth class standard students that we tried to target right now. And then accordingly, when we came to this level with consumers are not much aware what quality and what size is actually, we go for the kid. And then mostly go for the aesthetic and the price of the bag. So our problem statement was like, he's making something because there is no suspecting regarding a particular and what happens when you see the online platform also like Amazon or a Flipkart. So there is no particular dedicated platform where they can actually get the right information when they're buying the back from online also. So what happens if a bag is there? So they can't tell, actually you can keep five to 10 notebooks into it. There is no image such that they put any image, they don't put any image like that, which shows that they can carry, they can put that much number of books or it can be organized or what is the fit? Actually, if you see the height ratio of the height and the bag ratio of a kid. So that also that image is not there. So it becomes very tough for a consumer to imagine that thing. He has got to be the right size and what will be the right bag for their kid. And usually what happens, most of the buying are done by the mother itself. Mothers are more involved in buying the bag. So our solution was making a dedicated platform that is actually dedicated for a bag only, bag bags only. And with the certain, like a quiz like a filter where if somebody enters into that website or a platform, they can actually, it will go like a quiz. How, what is the age of a kid? It's a male or female or what standard they're studying, what is the color they like. Like that, when they will come to a conclusion, when all the questions will be answered, then at the end of that quiz, we will try to focus on that four or five bags that fulfill that customer need. And accordingly, what we can do at the down, when you go down in the website, you can show the competitive analysis, what different bars are available in the market with the same price, mattress, and how, when what, there are 13 parameters through which you can decide, there is a material, then there is size, then there is a functionality of the bag. So all these parameters can be set into it. So they can see, if you see Amazon Play when you go to buy a laptop, when you scroll down, it'll show what different type of laptops are available in that range with a different brand and what features it contains and what which it doesn't contain. And also one thing is that came to our mind, there is no end product of the bag. So ultimately, what happens when the bag lifecycle gets over, you tend to throw it. So there is no recycling at such happening in it. So we came with this thing, you can give us a bag that you don't want to throw it or something like that. We will recycle the bag and with that thing, we will give you a reward point accordingly, you know? And with that reward point, actually you can buy more bags from our platform or if you refer that thing at the same time, you can get more reward points accordingly and you can buy more bags of it. So that will also give us sense of, you know, a full-tillness that, you know, okay, that bag has not given somebody, it has been recycled in that cycle. And- There are no problems, you know, Gaurav? What's your core problem you're solving? Is it the buying experience you're solving or is it the- I'm buying experience. If you're solving a buying experience, you're making a, you know, that's one, one story, you know, because though- Yeah, yeah, yeah. I mean, the problem statement, take them clarity has to be spot on. Otherwise, many a time what happens is a typical product market fit we are not able to achieve. And close to, I think, some research I was reading, some close to 40, 45% of the startups fail because they haven't got the product market correct. So Kaustubh, thank you so much for this very, very wonderful, you know, like, you know, with examples, it was really nice. And thanks for such a nice session. Thank you so much. Good night. Bye. All the best. Love you.