Revenue

Each thing we make will be purchased by as many customers as possible.

The right side of the Business Model Canvas concerns customers: those who want, use, liaise with, or pay for Humaginarium. The cornerstone of the right side is Revenue Streams. Accordingly, everything we believe about customers must boil down to income.

That isn’t how we think about customers when designing for them. We think instead about their practical needs, the experience they’ll have with our products, what they’ll learn, and how that may nudge them to wellness and a better way of life.

It’s tempting just to think that way about design and not mind the cornerstone. “If you build it, they will come.” Maybe that works in a field of dreams, not so much in a marketplace.

So, separate from what we’re doing for customers, we’re deciding what customers must to do for us. We’re sorting out a web of branching revenue streams so that we design more carefully to sustain them.

The branches so far look something like this:

  1. Customers who pay to play. These are consumers of entertainment who pay nothing to start, but then buy subscriptions or features or feeds that enhance their satisfaction.
  2. Customers who pay to learn. These are patients or students who pay nothing to start, but then buy subscriptions or features or feeds that reinforce their therapy or study.
  3. Customers who pay to connect. These are medical product or service providers. They buy ads, product placements, or patient referrals in order to build their businesses.
  4. Customers who pay to collect. These are researchers. They pay for data analytics generated by users of our games, to track consumer choice and behavior.
  5. Customers who pay for content. These are manufacturers and institutions like medical centers. They pay for branded content that introduces products and services to patients.
  6. Customers who pay to advocate. These are organizations that make program-related investments. They pay to sponsor themes, stories, or competitions in order to further their societal agendas.

We’re subdividing these six different revenue streams to reflect skinny customer segments; so that each individual and small group of customers can be optimally served with tailored benefits. At the same time we’re aggregating all six streams in one production path, so that each thing we make is purchased by as many different customers as possible.

Positioning

Like everything we’re doing right now, the elevator story will be tried on hundreds of people.

When we have seconds to say what Humaginarium is, what is it? The answer must be straightforward and intriguing, and elicit a response. Ideally something like, “How does it work?”

Humaginarium still needs an elevator story, but doesn’t have to write it on a blank sheet of paper. There’s a template and it goes like this:

For (target customers) who (have certain needs), the (product name) is a (product category) with a (compelling reason to buy). Unlike (competitive alternatives) our product (is different and better).

Filling the blanks of that template is surprisingly difficult because much of what we think must be left out. No room! The little that gets in has allusive meaning that stirs the imagination and doesn’t cotton to analysis. For that reason an elevator story is a little like poetry.

Few people can write good poetry, or understand it for that matter. Nonetheless we go where angels fear to tread: into the Shark Tank. Here’s what we have so far:

For adults 18 and older who worry about medical unknowns, Humaginarium is video games that increase health literacy and self-awareness; making people good stewards of their bodies. Unlike ordinary entertainment and education, it nudges people to wellness.

Not great, but not too shabby. Like everything we’re doing right now, the elevator story will be tried on hundreds of people from all walks of life. It’s not positioning per se, but a starting position.

Mature

Who the customer is, that’s a much harder question than how something works.

A proverbial stumper for startups is this very basic question: Who’s your customer? After all, the world has managed to turn well enough without your newfangled technology. What if the thing you make isn’t all that useful and worthwhile? Since it didn’t exist yesterday and nobody’s clamoring for it, are you sure of even one customer?

Humaginarium is pretty sure we have hundreds of thousands of customers. Not somewhere on the other side of a blue ocean, but here and now. Whose needs are undermet and whose goals are underachieved.

Our customer is an adult over 17 years old, healthy or not, any gender and ethnicity, any income bracket, any nationality and community. Among  billions of people worldwide who fit that description, our customer is one who plays video games online or downloaded to a device. Our customer has to have at least one modern device, electricity, reasonably fast Internet, and access to Amazon or Google cloud services. He or she can have any level of education but can’t be dumbass stupid. Simple, yes. Dumbass, no.

If you step back and consider these parameters, it’s clear that our customer is “mature.” The Entertainment Software Rating Board uses that word for consumers who are not easily bored by intense violence, blood and gore, sexual content and/or strong language. This is odd because those kinds of people are immature by Humaginarium standards.

Mature for Merriam-Webster and for us means having mental and emotional qualities of an adult, of being fully formed as a human being, and still developing to a desired level. That last clause is crucial, because our mature customer is not done with life no matter how old or impaired. He or she is still learning and yearning.

Maybe the reason why many technology entrepreneurs are stumped by the customer question is they’re makers and doers, while those who know customers are are observers, people who ask questions of others, empathize with them, care about them, make connections and reach fond conclusions about “them” rather than “us.”

Who the customer is, that’s a much harder question than how something works. We’re on it.

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Scientific entertainment. Variation on The Reading Girl, by Theodore Roussel

Free

People say they’ll pay nothing, but in reality they pay, almost always with cash.

As Humaginarium develops a pitch to investors, a pre-money valuation, a robust business model, a commercialization plan, even our first working prototype, we’re struggling to answer the thorniest question: What should we charge?

It’s about more than dollars & cents price. It’s also about intrinsic worth, comparable value, fit with lifestyle, emotional appeal, unique affordances, and practical utility. These facets turn price into kaleidoscopic chimeras: none is fixed, each part depends on the others for reckoning, and all lead to the frightening concept of “free.”

Free of charge is frightening because we can’t make Humaginarium for free. If we give it away, we’ll need other ways to pay for it. The obvious way in the digital “freeconomy” is advertising. That’s of little use to a startup because advertisers require a mass audience that takes years to grow; and because advertising tends to undermine the credibility of mission.

Let’s not forget that our products develop insight and skills related to health. Can they do that honestly if we’re hawking snake oil in the margins? That’s what I asked when I learned the business model of Outcome Health, Chicago’s first unicorn. Don’t get me started.

Ask anybody what they would pay for Humaginarium and the answer will likely be “nothing.” Even if they like it, appreciate its benefits, recommend it to others, want to play it endlessly, they’ll still say they want it for free. Accordingly we should charge customers nothing and make money in other ways, like selling user data or product placements.

Yet there’s another view of economic reality. Consider:

  • Humaginarium makes entertainment. Consumers pay for entertainment. Try streaming from Netflix for free and see what happens.
  • Humaginarium makes education. Consumers pay for learning. Try enrolling in the School of the Art Institute of Chicago for free and see what happens.
  • Humaginarium makes therapy. Consumers pay for counseling. Try joining LA Fitness or Weight Watchers for free and see what happens.

Here lies the conundrum. People say they’ll pay nothing for things they need and enjoy, but in reality they pay, almost always with cash. When they don’t pay they wind up with sketchy customer experience. Facebook shows how that business model works.

Humaginarium is not sure how our thorny question will be answered. We’re working on it. The final answer may lie less in what we charge, and more in how we deliver.

Downloads

To prove that we’re actually going somewhere, for those who want to go with us.

The Peak Geek in the Head Shed is molding beautiful web pages from lumps of clay. Little lumps, because nobody’s going to spend hours reading about Humaginarium. Someday everybody may spend hours with our video games, but they’ll be playing and learning.

Right now there’s a downside to brevity: not enough space to tell a story. The website is for investors, business partners, and the media: people who want to work with us. A few who appreciate what we’re doing may want to know more. Will they have to call to find out?

Not at first. We’re attaching downloads to select web pages, so more details are available immediately online, without cluttering our virtual space. The downloads are:

  1. Analogs: companies and products that inspire our approach
  2. Evidence: research indicating our approach works
  3. Framework: concepts that organize our technical innovations
  4. Prototype: how things actually work in the first instance
  5. Business Model: how our company is set up to deliver
  6. Commercialization: how we’ll do well while doing good
  7. Pitch: the elevator version, less than 15 slides
  8. Valuation: what our investors are buying into

Does everybody need to see this material? Not by a long shot. It benefits those who can use it. Us walking the nudge talk. It’s also there to show each other that we’re thinking things through, working things out, sure of our steps and direction, ready to climb the ladder when the roof leaks. There’s nothing like text to prove that we’re actually going somewhere, for those who want to go with us.

Catchwords

Science isn’t “hard” because of what it is, but rather because of how it’s learned.

Rhetorical chips are flying as we carve a new website and pitch. Some neatly express our world view. They crop up again and again, mushrooming like a mantra. Of course the chips are catchwords: a way to talk that’s a little different from the ordinary.

Our first catchword was the name of the company. Humaginarium is a mashup of three ordinary words: human, imagination, and vivarium. It’s where the human body is infused with fantasy (wishful thinking) and explored for pleasure, meaning, and utility.

Another catchword is nudge. The verb has always meant to push gently. Then economists coined a new meaning: to offer qualified choices. Lately Humaginarium has been saying “nudge to wellness.” In this usage it means to stir conation. Notice a progression here: first push, then choose, then desire. Our catchword takes the meaning of nudge to a more authentic and personal level, hopefully one that’s still easy to grasp.

Yet another catchword is scientific entertainment. Let’s parse that. Scientific means systematic observation and experiment leading to hypotheses. Science usually involves deductive reasoning: producing insight by means of evidence. So far so good.

Science may be cerebral and erudite, but more often it’s merely curious, logical, and persistent. This is a very important point that non scientists usually overlook. Science is not “hard” because of what it is, but rather because of how it’s learned.

In contrast to scientific, entertainment tends to be downplayed as frivolous. It amuses and gives pleasure, helps pass the time agreeably. People like it, but they typically don’t get much out of it. They may even expect entertainment to be lazy and stupid, like some sitcoms, video games, and popular songs, but that’s not always the case.

Throughout our culture and over the course of history, entertainment is often intelligent and moving. There’s a reason for this. Entertainment is inherently artistic and art is among the noblest human endeavors. Take a stroll around the Art Institute of Chicago and see for yourself. True art is highly entertaining but rarely, if ever, lazy and stupid.

Scientific entertainment denies the polarity between serious science and frivolous art. It claims these are two sides of the same creative coin. They are complementary ways of posing questions and proposing answers. When we use this catchword, we mean that people can think more clearly and deliberately about the miracle known as human life. While they’re having fun.

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Scientific entertainment. Variation on Prometheus Creating Man in Clay, by Constantin Hansen

Mentor

Has Éowyn arrived on the Pelennor Fields?

Our first application for admission to I-Corps Phase 0 was stymied by lack of a suitable mentor. No more! The search was short and sweet, in the end yielding eight fully qualified candidates. As a group they have remarkable breadth and depth, like a faculty of Humaginarium College.

The challenge now is choosing just one mentor as we admire them all. Only one can join our team in the 2018 Summer Cohort of I-Corps. The others will become advisors if we are fortunate, because they clearly have a lot to offer. And they love our mission.

As we repaired the mentor deficiency, the Spring Cohort filled and closed. That was disappointing but, like most problems, there are silver linings. First, we learned more about the program than we knew before. Instead of basing decisions on assumptions, we grew to base them on facts. Second, we met a lot of terrific people in our search that we barely knew before if at all. They are likely to become colleagues and friends. Third, we formed and began enacting plans for the interval between now and the Summer Cohort in July. Plans include putting up our beautiful new website, writing and practicing our pitch, researching commercialization, and calculating a five-year valuation. These are vital to-dos that would have skidded off the highway if we had rushed into the Spring Cohort. Instead we are doing them well.

A fourth silver lining, by no means the least, is the discovery of women for the mentor role. Humaginarium at present lacks diversity, and we hate that. Now it looks like that’ll change for the better. Éowyn has arrived on the Pelennor Fields.