www.hindustantimes.com | March 2, 2018
Doshi conducted a breakfast session with TiE Pune members on – ‘Zero to One: Launching New Ventures’ where he gave the audience interesting insights into the business of entrepreneurship
“Too often entrepreneurs think of a product that they think people want. Then they spend precious time developing it without ever reaching the customer. Often this happens because the entrepreneurs never tried to find out what the customer wants. And when they reach the market with the product they thought the customer wants, they face indifference and the business fails. What happened was they spent time building a product without bothering to find out was required or not,” he said.
Doshi then spoke about the Lean Startup, developed by Eric Reis, which is a scientific decision-making framework that help aspiring entrepreneurs and guides them do things that can make them successful. Lean canvas essentially has nine elements that an entrepreneur has to look into whilst setting up her business. Excerpts from his speech:
DEFINE YOUR CUSTOMER SEGMENTS
Who are your target customers and users? What are their characteristics or persona?
DEFINE THE PROBLEM
Take the top three problems you want to solve. You have to identify the unique value proposition of your product or service. If for example, you want to build a product which integrates many software as a service (SAAS) products,
The main thing you need to know is do is to target small and medium enterprises who use software as a service for the integration. Then your problem would be how to design a product that would seamlessly integrate other software as a service products making its use easy. And so on. Identify top three problems faced by the customer that you wish to solve and how these are being solved currently.
WHAT IS YOUR SOLUTION?
What is the one thing you will solve for your customer? If you were to take Uber as an example then low cost and easy availability of taxis is the solution to passenger problems, while flexible work timings with increased income would be the solution for the drivers.
WHAT IS THE COST STRUCTURE?
Instead of writing a full business plan you write down your fixed and variable costs involved in delivering your product to your customer. At the same time, it is also important to define your cost structure that will help you in getting the first 1000 customers.
It is about where are you going to make the money and how? Will you get a one year contract or a monthly subscription? Or the customer will not pay but you will get advertising revenue? How much will you spend to acquire a customer? What will be your gross margins and so on?
How many people will buy and use your product? These are the metrics that you will use to track the progress of your business over time. For example, referral rate, retention rate, customer acquisition cost, among others.
YOUR UNIQUE VALUE PROPOSITION
What is unique about your product/service that is not available to your customers? Why are you different and worth paying attention and money.
What is it about your product that cannot be copied or bought? It could be as simple as you offering the product at a lower cost than your competition, or your product is so good that it will take years of research and development for competitors to copy.
How will you reach and acquire your customers? There are 19 established customer acquisition channels like Search Engine Optimization (SEO), trade shows, viral marketing and so on. The fastest growing start-ups generally use one or two channels to achieve rapid growth. The idea is to avoid spreading yourself too thin.
With the Lean Canvas you can get a clear picture of your business. What you are doing, what is your unique proposition, your costs, marketing etc. that will help in improving your chances of success. This is most helpful to people who wish to set up their business. You do need to change things as they happen but you can use this canvas as your guide.