COMPANY/TEAMNAME:ElMundodeDuam · ... ElMundodeDuam % ... El Mundo de DUAM is a web toolkit designed to support Latin American parents raise ... (NVC) and 5 Annual John Edwardson,

© 2015 The University of Chicago Booth School of Business Last Revised 2/8/15 www.chicagobooth.edu/entrepreneurship Page 1 of 28

19th Annual Edward L. Kaplan, ’71, New Venture Challenge (NVC) and 5th Annual John Edwardson, ’72, Social New Venture Challenge (SNVC)

2015 FEASIBILITY SUMMARY COVER SHEET

COMPANY/TEAM NAME: El Mundo de Duam Please consider our application for (check all that apply): ___ Traditional New Venture Challenge (NVC) _X_ Social New Venture Challenge (SNVC) Team Members (Please list main contact for your team first): Name Email Address Booth Class Year

or Evening/Weekend Expected Date

Affiliation (if non-‐Booth)

Alberto Garrido [email protected] Harris Esperanza Johnson [email protected] Harris Andrea Arevalo [email protected] Harris Please list all the participants who contributed significantly to the Business Idea. Attach additional sheets if necessary. Business Description (50 words or less, please note that this info may be made available on the NVC website): El Mundo de DUAM is a web toolkit designed to support Latin American parents raise their 0-5 year old children. Its design considers state-of-the-art evidence about child development and incentivizes parents to engage in healthy interactions with their children that strengthen attachment and increase skills that promote socio-emotional and economic success. Problem This Business is Addressing: High quality educational materials available for parents for the first years of life of their children are scarce in Latin America. This age segment is the most critical time to invest in skills that will affect children during their whole life in the form of salaries, educational achievement, social skills and other dimensions. This problem becomes more critical in disadvantaged segments. Social Impact of Business: (For Social NVC applicants only) Early childhood investments are critical for the development and future success of children. Moreover, Latin American countries are among the lowest of the PISA educational ranking. For example Chile, the highest ranked country in the region, is around the 50th place in math and reading. These results are lower than in other less developed countries such as Vietnam. Additionally, inequality within countries in Latin America is much higher than in the rest of the OECD countries on average. With El Mundo de Duam we expect to provide access to high quality educational material for the five first years of life, where it is still possible to have a positive impact in


cognitive and non-cognitive skills. This way we expect to help improve the educational results of the region and contribute to close the inequality gap.

Initial Target Customer Segment: Our initial segment consists of parents from Chile with children between 0 and 5 years old with access to internet at home. In a first stage we plan to develop an internet-based tool where parents find valuable evidence-based advice about parenting and activities to boost specific skills in their children. We decided to start with Chile because of our network, knowledge of the market and its high internet penetration. In a second stage we want to expand the service to other countries in Latin America. Potential Market Size: (if available) In Chile we estimate the total of children with internet at home is 752.374. If we consider the 5 most important markets in the region our estimate is 9.515. 538 (Chile, Colombia, Argentina, Mexico and Peru). Competing or substitutable products: (if available) At the moment there are books and toys providers. Parents also look for information in internet forums and Facebook pages and advice among family and friends. The opportunity we see is that there are not competitors offering a service that integrates the different components demanded by parents in a customized way.

Key milestones or estimated time to market: (if available) § March 15th : Gather relevant content already produced by other sources § March 30th: have a Facebook page where we provide high quality content and activities for parents to use

with their children. We expect to test how interesting the content is and in what dimensions are the parents more interested into.

§ April 15th Touch base with potential partners/ consultants that are doing research in early childhood. § April 30th : Find potential founders for a pilot project

Why is this the right team to launch this business? Andrea has worked in the Central Bank of Mexico, the World Bank and the Economist Intelligence Unit where, among other activities, she has done research on Education in Central America and regarding educational opportunities for girls. She was the president of her Economics class and when she arrived to Chicago decided to run the marathon, and she actually finished it. Esperanza was a lecturer/research associate of Microeconomics and Industrial Organization in the best school of economics of Chile when she was 24. She was also in charge of the microeconomics lecturer’s team of the college. When she came to study to the University of Chicago she got the “Becas Chile” scholarship and was ranked #1 in the country. Alberto designed and implemented a web based pedagogical service in a Chilean NGO that nowadays provides material to more than 300 schools in Chile. There he was the assessments director and managed a 25 people team. We have relevant network in education and business in Chile and Mexico.


CERTIFICATIONS AND AGREEMENTS

19th Annual Edward L. Kaplan, ’71, New Venture Challenge (NVC) and 5th Annual John Edwardson, ’72, Social New Venture Challenge (SNVC) The University of Chicago Booth School of Business Polsky Center for Entrepreneurship and Innovation and Social Enterprise Initiative 5807 South Woodlawn Avenue, Chicago, IL 60637

By submitting a Business Idea (“the Idea”) to the University of Chicago Booth School of Business - New Venture Challenge or Social New Venture Challenge (“the Competition”), each Contestant listed below agrees to the following conditions: Originality of Plan. The ideas and concepts set forth in the Idea are the original work of the Contestants and that the Contestant is not under any agreement or restrictions which prohibit or restrict his or her ability to disclose or submit such ideas or concepts to the Competition. Compliance with Guidelines of the Competition. Each Contestant has reviewed the Entry Guidelines ("the Competition Guidelines") and by his or her signature below certifies that this entry and the team or individual it represents complies with the Guidelines and agrees to abide by the Guidelines. Recognition of Prize Money (New Venture Challenge only). As a condition to receive the Prize Money, each winning team must agree to provide Chicago Booth with equity in the Company (that was the subject of its business plan) in an amount equal to its respective award if the company receives funding or otherwise enters into a business combination transaction wherein the surviving entity receives financing or equity in another entity, within three years of the agreement date. Waivers and Releases. Each Contestant understands that the University of Chicago Booth School of Business, each of the co-sponsors, judges, mentors, co-organizers (the “Competition Officials”) and its directors, officers, partners, employees, consultants and agents (collectively “Organizer Representatives”) are volunteers and are under no obligation to render any advice or service to any Contestant. The views expressed by the judges, co-sponsors, co-organizers, and the Organizer Representatives are their own and not those of the University of Chicago Booth School of Business or any person or entity. Each Contestant also understands and agrees that although the Competition Officials have taken and will take the steps described in the Guidelines regarding confidentiality of the ideas and plans submitted by the Contestants, the legal protection of the ideas and plans submitted by the Contestants to the Competition is otherwise the sole responsibility of the Contestant. In consideration of the time, expertise and other resources provided by the Competition Officials and Organizer Representatives to the Competition, each Contestant hereby voluntarily releases each Competition Official and each Organizing Team Member from any further liabilities, responsibilities, and accountabilities relating to or arising out of such Competition Officials or Organizer Representative's participation in the Competition. Business Plan Name: El Mundo de Duam Contestants (Team Members): List principal contestant (point-of-contact) first Name(s): Signature(s) (Check Box to sign electronically): Date(s):

Alberto Garrido þAlberto Garrido 02/08/2015 Esperanza Johnson þEsperanza Johnson 02/08/2015 Andrea Arevalo þ Andrea Arevalo 02/08/2015


Alberto Garrido Campos +1 (312) 3754730 [email protected]

Education

Master of Public Policy, The University of Chicago Harris School of Public Policy. Chicago, IL. Expected 2015 • Public Policy PHD track: Applied econometrics, Political Economy 1 and 2, Advanced

Microeconomics 1. Economics PHD: Human Capital • Business School: New Venture Strategy and Entrepreneurial Finances and Private Equity Universidad de Chile, Santiago, B.S. Civil Industrial Engineering. Chile 2007 • B.S. with honours • Specialized in operations management: Inc. marketing, economics, statistics &

mathematics

Royal Institute of Technology (KTH), Winter 2005. Stockholm, Sweden

Experience Research Assistant, Becker Friedman Institute, Chicago, USA. Feb 2013-Jun 2013

• Apply cognitive tests in preschool programs to assess different interventions in the framework of behavioural economics

• Processing of data and analysis

Assessment Director, Aptus Chile, Santiago, Chile. Apr 2011 – Aug 2013 • Managed the assessment department: designs 100 standardized test a year for over

100,000 students annually • Designed and implemented an experimental assessments web platform that was launched

in 2013. More than 150 schools used it the first year • The department grew over a 300% during this period • Designed and implemented a new web information system administrator that allowed for

sustainable growth and instant management reports. National Research Analyst, BAC, GPYR. Brisbane, Australia. Jul 2009 - Jan 2010 • Brand consultancies and planning support for nationwide advertising of George Patterson

Y&R. • Utilized the Brand Asset Evaluator (BAV) quantitative marketing model • 1st year department sales over a US $1 Million and consulting with some of the most

important companies in Australia.


R & D Analyst, The Lab Prolam Y&R, Santiago, Chile. Oct 2007 - May 2009 • Brand consultancies & proposals based on quantitative marketing model ( BAV)

through a multidisciplinary approach • Part of the head office for Chile, Latin America and the Hispanic population in USA

responsible for brand consultancies, planning, analysis and support • Managed key company accounts such as LG, GMO, and Banco de Chile • Visual Basic Programmer for automating processes and data analysis

Marketing Director, Re Estudio, Santiago, Chile. Dec 2006 a Sept 2007 • Developed marketing plan of a fledgling entrepreneurship that introduced a new

product into the market based on photogrammetric modelling and heritage • Managed pricing, corporative image, web site and launch. • Re Estudio currently provides photogrammetric modelling to mining companies

Other Activities

Leading Schools Systems at the National Level, Harvard University. Jan 2011 – Feb 2011 6 weeks online institute about schools practice, policy and education: Weekly papers required Founder and Contributor to www.cafeducacion.com Mar 20114 Web site on education topics in Spanish: Schools, research, public policy, technology.

Skills & interests Languages

Spanish native speaker, advanced in English (108 TOEFL IBT Score)

Computing

SPSS, Stata, and Excel.

Personal VvvvvTravelled to mor Travelled to more than 45 countries in Europe, Asia, Oceania and America


Esperanza Johnson Urrutia 5317 South Cornell Ave, apt 3R. Chicago, Il 60615 773-988-1864 [email protected] EDUCATION The University of Chicago Harris School of Public Policy Chicago, Il. Master of Public Policy. Expected June 2015 Pontificia Universidad Católica de Chile (PUC) Santiago, Chile. MA, Economics, with distinctions, with emphasis in Industrial Organization. 2010 Thesis: "Multimarket Contact, Bundling and Collusive Behavior" BA, Economics, with distinctions. 2008 EXPERIENCE Adjunct Instructor, Department of Economics PUC Dec 2010-Jul 2012 • Lecturer/Research Associate. • Taught Introductory Economics classes for the Department of Economics. • Coordinated lecturers of Introductory Economics for classes at the College: developed course's content, readings and

evaluations. • Organized a weekly seminar for working papers at the Department of Economics • Conducted research on Multimarket Contact, Bundling and Collusion with professor Juan Pablo Montero (MIT) • Participated in projects led by professor Rodrigo Harrison (Georgetown University) that analyzed antitrust concerns and

mechanism design in a variety of topics.

Research Assistant at PUC Jul 2009-Dec 2010 • Conducted research with professor Juan Pablo Montero under Fondecyt Project "On Collusion". • Worked on the papers "Multimarket Contact, Bundling and Collusive Behavior" and "Connecting Salop and Hotelling in a

Bundling Model" with professor Montero. • Assisted professor Harrison to develop an analysis of the industrial fishery market to support a change in the Chilean legislation. • Assisted professor Harrison in the analysis of strategies to enhance competition markets where the allocation of goods and

resources done by auctions.

Teacher Assistant PUC 2005-2012 • Assisted professor Harrison with Microeconomics II, Industrial Organization, Game Theory and Economics. • Assisted professor Rodrigo Vergara (Harvard, current chief of the Chilean Central Bank) with Macroeconomics I. • Assited professor Andrés Illanes (MBA Cantab) with Introductory Economics and Introductory Microeconomics. Teacher Assistant The University of Chicago 2014-2015 • Assisted professor Canice Prendergast (Booth) with Managing the Workplace. • Assisted professor Steve Cicala (Harris) with Statistical Theory and Applications for Public Policy I. • Assisted professor Bruce Meyer (Harris) with Statistical Analysis and Applications for Public Policy II.

ACTIVITIES The University of Chicago Gary Project, 2014 Daley Summer Internship Summer 2014 Support in different initiatives related with the Gary Project. Research project on Gary's Juvenile Justice current situation in comparison to Indiana's to present a compelling case so the City can apply for related grants. Develop a business plan to create a restaurant incubator in Gary, next steps and recommendations included. Service Match Program Volunteer, University of Chicago Community Center Oct 2013-March 2014 Assist Coppin Community Center's youth program Reading Library at Washington Park and work in the food pantry.


Education Policy Student Association, Harris School of Public Policy Winter Quarter 2014 Participate at the Experiential Learning Program, specifically in the Teacher Demand and Supply Report for the Illinois State Board of Education. Congresses and Seminars Presented "Multimarket contact, non-linear pricing and collusive behavior", at the 9th Annual International Industrial Organization Conference. Boston, MA, 2011. Presented "Contacto Multimercado, Discriminación de Precios y Colusión", at the National Economic Society of Chile. Talca, Chile, 2010.

SKILLS Stata, Excel, Scientific WorkPlace , Power Point and Word. Bilingual: Spanish (native) and English (advanced).

January 2015


Andrea Arévalo Arroyo 312-647-8125 5050 S Lake Shore Drive Apt. 2114 S, Chicago, IL 60615 [email protected]

EDUCATION

UNIVERSITY of CHICAGO HARRIS SCHOOL of PUBLIC POLICY Chicago, IL Candidate for Master of Public Policy 2015

• Research Assistant, Becker Friedman Institute for Research in Economics (Jan. – Jun. 2014) • Research Assistant, University of Chicago Crime Lab (Jun. – Jul. 2014)

CENTRO de INVESTIGACIÓN y DOCENCIA ECONÓMICAS (CIDE) Mexico City, Mexico BA in Economics 2011

• Thesis: Determinants of Access, Participation and Restriction to Credit in Mexico • Teaching Assistant, Introduction to Economics (2009) • Excellence Grant in 1st semester

EXPERIENCE THE ECONOMIST INTELLIGENCE UNIT, Custom Research Chicago, IL., USA Intern Oct 2014- Present

• Conducted research for Gender Business Case in Extractive and Agricultural Industries project and educational opportunities for girls in the developing world.

WORLD BANK, Central America Country Management Unit (LCC2) Washington D.C., USA Short Term Temporary Jul-Sep 2014

• Conducted research for the Systematic Country Diagnostic (SCD) reports of Panama and El Salvador regarding education and labor market dynamics using the WB Enterprise Survey.

• Elaborated a report of key economic and development indicators for Central America.

BANCO de MEXICO, International Monetary Affairs Mexico City, Mexico Economist Jan 2011-Aug 2013 Economic Policymaking

• Coordinated meetings of Banco de México with other International Organizations such as the Annual IMF Article IV mission for Mexico, and meetings with BIS, FSB, WB and OECD.

• Attended as a Mexican Delegate to Deputies and Ministerial G20 Meetings and the IMF- WB Spring Meetings of 2012 in Washington D.C.

• Member of the 2012 G20 Mexican Presidency Financial Track Task Force. Quantitative and Qualitative Research

• Research of relevant topics and elaboration of Talking Points for the participation of Governor Agustín Carstens as Chairman of BIS Economic Consultative Committee (ECC), BIS Global Economy Meeting (GEM) and the FSB Standing Committee on Assessment of Vulnerabilities (SCAV) in 2013.

• Research of relevant topics regarding Mexico’s position in International Organizations and Forums including: Global Outlook, Financial Regulation, Energy and Commodities Markets.

• Elaborated position notes for G20 Working groups including the Framework Working Group and International Financial Architecture Working Group.

SKILLS/CERTIFICATIONS Computational Skills: STATA, E-Views, Bloomberg, MS Office (Word, Excel, PowerPoint) Languages: Spanish (native speaker), English (TOEFL: 116), French (intermediate) Certifications: Dynamic Econometric Models Diploma, ITAM Sep 2012-Jul 2013

ACTIVITIES Economics Class President, CIDE 2006-2011 Volunteer Instructor, Adult Literacy Campaign in Michoacán, Mexico Summer 2006


Feasibility Plan

Andrea Arévalo

Alberto Garrido

Esperanza Johnson


Feasibility Plan: El Mundo de DUAM

1. Introduction

Latin America is a developing region with high levels of inequality between and within countries (World Bank, 2005).

Young children suffer from such inequality in part because they received different levels of stimulus and resources in their

homes. Parents of disadvantaged families do not have the time or money to invest in their toddlers and preschoolers and

sometimes do not know what is best. Shady et al (2014) show how young children's cognitive development is deeply

related to family income and so it widely varies between and within Latin American countries. The differences in

development that emerged in early childhood don not change after age 6 and thus, this diminishes the opportuinities and

future outcomes to achieve social mobility. This scenario might seem pessimistic. Nevertheless, it is possible to reduce

those gaps if the correct investments are done in time (Heckman, 2008). What parents do during the first years of their

children's life can actually determine their development and success. Therefore, empowering parents and giving them the

right tools to affront that challenge can generate a positive and lasting impact. Our project aims to provide parents with

tools to strengthen their parenting and break the vicious circle of inequality.

2. Value Proposition

El Mundo de DUAM (DUAM) is a toolkit designed to support Latin American parents raise their 0-5 years old children.

Its design considers state-of-the-art evidence about child development and incentivizes parents to engage in healthy

interactions with their children that strengthen attachment and increase skills that promote socio-emotional and economic

success.

The development of DUAM consists of two main stages. First, an application that includes diverse material for parents

and children will be developed. Once the brand has flourished, a collection of books and other educational material and

accessories will be produced and DUAM will be completed. All the material will be based on an educational curriculum

specialized for the age and needs of every child.

Given DUAM's mission, a social impact department will be created. The area will be responsible for managing the one-

for-one donation system and the development of non digital material and workshops to be donated to other institutions


that work with disadvantaged children. This will support deprived families in Latin America to develop the potential of

their children.

Product Description: Our key feature is to combine high quality and attractive design with innovative and stimulative

educational content with literacy at the core. Experts in Education and Psychology will be the team behind the readings

and activities aimed to enhance different skills. We will also team up with innovative designers specialized in illustrations

for children. Synergies between both types of specialists will favor the development of content that caters the need of

parents and children regarding visual and educational aspects. Another advantage is that parents will be prompted to

interact with their kids by establishing goals for specific skills to be developed and using behavioral nudges that will send

reminders in order for them to achieve their targets and emphasize the importance of early childhood education.

Product Development: To assure a high quality product, DUAM needs to be created following the next stages: (1)

Develop recommendations for the prototype phase, (2) Prototype an application testing the materials and technologies

with the help of parents, (3) Define a version 1.0, and (4) Generate the rest of the curriculum to expand the products

(books, accessories, games) and establish best practices for continuous learning and innovation.

Social Impact: Why early childhood investment? Early childhood investments are critical for the development and success

of children. As Heckman (2000, 2006, 2007, 2008) shows cognitive and non-cognitive abilities determined economic and

socioemotional success. These abilities critically depend on the family environment, and gaps in both kind of abilities

between advantaged and disadvantaged children open up early. Nevertheless, Heckman's conclusions present strong

evidence of the positive effects of early interventions on children, even for disadvantaged families.

As suggested by the work of Harvard University's Center on the Developing Child, a young child experiences the world

as an environment of relationships, and those experiences shape the development of the brain and represent the foundation

of later development.

Why empower parent-child relationship? Responsive relationships are essential in early development. According to

Harvard Center on the Developing Child there is no evidence that supports the idea that something besides real-life


relationships can help develop a child's brain up to age 3. Also, it is important to highlight that interventions that work

through parents might have long lasting effects

3. Costumer Segment

In its inception, DUAM will serve middle and high income parents of 0 to 5 years old children in Chile. At the same time,

through the donation model, DUAM will reach low income parents with children of the same age group. The Chilean

market was selected to launch DUAM because of its high internet penetration, income level and its awareness about the

importance of early childhood investments, all in comparison to the region. Once the brand is consolidated in Chile it will

be expanded to other countries in Latin America, such as Mexico, Peru, Argentina and Colombia.

Costumer Profile: DUAM has two types of costumers, private costumers and beneficiaries. Both are defined in terms of

their socioeconomic status and access to internet, which are characterized for Chile in Appendix 2 and 3. Their profile is

defined as: (i) Private costumer: 25-45 years old, parent of 0-5 years old child, college educated, family income above

1,500 dollars (IV quintile’s average family income). (ii) Beneficiary costumer: Parents of 0-5 years old children from

quintile I to III who can access DUAM through their municipalities or other nongovernmental alliances.

Market Size and Market Opportunities: According to the OECD, in the last 4 years Chile's internet access has increased

from 30% to more than 60% and it is still increasing. In Chile, 752,374 children from 0 to 5 have access to internet which

corresponds to 417,986 families (See Appendix 4). This is DUAM's potential market and it considers two types of

costumers, those who will buy and those who will receive the donation, called beneficiaries. To further analyze the size of

the market, consider the description of Chilean families per income level given in Appendix 2. Families from quintile IV

and V can be seen as potential DUAM's costumers, and families from quintile III and below can be the beneficiaries.

Because the internet penetration in 2012 was 61% we can assume that families of quintile III and II have access to

internet. Nevertheless, there are families that can be beneficiated by DUAM but don not have direct access to internet.

Given this reality, DUAM's donation model will adapt to the beneficiaries context thanks to alliances with municipalities,

NGOs and others.


Once the company is stable in Chile, it will be expanded to Mexico, Peru, Argentina and Colombia. Considering all these

countries, there are more than 9.5 million children from 0 to 5 with access to internet, corresponding to more than 4

million families (See Appendix 4). As internet penetration increases, the size of the market will follow the same trend in

all the selected countries. For example, according to the OECD in 2012, 22% of the households in Mexico had internet

and today that number has increased to more than 43%.

Social impact in the Chilean context: First, comparing to PISA taker countries, Chile's performance shows a gap that not

corresponds with other measures of development. For example, PISA 2012 results ranks Chile 51st in mathematics and

47st in language, falling behind countries less developed as Vietnam. PISA tries to measure knowledge and skills that are

essential for participating in society. Considering this fact, DUAM can help increase educational achievement, in this case

measured as PISA score, for all the children that use it. DUAM can contribute to the development of those skills because

it will empower parents and help generate engaging parent-child relationships that will promote children's creativity,

problem solving skills and critical thinking. Secondly, Chile is very unequal in comparison to the region (see Appendix 1)

and to other OECD countries. Chile's GINI index was 0.508 in 2011 and the average GINI index for OECD countries was

0.316 in the late 2000s. Segregation implies the existence of non trivial gaps in the resources, time and information that

parents have. In this context, we consider that the donations of DUAM can contribute to reduce inequality.

4. Competition

Current players in the market lack the combination of the features of DUAM. However, there are indirect competitors in

different levels in the US and Latin American Market:

A Story Before Bed. This app provides parents with the opportunity parents to record themselves reading a book for their

children.

Daniel’s Tiger Neighborhood: TV show aimed for preschool aged children based on a curriculum focused on child

development. This television series has developed a world with toys and books.

Baby Time, BabyCenter, Learning 4 kids and other web-based support: Guidance and tips on how to educate their

children and activities for parents and children.


Caramba, Ninots and De Magia y Carton: Sell educational and creative toys.

Baobab: Educational toys and material provided by Baobab through municipalities. Parents can use and exchange toys for

free in parks.

Personal networks: Parents rely on their personal networks to obtain information about parenting.

5. Intellectual Property

Our venture will rely heavily on the fact that design and content will differentiate the product and will be one of its most

attractive features. Therefore, it will be crucial to protect its Intellectual Property. Trademarks in Chile, after being

accepted, are protected for 10 years since the year of registration and afterwards can be renovated indefinitely for periods

of 10 years. Additionally, designs and drawings can also be registered.

6. Customer Engagement

Customer engagement will rely on several strategies that will be determined by the phase of the venture. The main goal is

to create a brand and a “world” that generates an attachment between children and the characters while parents get high

quality educational material.

Advertising and word of mouth will be the main communication channels to get to customers. In the first stage a free trial

mode will be offered so parents can download the application and try it for free. To keep and grow the customer number,

we will use a referral model in which if parents get friends and family to subscribe they will get three free months of use

for each people they refer.

In a later stage we will divide membership into standard and premium so that parents in the premium content get

exclusive access to new content, specialized guidance and special events and workshops in the stores. Besides, new

content and new characters will be gradually launched so parents and kids remain engaged. Also, parents will get

discounts and special promotions for the physical accessories when they reach key milestones in their goal tracking in

order to incentivize the use of the app and the interaction with their children.


7. Revenue Model

Pricing: Monthly fee of 3 U$ per child for the access to the content of the application to people that can afford it. The fee

was decided after in depth interviews with Latin American parents and it was chosen because it can be perceived as a non-

relevant small fee for people that have internet at home. The company will also have a social department that will focus

on giving access to the application and to the content in other formats for free to segments that do not have the money to

pay it or internet access.

Referrals: A key issue in the strategy of DUAM is to grow fast. In order to achieve this, the revenue plan includes a

referral program. Based on an interview with the founder of Poncho (weather forecast provider new venture) we estimate

that around 10% of costumers are going to recommend the application to someone else. This is also considered in the

revenue estimation.

Revenue: The project considers using digital advertising with an efficacy of 3% during the first 3 periods in each market.

This means the percentage of people that download the app after clicking on the advertisement. We also analyze the

scenario having a 2% efficacy. This exercise reveals that growing fast is the most important factor in the strategy of the

venture. The analysis also considers the revenue effect of the referrals. The exercise includes the first 2 years, considering

just the Chilean market for the first year and adds the Mexican market for the second.

The break-even is reached after 11 months using the 3% internet advertising efficacy and after 18 months using the 2%.

And the NVP of the project using a constant revenue from the 2nd year on and considering the first 5 years is $5.2M for

the 3% and $2.8 for the 2% scenario. In Appendix 5 there are details on the cashflows, breakeven points and market

penetration.

8. Operations

DUAM will focus on creating material connecting state-of-the-art content with practical advice to parents. Therefore it

will be key to higher highly qualified experts to develop the material and this is will be translated into higher costs. The

cost of the staff will include 8 professionals and it will cost $272.000 a year. The development of the app will cost

$60,000. All the details are in Appendix 11.


As mentioned in the previous section, growing fast is the most important dimension of the strategy. The Venture considers

spending $150,000 in sales and advertising a year, that will be spend when entering to a new market. Other important

costs are summarized Appendix 11.

9. Management Team

Managers: Andrea Arévalo (Founder, former consultant at the World Bank, Economist from CIDE, Mexico, MPP the

University of Chicago 2015), Alberto Garrido (Founder, Former assessment director at Aptus Chile and branding

consultant at BrandAsset Consulting Chile and Australia, Industrial Engineering), and Esperanza Johnson (Founder,

Master in Economics Universidad Catolica de Chile, former Lecturer and Research Associate in the economics

department PUC-Chile. MPP the University of Chicago 2015)

Advisors: Susan Mayer (Professor, University of Chicago), Anjali Adukia (Assistant professor, University of Chicago),

Gregory Bunch (Adjunct professor of entrepreneurship, University of Chicago), Caterina Platovski (Former Chief of

Language Curriculum, Ministry of Ed. Chile), Rafael Lopez (Founder of Sexto Piso and Hueders, Publishing Houses),

Piero Solari (Stakeholder at Fallabela retail store. Vice President Aptus Chile), and María Paz Ardito (Clinical

Psychologist, Infant Mental Health Specialist at Erikson Institute)

10. Progress to Date

Up to date we have done research in early childhood education and development and the needs and behaviors of Latin

American parents of children from 0 to 5. From the research we established a solid theoretical and evidence-based

analysis to support a social enterprise such as DUAM. Also, the research helped us establish the first guidelines of

DUAM's curriculum, which are mentioned in its description. Also, we developed a survey that was applied to more than

70 parents from Chile and Mexico to have a sense of the needs and behaviors of our potential customers. This survey

provided relevant insight about how parents like to spend their time with their young ones, what skills do they hope to

develop in their kids and what tools they would like to have in order to do so. These results helped define DUAM's

strategy. The complete results of the survey are in Appendix 6.


11. Business Risks

Intellectual property: Our business must be able to protect the content and design to avoid copies by competitors. We will

tackle this issue by protecting the rights.

Securing payment and personal information: Online payments and personal information are subject to theft that can

derive in identity theft. To mitigate risk a specialized IT team will be contracted.

Inability to secure fast growth: Digital marketing, referal program and aggressive entry to other markets. Mexico as a

second market.

Competitors’ response: There could be the case that new players try to emulate our model with the creation of their own

content and designs. Therefore, it is crucial that our brand grows quickly and profits from the lack of direct competitors in

the first stages.

12. Business Analogs

There are several evidence-based initiatives that provide guidance to parents in order to develop their children and

empower their role, strengthening parenting:

Thirty Million Words Initiative (TMW), The University of Chicago: Parent-directed program that enhances a child’s brain

and impact his or her future through the power of language.

Center on the Developing Child (CDC), Harvard University: Generates knowledge and innovations to benefit

disadvantaged children.

Encouraging Your Child to Read, Harvard University: Provides guidelines to encourage reading and recommends

activities and books for children of different ages, from 0 to 9.

Chile Crece Contigo (ChCC), The Government of Chile: Governmental program that provides online information to

parents about early childhood education.


Appendix

A1: Comparison between Latin-American countries

Chile Mexico Peru Argentina Colombia

Population (2013) 17.620.000 122.300.000 30.380.000 41.450.000 48.320.000

GNI per capita (dollars 2013) $ 15.230 $ 9.940 $ 6.390

$ 6.310

(2006) $ 7.560

OECD Income level (2013) High

Upper

middle

Upper

middle Upper middle

Upper

middle

GINI Index (2011) 50.8 48.1 (2012) 45.7 43.6 54.2

Students who had not attended

pre-primary education (2012) 6.2% 9.2% 14.2% 9.5% 13.8%

Internet Users (2013) 66.5% 43.5% 39.2% 59.9% 51.7%

Source: World Bank (World Development Indicators) and OECD (2014, Internet access indicator)

A2: Chile's income level per quintile

Per capita

Quintile Homes Population

Persons per

home Home average Average Min Max

I 937.091 3.586.875 3,8 130.940 31.582 0 58.933

II 937.248 3.628.503 3,9 307.162 79.733 58.934 100.814

III 937.748 3.407.328 3,6 463.504 127.593 100.831 159.805

IV 936.306 3.182.844 3,4 722.394 213.147 159.807 286.399

V 937.097 2.777.285 3,0 2.053.759 759.485 286.406 -

All in Chilean pesos, exchange rate 1 dollar=600 CP Source: Casen 2009, Ministerio de Desarrollo Social Chile A3: Chile's Internet user profile

47%

53%

Gender

Male Female

28%

44% 28%

Age 18-‐24 25-‐39 40-‐55

23% 39%

38%

SES C1

C2

C3


Source: Report Internet Uses, ICCOM 2010 for Chilean Ministry of Tourism

Socioeconomic status defined as C1, C2 and C3 can be understood as middle-high, middle and middle-low status

respectively. The smallest proportion of C1 users is because that group has a lower weight in the population.

A4: Market Size Calculations

Chile Mexico Peru Argentina Colombia Fertility Rate (2012) 1,8 2,2 2,4 2,2 2,3 Internet Access (2013) 61% 26% 39% 59% 54% Population (2013) 17.620.000 122.300.000 30.380.000 41.450.000 48.320.000 Birth per thousand (2012) 14 19 20 17 19 Total births 246.680 2.323.700 607.600 704.650 918.080 Children 0 to 5 with internet access 752.374 3.020.810 1.184.820 2.078.718 2.478.816

Families 417.986 1.373.095 493.675 944.872 1.077.746 Children 0 to 5 752.374 3.020.810 1.184.820 2.078.718 2.478.816 Total Children 9.515.538 Total families 4.307.374 Source: World Bank, World Development Indicators. Author’s calculations.

Using data from the World Bank (italics in the table above), we have calculated the total number of children from 0 to 5

with access to internet considering the total births per year as one cohort. Then we consider five of those cohorts and the

internet penetration rate to reach the total number of children 0-5 with internet access. Given the fertility rate per year we

can have the total number of families with children from 0 to 5 with internet access.

A5: Survey's Results

1. Gender Composition

Female 65,75% Male 34,25%

2. Full time employment

Yes 46,58% No 53,42%

3. Full time student

Yes 14,93% No 85,07%


4. Profile of children under 5

The majority of the parents surveyed had 1 child under 2 years old. Parents with more than one child had on average one

of 4 to 5 years and one of 1 to 0 years.

5. Confidence on parenting skills

Always 32,39% Almost always 53,52% Sometimes 11,27% Few times 2,82% Never 0,00%

6. What is your favorite parent-child activity?

Average ranking over 6 options:

7. Which skill would you like to foster in your child?


Creativity 5 Cognitive skills 3,20 Social skills 5,70 Self suficiency 4 Curiosity 3,43 Team group 2,66 Resilience 3,05

8. Do you use any educational tool?

Yes 34,92% No 65,08%

Playing 5,26 Drawing 3,07 Having a conversation 4,58 Readind together 3,03 Watching TV 2,16 Daily activities (eating, getting dress, etc) 2,93


9. What an educational application should have to be useful?


Educational material 5 Creative ideas to use with children 5,90 Expert advices 4,26 Books and short stories 4,15 Games 4,40 Videotutorials 2,48 Reminders to organize time with children 1,77

A6: Cash Flow – Year 1


A7: Cash Flow – Year 2


A8: Market Penetration

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50%

Market penetration for the Jirst 2 years


A9: Revenue depending on the Internet Advertising Efficacy

A10: Cumulative Income depending on the Internet Advertising Efficacy

$-‐ $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000

January

February

March

April

May

June

July

August

Septem

ber

October

Novem

ber

December

January

February

March

April

May

June

July

August

Septem

ber

October

Novem

ber

December

Revenue

3% adv efJicacy Revenue 2% adv efJicacy Revenue

$(1,000,000)

$(500,000)

$-‐

$500,000

$1,000,000

$1,500,000

$2,000,000

January

February

March

April

May

June

July

August

Septem

ber

October

Novem

ber

December

January

February

March

April

May

June

July

August

Septem

ber

October

Novem

ber

December

Cumulative Income

Cumulative with 3% EfJicacy Cumulative with 2% EfJicacy


A11: Operational Costs

Team Salary after taxes in CH$ Total Salary in CH$ Monthly Salary in Dollars

CEO $ 2,300,000 $ 2,530,000 $ 4,016

Multimedia Expert $ 1,400,000 $ 1,540,000 $ 2,444

Pedagogical Expert $ 1,400,000 $ 1,540,000 $ 2,444

Technical Support $ 1,400,000 $ 1,540,000 $ 2,444

Social impact manager $ 1,400,000 $ 1,540,000 $ 2,444

Customer service $ 600,000.00 $ 660,000 $ 1,048

Material Production $ 1,500,000.00 $ 1,650,000 $ 2,619

Educational Experts $ 3,000,000 $ 3,300,000 $ 5,238

Monthly Total

$ 22,698

Total year

$ 272,380.95


Cost forecast

App development $ 60,000

Sales and Advertising $ 150,000

Design $ 30,000

Travel Expenses $ 40,000

Server Rental $ 6,000

Educational Team $ 272,381

Office space rental $ 25,000

Total $ 583,381


References

Cunha, F., J. J. Heckman, and S. M. Schennach (2007). Estimating the technology of cognitive and noncognitive skill

formation. Unpublished manuscript, University of Chicago, Department of Economics. Presented at the Yale Conference

on Macro and Labor Economics, May 5–7, 2006. Under revision, Econometrica.

Harvard Graduate School of Education, Encouraging Your Child to Read, Booklet.

Heckman, J. J. (2000, March). Policies to foster human capital. Research in Economics 54(1), 3–56. With discussion.

Heckman, J. J., J. Stixrud, and S. Urzua (2006, July). The effects of cognitive and noncognitive abilities on labor market

outcomes and social behavior. Journal of Labor Economics 24(3), 411–482.

Heckman, J. J. (2007, August). The economics, technology, and neuroscience of human capability formation. Proceedings

of the National Academy of Sciences 104(3), 13250–13255.

Heckman, J. J. and D. V. Masterov (2007). The productivity argument for investing in young children. Review of

Agricultural Economics 29(3), 446–493.

Heckman, James J. "The case for investing in disadvantaged young children."Big ideas for children: Investing in our

nation’s future (2008): 49-58.

Heckman, J. J. (2008). Schools, skills and synapses. Economic Inquiry. Forthcoming.

Shady, Norbert et al. “Gradientes de riqueza en el desarrollo cognitivo durante la primera infancia en cinco países de

América Latina”. BID Document # IDB-WP-482, 2014.

World Bank. 2005. Equity and Development, World Development Report 2006, Washington, D.C.

Electronic References

Center for the Developing Child, http://developingchild.harvard.edu/, Web, 06 Dec. 2014

Thirty Million Words, http://tmw.org/, Web, 06 Dec. 2014

Chile Crece Contigo, http://www.crececontigo.gob.cl/, Web, 06 Dec. 2014

AlMas, https://blueprint.uchicago.edu/organization/almas,Web, 06 Dec. 2014

Learning 4 Kids., www.learning4kids.net, Web, 06 Dec. 2014.

A Story Before Bedtime, www.astorybeforebed.com, Web, 06 Dec. 2014.

Daniel the Tiger, www.pbskids.org/daniel, Web, 06 Dec. 2014.

Editorial Alfaguara Infantil, http://www.librosalfaguarainfantil.com/cl/,Web, 06 Dec. 2014.


Recrea Libros, http://www.recrealibros.cl/, Web, 06 Dec. 2014.

Editorial Amanuta, http://www.amanuta.cl/, Web, 06 Dec. 2014.

De Magia y Carton, http://www.demagiaycarton.cl/jugar-con-carton, Web, 06 Dec. 2014.

Caramba, http://www.caramba.cl/ Web, 06 Dec. 2014.

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