[MUSIC] Welcome back, everybody. It's time for Module 7. And in this module, we're going to do a few really important things to help the learning for the entire course stick, and to get you started on implementing one of these models in the business you're running or currently planning or hoping to get underway. But first, there's a key question I always get asked. Can you do this for every startup or every business? So let's turn this into a little quiz. Could the customers fund a new restaurant startup? Could they fund a biotech business, seeking a cure for pancreatic cancer? Could they fund a new electric power utility to build a dam and a hydroelectric power plant? What do you think? Well, you might think you'd need cash to start a new restaurant, to buy all the equipment and all that stuff. But there's one guy I know who didn't. What he did, he was a chef who worked at another restaurant and he got to know his customers and he wanted to open his own restaurant, but he had no cash. So what do you think he did? So he went around to his customers and he said, I'm going to open my own place, but I don't have any money, so I'd like you to do the following. Would you buy ten dinners for ten good anytime in the next year? And people would buy those dinners for ten and give him the cash for those. They'd get a 50% discount on the meal, when they eventually showed up. And that was the cash he needed to open his business. So could you do it for the other two alternatives? You know, probably not. But who am I to say no? So sometimes you can get customer commitments of one kind or another. Even if not payments, you can get customer commitments, that then let you borrow or raise money from a bank or an investor, with those commitments in hand. Or maybe you can get a future customer to agree to buy the power output from your future hydro plant? Who knows? And with that commitment, maybe you can get a banker to give you most of the money you need to build it. So you never say no, that I can't do it with my customer funds. So putting the customer at the center of your thinking can do many, many good things. Next, let's review what I promised you we'd do way back in the introduction of the course, to make sure I've delivered. Number one, I said I'll give you the preface to the customer-funded business. And I hope you've downloaded it and read it. If not, do it now, it's still there. And I hope it inspired you, frankly, to get a copy of the book as well so you really get more depth then we have time to do it here. I told you we'd do stories and interviews with people from around the world, and we've done that. I told you you'd get some inspiring examples including companies like Budgetplaces and Funovation and Aiken Wines that are not in the book. I told you you'd have some insights from both investors and entrepreneurs. And I told you I'd give you some additional things to read. You don't have to have read them, but I hope you've read those that interested you. And I said we'd do some activities, some assignments to get you working with these ideas, not just listening. And last but not least, I said we'd do a final module to address some of the challenges you're going to face in putting these ideas to work. So let's get started on that last chunk. First, as you now know, there's an entire chapter eight in the book that deals with three issues. When to use each of the models. How to use each of the models. And the pitfalls you're likely to encounter. There's more there than we can cover here. So if you've got the book, you're going to want to read that chapter now if you've not done so already. Second, customer-funding your business means putting your customer at the center of your thinking. With this in mind, a good place to start thinking about the challenges you'll face in putting these models to work is to think about the challenges your customer has in his business if you're B2B, in his life or his family or whatever if you're B2C. That's going to lead to a few questions that I suggest you ask of yourself first, and then of some customers, once you've done that. So first, what groups of narrowly focused buyers and sellers could you match together who you know need one another? Second, why might it be in your customer's interest, their interest, to pay sooner? Paying in advance. I don't mean discounts, I mean real benefits, like getting something special like free delivery and other benefits in Amazon Prime. Third, for what might customers be happy to subscribe? Fourth, why might a subscription be better or easier from them, than buying what they need in the normal way they buy it? Fifth, how might you introduce scarcity into your business idea? Sixth, what service might you bottle as a product and change a service into a product? And then finally, why might it be in your supplier's interest to give you longer terms? You're going to need that for all models. Well, they might be interested in doing that because you're going to prove to them that you can grow your business with them over time and that your credit is good. Now, last I want to remind you that your Plan A in all likelihood is not going to work in the manner in which you planned it. Peter Drucker, the greatest management thinker of the 20th century, said this about Plan A. If a new venture succeeds, more often than not it's in a market other than the one it was originally intended to serve, with products and services not quite those which it thought it was going to sell, bought in large part by customers it didn't even think of when it started the business and used for a whole host of purposes besides the one for which the products were designed. So, what should you do? I think what you need to do is treat your initial business idea as a series of hypotheses and proceed to test them methodically. There's a wonderful book by London's Rob Fitzpatrick, a tech entrepreneur, called The Mom Test which offers great insights in how and how not to talk to customers so they don't lie to you. As Rob says on the cover, we all know we're supposed to talk with customers, but nobody seems willing to admit that it's hard to do it right and it's easy to screw up. Are you ready? Let's go. [MUSIC]