MaGIC Academy Symposium 2015

MaGIC Academy 2015 SymposiumHow To Get Started with an Idea – Product Market Fit

by Nadhir Ashafiq

My journey to entrepreneurship

Nadhir Ashafiq

• Master’s in Finance – Curtin University (2006 – 2010)• Management Trainee – CIMB Investment Bank (2011 – 2012)• Finance Manager – ABDA Aviation (2012 – 2014)• Co-Founder – Glokalise (2013 – 2014)• Co-Founder – TheLorry.com – (Sep 2014 – Now)

A little bit about TheLorry.com

• On-demand marketplace for logistics

• Launched exactly one year ago

• Mission: disrupt logistics industry via technology

• Simple start – take “lori sewa” process online

• Currently – funded and team of 12

• Loving it!

• Not easy though.. blood, sweat and tears.

What will you get out of today’s workshop

• How to develop your idea and get it to Product/Market Fit

• Understand The Lean Startup concept

• Tips for first-time founders

NOTE:SLIDES WILL BE AVAILABLE ON SLIDESHARE

What will we cover today

1. 3 Stages of A Startup

2. How NOT to Start A Startup

3. The Lean Startup Way

4. Lean Canvas

5. Tips for First Time Founders

6. Q&A

3 stages of a startup

Problem/Solution Fit Product/Market Fit Growth

Product/Market Fit

• Does this problem exist?• Can I solve it?

• Is my product desirable?• Am I selling to the right

target market?

What will we cover today

1. 3 Stages of A Startup

2. How NOT to Start A Startup

3. The Lean Startup Way

4. Lean Canvas

5. Tips for First Time Founders

6. Q&A

Hard truth - 93% of startups fail

3 stages of a startup

Problem/Solution Fit Product/Market Fit Growth

Product/Market Fit

• Does this problem exist?• Can I solve it?

• Is my product desirable?• Am I selling to the right

target market?

93% 7%

How NOT to Start a StartupThe n00b way

Have an idea

Build product

Spend $$ acquiring users

Pray

“Wouldn’t it be cool if..”

“It has to be jam-packed with features”

“We gotta spend on marketing!”

“I hope people use it”

How NOT to Start a StartupThe n00b way

• Hear about billion dollar acquisitions/fund raise

• Gather with friends at mamak.

• “I also can do la!”

• “What should we do?”

• “Let’s start a website. Its never been done before.”

How NOT to Start a StartupThe n00b way

• Quit your job

• Register company (Sdn Bhd)

• Register patent & trademark

• Be secretive. Afraid people will copy. Sign NDA

• Talk to no one about it until launch.

How NOT to Start a StartupThe n00b way

• Pay developers hundreds of thousands to build full version of product – 6 months

• Upon launch, pay to acquire users (facebook ads, google ads, taxi ads)

• Contact media (The Star, NST) to cover you

Is there a more low-risk way?

What will we cover today

1. 3 Stages of A Startup

2. How NOT to Start A Startup

3. The Lean Startup Way

4. Lean Canvas

5. Tips for First Time Founders

6. Q&A

The Lean Startup Way

Lean Startup definition:

“A method for developing products and businesses. Central idea is to reduce risk by building products iteratively and validated learning.”

The Lean Startup Way

BUILD

MEASURELEARN

The Lean Startup Way

BUILD MVPMEASURE

KEY METRICS

LEARN FROM

FEEDBACK

SOLUTION HYPOTHESIS

PROBLEM HYPOTHESIS

Problem Hypothesis

• A guess on the suffering/bad experience faced by a target customer

• Problem has to be painful (pain point) and worth solving

• Build painkillers (need to have) rather than vitamin (nice to have)

• Usually good problems are those that the founders themselves face

• How to get ideas? Cannot be brainstormed/discussed at a mamak session.

Examples of problem hypothesis

“Families & students who are looking to move house find it difficult to get transparent pricing and reliable movers”

“Travellers find it difficult to book a room with a

local”

“City folks have a problem finding a taxi

that is safe and charges transparently”

How to find problems worth solvingFrequency-Density-Pain test

Frequency

Density

Pain

“Does the problem you’re solving occur often?”

“Is the problem something that must be resolved?”

“Do a lot of people face this problem?”

Estimating market potential

Top-down Bottom-up

• Estimates of market size based on government data, research, trade journals, surveys, etc

• “It is estimated that the market size for the mining industry is USD 500 bilion”

• Number of potential customers x average revenue per user

• Example:o 1,000,000 burger eaters in

Malaysiao 500,000 are in KLo They eat burgers twice a montho 1,000,000 potential customerso RM5 per burgero RM5m market a montho RM60m market a year

Lean Startup exampleProblem hypothesis:Busy working professionals in KL area have no time to cook food.

The Lean Startup Way

BUILD MVPMEASURE

KEY METRICS

LEARN FROM

FEEDBACK

SOLUTION HYPOTHESIS

PROBLEM HYPOTHESIS

Solution Hypothesis

• Don’t approach problems with fixed solution in mind – hammer looking for a nail

• Ask users how they want it solved

• Your solution needs to either:1. Increase income (GrabTaxi)2. Decrease cost (WhatsApp)3. Create feel good factor (Facebook)4. Save time (BeMalas / GoGet)

• Find a solution that’s better, different or solves the problem more efficient than current solution (Google)

• If not, find other problems to solve!

Lean Startup exampleProblem hypothesis:Busy working professionals in KL area have no time to cook food.

Solution hypothesis:Provide home-cooked meals on a subscription basis

The Lean Startup Way

BUILD MVPMEASURE

KEY METRICS

LEARN FROM

FEEDBACK

SOLUTION HYPOTHESIS

PROBLEM HYPOTHESIS

Build MVPMinimum Viable Product

Definition:

“A minimum viable product is a version of a new product which allows a team to collect the maximum amount of validated learning about customers with least effort ”

Build MVPMinimum Viable Product

Simple English

“A product to test your assumptions, built as cheap as possible, as fast as possible with the goal of learning as much as possible.”

Build MVPMinimum Viable Product

Build MVPMinimum Viable Product

Build MVPMinimum Viable Product

• Build most important feature first 10 features vs 1 important feature

• Manual vs automated Can you build something low-tech to test your assumptions first?

• Examples of MVP: landing page, prototype, mock-up, wizard of oz, crowdfunding

Examples of MVP

Asked permission from local shoe shops to take photos and put them online. Once order came in, bought the shoes and shipped it. Manually.

A website to accept bookings and get matched with a transporter manually.

A social network that connects students from Harvard University.

Case study: TheLorry.comCurrent user flow

Motivated Customer goes to TheLorry.com

Places a booking

TheLorry.com receives booking

at back-end

Contact customer to

verify

Push to vendor app

Claim job

Email driver details to customer

Job Done

Rating & Feedback

Payment

Payment

Case study: TheLorry.comThe MVP. Built with less than RM5k

Motivated Customer goes to TheLorry.com

Places a booking

TheLorry.com receives booking

via email

Contact customer to

verify

Once verified, place booking with Provider

Get driver personal details from Provider

Forwards driver personal to Customer

Job Done

Ask feedback

Payment

Payment

Lean Startup exampleProblem hypothesis:Busy working professionals in KL area have no time to cook food.

Solution hypothesis:Provide home-cooked meals on a subscription basis

Build MVPA simple website. Work with single moms to generate supply.

The Lean Startup Way

BUILD MVPMEASURE

KEY METRICS

LEARN FROM

FEEDBACK

SOLUTION HYPOTHESIS

PROBLEM HYPOTHESIS

Key metrics - The AARRR

Acquisition How do you get users?

ActivationDo users have great first time experience?

RetentionDo users come back?

RevenueDo users pay?

ReferralDo users tell others?

Key metrics - The AARRR

Acquisition 100 impression on Google AdWords ; 20 click throughs

Activation5 use the product / make a booking

Retention2 use again the next week

Revenue1 become paying customers

Referral1 refer another

A/B testing or split testing

Acquisition 100 impression on Google AdWords ; 20 click throughs

Definition:

Compare two versions of a product by showing two different variants and see how each of them perform.

Acquisition 100 impression on Google AdWords ; 25 click throughs

“Get home-cooked meals delivered to your home”

“Get home-cooked meals delivered to your home for just RM10”

A

B

A/B testing or split testing

Definition:

Compare two versions of a product by showing two different variants and see how each of them perform.

“Pay RM20 monthly to get delicious home cooked meals”

“Pay annually at RM10 a month to get delicious home cooked meals”

Revenue1 become paying customers

Revenue2 become paying customers

A

B

Vanity metrics vs key metrics

Vanity Metrics Key Metrics

• Registered users

• No of downloads

• No of page views

• Active users

• Cost per customer acquisition (CAC)

• Long Term Value (LTV)

CAC & LTV

CAC

LTV

Customer Acquisition Cost

How much does it cost you to acquire one customer?

Long Term Value

What is your expected profit over the long term from one customer?

CAC & LTV

CAC

LTV

Customer Acquisition Cost

Spend RM1,000 on flyersAcquire 1,000 new customers

CAC = RM1.00

Long Term Value

Profit = RM1 per mealCustomer will be loyal for 3 monthsMake 2 purchases a month

LTV = RM6.00

Lean Startup exampleProblem hypothesis:Busy working professionals in KL area have no time to cook food.

Solution hypothesis:Provide home-cooked meals on a subscription basis

Build MVPA simple website. Work with single moms to generate supply.

MeasureSales per day, activation rate, churn rate

The Lean Startup Way

BUILD MVPMEASURE

KEY METRICS

LEARN FROM

FEEDBACK

SOLUTION HYPOTHESIS

PROBLEM HYPOTHESIS

Learning from user feedback• Be obsessed about your users &

customers

• Be very personal – talk to your users – understand their behavior

• Don’t put anybody between founders and users (CS, sales guys)

• Do the job yourself (for service startups)

• Observe and ask• How do they use your product?• Would you promote this product?• Would you use it again?• What can make the experience

better?• How was the service?

Get users to use the product in front of youUser testing

Get users to use the product in front of youUser testing

Get a real life person to view your product for FREE: http://peek.usertesting.com/

Pivot or Persevere

Example of products that went through pivots

OdeoFind and subscribe to

podcasts

TwiterMicro-blogging social

network

BurbnLocation-based app

InstagramMobile photo-sharing

network

Lean Startup exampleProblem hypothesis:Busy working professionals in KL area have no time to cook food.

Solution hypothesis:Provide home-cooked meals on a subscription basis

Build MVPA simple website. Work with single moms to generate supply.

MeasureSales per day, activation rate, churn rate

LearnUsers don’t want subscription model and commitment

Change solution hypothesis

We do all this to get to Product/Market fit

BUILD MVPMEASURE

KEY METRICS

LEARN FROM

FEEDBACK

SOLUTION HYPOTHESIS

PROBLEM HYPOTHESIS

Questions to ask if you’ve achieved PMF

• Did I build something that the market wants?

• Do people love it?

• Do you have high Activation rate and Retention rate?

• Would 40% of your users feel sad if your product was taken off the market?

• If so Holy Grail of startups

What will we cover today

1. 3 Stages of A Startup

2. How NOT to Start A Startup

3. The Lean Startup Way

4. Lean Canvas

5. Tips for First Time Founders

6. Q&A

Lean Canvas Project Name01-Jan-2014

Iteration #x

Cost Structure

Customer Acquisition costsDistribution costsHostingPeople, etc.

Revenue Streams

Revenue ModelLife Time ValueRevenueGross Margin

Problem

Top 3 problems

Solution

Top 3 features

Key MetricsKey activities you measure

Unique Value PropositionSingle, clear, compelling message that states why you are different and worth paying attention

Unfair AdvantageCan’t be easily copied or bought

ChannelsPath to customers

Customer SegmentsTarget customers

PRODUCT MARKET

Lean Canvas DeliveryMom9th September 2015

Iteration #1

Cost Structure Revenue Streams

Problem Solution

Key Metrics

Unique Value Proposition

Unfair Advantage

Channels

Customer SegmentsTarget customers

PRODUCT MARKET

Have no time to cook food

Lean Canvas DeliveryMom9th September 2015

Iteration #1

Cost Structure Revenue Streams

Problem Solution

Key Metrics

Unique Value Proposition

Unfair Advantage

Channels

Customer SegmentsTarget customers

PRODUCT MARKET

Working professionals

In Kuala Lumpur

Have no time to cook food

Lean Canvas DeliveryMom9th September 2015

Iteration #1

Cost Structure Revenue Streams

Problem Solution

Key Metrics

Unique Value Proposition

Unfair Advantage

Channels

Customer SegmentsTarget customers

PRODUCT MARKET

Working professionals

In Kuala Lumpur

Have no time to cook food

Cheap, quick & convenient

way to get home-cooked

meals

Lean Canvas DeliveryMom9th September 2015

Iteration #1

Cost Structure Revenue Streams

Problem Solution

Key Metrics

Unique Value Proposition

Unfair Advantage

Channels

Customer SegmentsTarget customers

PRODUCT MARKET

Working professionals

In Kuala Lumpur

Have no time to cook food

Cheap, quick & convenient

way to get home-cooked

meals

Provide home-cooked deliveries on subscription

Lean Canvas DeliveryMom9th September 2015

Iteration #1

Cost Structure Revenue Streams

Problem Solution

Key Metrics

Unique Value Proposition

Unfair Advantage

Channels

Customer SegmentsTarget customers

PRODUCT MARKET

Working professionals

In Kuala Lumpur

Have no time to cook food

Cheap, quick & convenient

way to get home-cooked

meals

Provide home-cooked deliveries on subscription

Facebook Marketing &

Content Marketing

Lean Canvas DeliveryMom9th September 2015

Iteration #1

Cost Structure Revenue Streams

Problem Solution

Key Metrics

Unique Value Proposition

Unfair Advantage

Channels

Customer SegmentsTarget customers

PRODUCT MARKET

Working professionals

In Kuala Lumpur

Have no time to cook food

Cheap, quick & convenient

way to get home-cooked

meals

Provide home-cooked deliveries on subscription

Facebook Marketing &

Content Marketing

Subscription model

Lean Canvas DeliveryMom9th September 2015

Iteration #1

Cost Structure Revenue Streams

Problem Solution

Key Metrics

Unique Value Proposition

Unfair Advantage

Channels

Customer SegmentsTarget customers

PRODUCT MARKET

Working professionals

In Kuala Lumpur

Have no time to cook food

Cheap, quick & convenient

way to get home-cooked

meals

Provide home-cooked deliveries on subscription

Facebook Marketing &

Content Marketing

Subscription model

Cost of food, logistics & marketing

Lean Canvas DeliveryMom9th September 2015

Iteration #1

Cost Structure Revenue Streams

Problem Solution

Key Metrics

Unique Value Proposition

Unfair Advantage

Channels

Customer SegmentsTarget customers

PRODUCT MARKET

Working professionals

In Kuala Lumpur

Have no time to cook food

Cheap, quick & convenient

way to get home-cooked

meals

Provide home-cooked deliveries on subscription

Facebook Marketing &

Content Marketing

Subscription model

Cost of food, logistics & marketing

Activation rate, sales per

day, churn

Lean Canvas DeliveryMom9th September 2015

Iteration #1

Cost Structure Revenue Streams

Problem Solution

Key Metrics

Unique Value Proposition

Unfair Advantage

Channels

Customer SegmentsTarget customers

PRODUCT MARKET

Working professionals

In Kuala Lumpur

Have no time to cook food

Cheap, quick & convenient

way to get home-cooked

meals

Provide home-cooked deliveries on subscription

Facebook Marketing &

Content Marketing

Subscription model

Cost of food, logistics & marketing

Activation rate, sales per

day, churn

Strong network of 5-

star home cooks

What will we cover today

1. 3 Stages of A Startup

2. How NOT to Start A Startup

3. The Lean Startup Way

4. Lean Canvas

5. Tips for First Time Founders

6. Q&A

Tips for first-time founders

1. Launch fast & learn fast• Don’t be afraid of people copying• Execution matters more• Don’t spend too much time & resources• Just do!

2. Hustle• Get things done• Want it? Goget it!• Hustle for customers, suppliers, investors, mentors, peers

3. Network, network, network• One part of entrepreneurship is about networking• Exchange ideas, learn from each other, share resources• No startup can be built in a silo

Tips for first-time founders

4. Co-founder• Finding a co-founder is like finding a spouse (wife/husband)• Have to work well together – “Chemistry”• Complementary skillsets

5. Tech guys• Not a technical co-founder? Don’t fret.• A lot of tools to build websites & apps without coding• Can approach freelancers at the start.

6. Spend less than RM5k for MVP• Even if you fail, you’ve only burned RM5k. Can be recouped• “Tuition fees”

Tips for first-time founders

7. Quality over quantity• Focus on quality of service/product• If need to take loss to maintain quality, do it.• Your only advantage against big boys is quality, personalized

service/product

8. Incorporation tips• Don’t incorporate a Sdn Bhd straight away - expensive• Incorporate a LLP / Enterprise first

9. Don’t expect work-life balance• Running a startup = will consume your life• No work-life balance anymore

Some useful tools / resources

Resources• The Lean Startup by Eric Ries• Zero to One by Peter Thiel• Neilpatel.com• Quicksprout.com

Tools• Slack (Communicate with team members)• Buffer (Manage social media accounts)• Trello (To-do list)• Google Analytics (View your site’s performance)• Google Drive (Share files)• Wix.com (Build your own website)• Appmakr.com (Build your own app)

What will we cover today

1. 3 Stages of A Startup

2. How NOT to Start A Startup

3. The Lean Startup Way

4. Lean Canvas

5. Tips for First Time Founders

6. Q&A

THANK YOU!

nadhir@thelorry.comFacebook: Nadhir Ashafiq

Link to SlideShare

www.nadhirashafiq.com