This blog is a platform that I use to share ideas and catalogue my thoughts. My main interests are in Entrepreneurship, Venture Investing, Hospitality and Economics.
Showing posts with label Validated Learning. Show all posts
Showing posts with label Validated Learning. Show all posts
We had our 6th Meetup @Cafe Solon last evening. We once again had a very good turn up, around 30 people. The topic of the discussion was Strategies to Test Business Hypothesis, which was a follow up from last week's meet topic "Business as a Hypothesis", here are the Notes to that meetup and follow up write up. Björn Brynjar Jónsson, give a 5 minute brief talk about a topic of interest that he wanted to share with the group. The topic that he talked about was from the book "Start with Why" by Simon Sinek. It was very interesting and inspiring. Björn talked about the Golden Circle from the book. The premise is that we tend to focus our effort our vision etc on the "What", whereas great leaders who inspire us usually start with the "Why", which refers to the Purpose of why we do the things we do. When we understand the purpose and communicate the purpose we can inspire people to action. He gave the example of Apple. Here is the Video of Simon talking in Tedx.
We talked about Strategies that were used in Clara to test their business model through the product Vaktarinn. Originally, Clara had not created the software that automatically sources all the digital content and provides the visualization that they do on Textual information. Gunnar explained how they got 10 of their friends to manually enter all the text from different sources into Excel Spreadsheets and then manually created the visualization look and feel on the data to validate if anyone would be interested to buy the product. Their first revenue was in selling that manual work, once they validated that idea they went on to build all the software that powers Clara Insight and Vaktarinn now. This was a quick and dirty way to see if there is a market for what you want to build.
The second example was from the company Buuteeq, how the team there validated their hypothesis that Independent Hotel Owners are willing to share their contact details and everything about their hotels to a third party and host their solution on a third party platform. They validated that by creating a Hotel Directory Service for Independent Hotel Owners called Wandari.com. Not only were they able to validate that business hypothesis they also created their customer funnel which they could target and convert into actual paying customers.
There was a discussion on a new business hypothesis that Safe Drivers would be willing to save money on their car insurance by allowing a tracking device to be installed in the car. We talked about how this hypothesis can be validated by just creating a web page with a simple button that says "Are you a Safe Driver? If you answered Yes, You can save 30% on your Car Insurance!" Sign up to be the First of the Safe Drivers to take advantage of the offer." Ok, I made the actual sentences up but that is where the discussion was going!
The 4th business hypothesis was about non-availability of Icelandic Candy on Souvenir shops. One of the participants wanted to create a business on creating an attractive wrapper around the traditional Icelandic Candy and sell it to the Souvenir shops. The group guided her to actually pre-sell the candy to the stores with just using Digital images and depending on the demand she could build up her business. I was so happy to see how excited she was about being able to launch her business by this weekend! Entrepreneurs find the way!
Kristján Freyr Kristjánsson shared the story of how they created a business to sell the Eyafjalljokul's volcanic ash. They sold this idea while they were stranded in the airport in London, they just used digital images to create a visualization of a fancy bottle with the Ash in it and they sold it even before the product was ready. Overall a fantastic meetup and the next meetup is going to be on Pivot Stories.
The above video is from the Stanford University'sEntrepreneurship Corner. Alexander Osterwalder explaining his Business Model Canvas, with examples and Steve Blank joining him to discuss about Customer Development and how it all fits together. It is 53 minutes long but well worth it. There is an iPad App called Business Model Toolbox ($29) which you can buy, I think it is pretty neat because it has the Cost estimation embedded in it. The entire tool set could allow us to define our hypothesis and then we can use the canvas to define our value proposition and the customer pain vs gain map. This whole approach allows for understanding what needs to be validated. We talked a lot about Validated Learning in our meetup last week and I am still thinking about how do we know we are validating the right thing. Alexander and Steve explain this in the video. Check it out.
The meetup yesterday on the Lean Startup was very inspiring, so I am following up the post with some more thoughts on how can we implement the validated learning concept on various businesses and scenarios. I strongly believe that the Internet and all the applications that have been built on this global network provide us with valuable sensors to touch, feel and understand the dynamics of human behavior. We can conduct experiments, collect data and learn from them. This is precisely what Validated Learning is from my perspective. The classic example is the concept of selling a car through the internet, when someone floated this idea 13 years back, the conventional wisdom was it will never work but I know various examples from Steve Blank's book as well as Bill Gross'sinterview on This Week in Venture Capital with Mark Suster show how they experimented and did validated learning. Bill Gross is a fantastic ideas guy, check out the full video but if you want to skip to the part about the Car Selling example it is at 0:31:41 in the video. The summary of it is they had just put a landing page with some images of Car with a price tag on it, they had no inventory or distribution or management team or any infrastructure to support selling cars but they did it anyway to learn if anyone would click on the "Buy" button and their idea was if anyone click on it they will have validated the idea a car can be sold on through the Internet, they followed that link to test further hypothesis will a user actually give their credit card information and personal details like address, phone number etc sure enough they put up a form that takes in the information of the buyer and the credit card information. They were surprised to see the orders start to come in, and when it did they physically drove to a Car seller bought the car and deliver it to the buyers. When you think about this, the buyer really does not care whether you are buying it from another seller or not, all he cares about is the convenience of being able to buy a car from his office. They found out that there were many buyers and once they had validated that hypothesis, they built the infrastructure to support growing sales. Actually, I think they took down the site in a day because they could not fulfill the orders that poured in, thats what I can a luxury problem.
