There are 3 phase of doing this market research: (We are in the phase 1)
Phase 1 : State Your Business Model Hypotheses
Phase 1 : State Your Business Model Hypotheses
Market size Hypotheses
Checklist
Do you have a large market?
Do you have a large number of active users?
Do you have a clear future-user growth in a market with rapid and predictable growth?
Do you have a the opportunity to attract active users / customers ?
Investors have 3 numbers to determine the market size
Where to find to estimate these numbers ?
industry-analyst reports
market-research reports
competitors’ press releases
university libraries
discussions with investors
discussions with customers
Units to estimate : units, dollars, page views, eyeballs, whatever.
Caution : These authors are just predicting the future which might be biased, some of whom might be running a hedge fund
Do we have a power to encourage switching? (like blackberry >> apple)
Barrier to switch :
Count only the switchable subset and beware of long-term contracts,
service contracts, and “sunk costs” like training or installation,
Multilayer market
“30/10/10” law posited by leading venture capitalist Fred Wilson.
Thirty percent of registered users and those downloading mobile apps will use the service each month.
Ten percent of registered users and those downloading mobile apps will use the service each day.
Concurrent users of a real-time service will seldom exceed 10 percent of the number of daily users.
Value proposition 1 : “Low Fidelity” MVP Hypothesis
Product vision
We aim to
Cred Vision
becoming a valuable network where members are able to build engagements and connections with each other. It looks to build a community of creditworthy individuals that can trade with each other and develop stronger networks, though it's clear from the reactions on Twitter that the company needs to become clearer about what it does
good life for creditworthy individuals, and the second was to incentivize good financial behaviour to expand the base of creditworthy people in the country. There were two insights that contributed to the conceptualization of CRED.
Risk of overspending (hard to budget)Multiple fees and interest charges
Having one credit card means paying one credit card bill, but having multiple cards means managing multiple bills, which can be more challenging.
While it is possible to set up automatic payments and direct debits to handle some of this for you, just one late repayment can see you slugged with interest charges.
And if you start missing payments altogether, you could find yourself looking at a default, which could prove devastating for your credit rating.
higher interest rate
cannot pay off balances every month, and interest payments quickly accrue. If cardholders make late payments or go over their spending limit, they may be subject to increased interest rates in addition to other fees or penalties.
Pick one distribution channel. You can add additional channels as you scale and grow.
6 ways of social media promotion
Customer Relationship
Checklist
The “Get, Keep and Grow” Customers Funnel in Web/Mobile (Figure 3.10)
2ways to get customers
It also includes a “viral loop” where early customers invite friends and colleagues to
explore the new product. Finally, not visible in the diagram is the fact that web/mobile startups can test tactics faster,
market less expensively, and reach out to far more customers than companies in the physical channel.
The test of “Get, Keep and Grow” activities during customer discovery is small-scale, exposing the “rough and dirty,”
or low-fidelity, minimum viable product to a modest number of customers, perhaps a few hundred or so, to gauge their
reaction to the business model (including value proposition, price, and product features.) Discovery explores which
tactics work and gauges initial reactions to the MVP.
Customer Relationship for Web/Mobile Channels (Table 3.3)
Emergencies, rewards and big-ticket items among top reasons for taking out a credit card. What are the top reasons you got your most recent credit card?
We are cloning market as we are cloning Cred which has been a major success in India.
This idea is already proved overseas and we are using this hypothesis that it would be a success, as the number of credit card users in Australia is relatively higher (prompting a greater number of users) and the credit card debt in Australia is very high as well.
Customers in Australia are not aware of any such market which helps them pay their credit card bills on time. So this will be a completely new market
What are the markets adjacent to us?
We are planning to :
Make a cooperation with leading credit card providers to launch credit cards
Partner with retailers(for the rewards part)
What markets will potential customers come from?
The credit card holder from these banks.
Details are found in customer segments
What’s the company’s vision and why will a lot of people care?
Provide better financial health by helping in managing all your credit cards at a single place with the option to pay their credit card bills.
How long will it take to educate potential customers to grow a market of sufficient size? What size is that?
It might take around a year to educate costumer about the initiation of our project (relatively depends on the scale of advertisement).
The expected size is the people who are way behind on their credit card bills.
The potential customers are ppl who are not using Credit Cards but we encourage them
How will the company educate the market? How will it create demand?
We aim to educate the market through advertisements and create demand by introducing a rewards program.
We incentivize people who are financially disciplined
Given that no customers yet exist, what are realistic sales forecasts for the first three years?
How much financing will it take to soldier on while educating and growing the market?
What will stop a well-heeled competitor from taking over the market once the startup develops it? (This phenomenon is the source of the phrase “Pioneers are the ones with arrows in their backs.”)
Look for a big investment (mainly for branding and promotions) so that, you can capture the market all at once and try to build a loyal customer base by giving them all the required facilities.
Is the product better defined as one that will re-segment a market or enter an existing one?
Although the aim of the company is to help in credit card management, it can enter into the field of providing credit cards by partnering with banks.
Key resource
Checklist
Key resources fall into four main categories:
physical resources
Two types:
company facilities
example : office space and company location (near mass transit to more easily attract lots of employees, in a city with great restaurants, etc.).
product/service resources
Examples : a steady supply of superthin silicon wafers or iron ore or thousands
of feet of warehouse space or specialized lab or manufacturing space.
financial resources
usual suspects :
Friends and family, crowd funding, angels, venture capital and corporate partners
don't overlook government grants as an alternative funding source for new ventures
human resources
3 categories:
personal advice (mentors, teachers, and coaches),
help you advance your personal career
If you want to learn about a specific subject, find a teacher
If you want to hone specific skills or reach an exact goal, hire a coach
If you want to get smarter and better over the course of your career, find someone who cares about you enough to be a mentor.
company advisors,
help advance your company’s success
Founders fail when they believe their visions are facts. Listening to advice based on experience can help you sort through whether your vision is a hallucination.
Getting an advisory board (by expanding your circle of accumulated wisdom beyond your investors) is so important that it’s an explicit step in the Customer Development process.
qualified employees.
How does your company need dozens of specialized engineers or coders or designers as it grows?
Will offshore teams be required as the company scales?
intellectual property resources
Intellectual property is an asset for your company. You need to acquire, protect and exploit it.
Types of IP
Trademark: A trademark protects branding and marks and gives you the right to prevent others from using
“confusingly similar” marks and logos. Trademark protection lasts as long as you use the mark. The more you use the
mark, the stronger your protection. Trademark registration is optional but has significant advantages if approved.
Copyright: A copyright protects creative works of authorship, typically songs, books, movies, photos, etc. Copyright
gives you the right to prohibit others from copying, distributing or making derivatives of your work. It protects
“expressions” of ideas but doesn’t protect the underlying ideas. (If your product is software, copyright is also used to
prohibit someone from stealing your software and reselling it as machine and/or source code.) Copyright protection lasts
practically forever. Registration is optional but is required for suing for infringement.
Contract: A contract is a binding legal agreement that’s enforceable in a court of law. There’s no official registration
process; you have whatever protection is defined in the contract (e.g., a nondisclosure agreement gives you certain rights
to protection of your confidential information). The protection lasts for the time period defined in the contract.
Patents: A patent is a monopoly the government grants to prohibit others from making, using or selling your
invention, even when the other party’s infringement is innocent or accidental.
Just about anything can be patented—circuits, hardware, software, applied algorithms, formulas, designs, user
interfaces, applications, systems. Scientific principles or pure mathematical algorithms may not be patented. Your
invention must be “nonobvious.” The test for whether it’s nonobvious is: given the prior art at the time of the invention,
would a typical engineer 1) identify the problem and 2) solve it with the invention? You must be “first to file.” You must
file in the U.S. within a year of sale, offer for sale, public disclosure or public use. Your patent application has to include a
written description with details of the claims of the invention. The details have to allow others to duplicate your invention
from your description and have to use the “best mode” in describing critical techniques/technologies. And it has to
identify all prior “art,” or solutions to the problem.
Patent protection typically lasts 15 to 20 years. There is a formal application and examination process. Each patent
filing will cost your company $20,000 to $50,000 and take one to four years to complete. Filing of patents is frequently of
major interest to people funding your company. (There’s something called a “provisional patent” that’s an alternative to a
full patent. It allows you to claim “first to file” and use the term patent pending. Provisional patents get into the patent
office quickly and cheaply. However, they automatically expire after one year, and no patent rights are granted.
Provisional patents are a good placeholder because they’re cheap to file and don’t get in the way of your other patent
efforts.)
How to map out an intellectual property strategy ?
Who are the key players and technologies in its market(s)?
What are the most important ideas and inventions that need patents (or provisional patents)? Start filing these early!
What are the important patent applications that come next?
Four Common Intellectual Property Mistakes Startups Make
Founders didn’t make a clean break with previous employer: Do your employers or university own or have a claim on
your inventions? It’s a very subjective standard, and since startups don’t often have resources or time to spend on
lawsuits, large companies and universities may use threats of litigation to ensure that you don’t take anything.
Therefore the best advice is to “take only memories.”
Your startup cannot show that it owns its intellectual property: Take the time to create a clear, well-documented chain
of title (think lab notebooks) to your intellectual property. If you’re using independent contractors, make sure you
have written agreements assigning work created. Make sure you have Employee Invention Assignment Agreements.
(If you hire subcontractors or friends to do some work, get assignment agreements as well.)
You lost your patent rights due to filing delays/invention disclosures: In the U.S., patent rights are forfeited if you wait
more than a year after:
• disclosure in a printed publication (white paper, journal/conference article, website)
• offer for sale in the U.S. (start of sales effort, price list, price quotation, trade-show demonstration, any
demonstration not under NDA, public use in the U.S.)
In most foreign countries, there is no one-year grace period.
Your company grants “challenging” licenses to intellectual property: Startups acquiring their first customers may give
special licensing terms in key markets, territories, etc.—e.g., a grant of “most favored nations” license terms or other
licensee-favorable economic terms. This can make your intellectual property less valuable to future buyers of your
company. Or you may cut a deal that you can’t assign or transfer (or can’t get out of) if you get acquired.
What hypo can you make to ensure those key resources can be readily available?
What are the risk of the unavailability of these resources?
What are the alternatives of this unavailability
In each relevant category, create a list of the key resources
What are you gonna require?
What are you expect to pay?
Where you’ll go to find them?
Partner (value exchange)
four key areas:
strategic alliances;
“coopetition,” or cooperation between competitors;
joint new business development efforts;
key supplier relationships.
Think of this hypothesis as a simple three-column spreadsheet. The headings: partner name (list primary and runner-up
candidates), “what they provide,” and “what we provide.” Don’t feel bad when the word money appears repeatedly in the third
column. It’s fairly typical for startups, at least in their early days.
Strategic alliances, generally between noncompetitive companies, can often shorten the list of things your startup needs to build
or provide to offer a complete product or service. For physical products, alliance partners might provide product training, installation
or service, peripherals or accessories, whether they’re sold under your startup’s brand name or not. Specialized service firms in many
industries (law, accounting, engineering, IT) can often market a wider range of services by combining their services with those of
other specialists. Alliances can also be used to broaden a startup’s footprint, making its product more available in geographies where
the startup itself can’t support sales or service.
Joint new business development efforts generally happen later in a startup’s life, but can be important once the startup has
established its own identity and brand. Dell and HP sell lots of software and products made by others, but seldom do so until they’re
confident the product has significant consumer demand. Think of these as longer-term opportunities to investigate as part of your
customer discovery process.
“Coopetition” similarly happens later in a startup’s life, as a rule. It’s a form of working with a direct competitor to share costs or
market together. New York City’s “fashion week” is a good example of coopetition for established fashion houses. While they’re
fiercely competitive, they work together to coordinate fashion show schedules so the top buyers can attend all the key showings. Word
for Mac is perhaps the greatest coopetition example of all time, but both companies were well-established before the product was
developed and launched.
Key supplier relationships can mean life or death for a startup. Imagine how tough it would be to churn out millions of iPhones
without Foxconn, the massive Apple manufacturing partner in China, or to make Ben & Jerry’s famed Cherry Garcia without an
uninterrupted supply of delicious cherries. Suppliers can be instrumental to any company’s success, but tight, flexible partnerships
can be absolutely critical. Many startups outsource a variety of “back office” functions, ranging from warehousing and fulfillment of
physical goods to HR, payroll, benefits and accounting. These outsource suppliers act as extensions of the company that leverage the
suppliers’ expertise to improve the startup’s efficiency and cost structure.
Will the partner flex its delivery times, order-size requirements, credit terms or even its price in your startup’s early days? How
will the partner ensure a steady supply that rises (quickly, we hope) or falls in line with customer demand? Identify the key suppliers
in this hypothesis, along with what you’ll need from them. You’ll visit with them later to validate this hypothesis and understand your
role and theirs in forging a mutually beneficial relationship.
Pricing
Checklist
All advice about the below questions can be found from the book
How many of these things will we sell?What’s the revenue model?How much will we charge?Does this add up to a business that’s worth doing?
Phase 2 : “Get Out of the Building” to Test the Problem: “Do People Care?”
Tests
Checklist
Build Low Fidelity MVP
Checklist
Low Fidelity MVP Test
Checklist
Gain customer understanding
Checklist
What would make people change their way to use our product?
Our features?
Our price?
A new standard
Ask :
“If you had a product like this (describe yours in conceptual
terms), what percentage of your time could be spent using the product? How mission-critical is it?
Would it solve the pain mentioned earlier?
What would be the barriers to adopting a product like this?
What are the way to let them know the convenience of our products?
Who are the visionaries in the press/analyst/blogging community whom they
read? Whom they respect?
Phase 3 : “Get Out of the Building” and Test the Product Solution
Why this phase
see whether the product offers a compelling solution to customers who have said there’s a problem
Update The Business Model And Team
Checklist
High Fidelity MVP Test
Checklist
“velocity” of customer activation
how many visits before someone activates
how many tell their friends
how fast those friends activate, and
how quickly—and how often—visitors return
Measure Customer Behavior
Checklist
Identify Critical Customer Metrics
PurchaseEngagement
Once a user visits for the first time, how often does he come back?
how often do users visit?
how long do they stay?
how active are they when using the site or app?
What are the characteristics of frequent returnees (are they gear heads, teens, retirees or housewives)?
Can more of them be found cost-effectively?
If users visit once a month, they’re of little value; if they use an app dozens of times a day, it’s probably a strong multi-sided market product.
## Retention
Measure both of the most obvious form of attrition (the opposite or enemy of retention):
unsubscribes and terminations.
Inactivity is the most insidious form of attrition, particularly in mobile apps. People don’t delete the app, but they also never use it.
Referral
what percentage refer others?
do they refer one or two or six or 10?
whose referrals engage better than others?
which referrals become heavy users or referrers?
Cohorts
Do (more than 50% of) customers love it?
Don’t stop driving people toward the product until you’re certain of:
How many people who expressed serious interest in the need or problem actually accept an invitation to explore the product, and how many engage or accept the call to action?
How many less interested or uninterested people are willing to explore and engage?
For each of those groups, how many will tell others, and how many will they tell?
Answer each question on both an absolute and a percentage basis. If, for example, 1,000 people show up, were invitations sent to 2,000 or 200,000? The implications are obvious
Update The Business Model And Team
Checklist
4 types of customers
Category 1: Customers unequivocally love the product, and no changes are needed.
congratulations! it may well be time move on to customer validation
Category 2: Customers like the product, but we’ve heard consistently that they want this or that additional feature at launch.
Balance customer reactions with development time, since it may take much more product development effort to earn a convincing Category 1 answer.
Category 3: Customers can understand the product after a long explanation, but no one was jumping over the table to buy it.
restarting Phase 1 from the beginning rather than continuing forward on a death march to failure.
Category 4: Customers don’t see much of a need for the product.
restarting Phase 1 from the beginning rather than continuing forward on a death march to failure.
Repackaging the Product—A Pivot Strategy
at some points, founders think their product is perfect, but to customers
Therefore, BPI or even BPR are needed to refine and package it
Identify First Advisory Board Members
Checklist
As good as any founding team may be, invaluable people outside the company who can’t be hired full time will often be willing to help in an advisory capacity. These advisers can help :
solve technical problems,
introduce key customers,
provide domain-specific knowledge,
and share business expertise and wisdom.
Product Development should engage some advisers for specific help in designing and building the product, and a business mentor, someone who’s been through the startup grind before, may also be helpful.
Marketing research :
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Jason Siu
A warm welcome! I am a tech enthusiast who loves sharing my passion for learning and self-discovery through my website.
