We are now close to the ending of our trip and this is my personal sum up of how my initial Business idea have changed (Pivoted) during my stay in San Francisco and what I have been doing.
As stated in many of the other blog posts; Lean Start-up methodology is the hype here. The central reason for its popularity are in my opinion related to fact that the business around Venture Capital (VC) funding have changed. It seems that the classic VC funding of small promising start ups have broken and are now focused more on small companies that are all ready ”making it” and needs capital to scale their business. In this environment, concepts like Lean Start-up is a popular and applicable method to for start-up companies to ”Bootstrap” there business – getting started without funding.
The main concept of Lean Start-up is to go out an test your business idea and your related assumptions about your marked – what the customers want. As you test your assumptions a find discrepancies you change your business model to fit your findings – lowering the risk of product failure. Every time you change the business model due to new test findings you 'Pivot' your Business model. This is the general concept of Lean Start-up and has been the methodology that I have used to test my own Business Idea; The Edition.
My original idea – before going to San Francisco
The Edition was to make multiple mobile applications that provided users with information about a specific niche environment of Copenhagen Night-life – places, events and users of the environment. Whether it was Tango music, Jazz, Techno-clubbing and so on, users could get access to this information through a small fee, buying the mobile application.
Experiences, Findings and testing in San Francisco
After meeting many entrepreneurs the start-up companies during the first three weeks, it has become clear to me that my original business model; making people pay for every new mobile application, would not work. A more precise strategy on how to get people to use my product was necessary.
During the first day San Francisco I found the company Yelp that was already doing something similar to what I was working on. I was not the same product – but had many similarities. Yelp does not operate in Denmark and had never hear of it. Yelp is a web and mobile platform that encourage people to rate local business and services, so that people can make a choice on behalf of others perception and experience. I want to do the same, but be more narrow in my scope and focus on real-time information – what goes on here-and-now around you.
Because of the many similarities I decided to make a personal study of Yelp – how did they engage people to rate local businesses, how did they engage local business owners, what was the business model and how did people actually use the application and for what:
1) I started my research by finding every interview and news spot I could get my hands on. This gave me some insight on the history of how they build the company and what strategies they had used. I also had some good talksith Torsten Kolind from YouNoodle about the project. He had been working on a similar idea many years ago – gave me some great inspiration and things to consider – how to do that extra little thing that brings customers more value, than you put into it. He also new some of the original start-up team members of Yelp and gave me some insights into their initial strategy in getting people to use the service. The created a team of early vangelists and nurtured them to help building up the database with recommendation.
2) I wanted to know how people used Yelp. So I started to use the program myself and go out on café's and into stores – asking customers if they used Yelp, how they used Yelp and why they used Yelp. As a reversed Dane this was quite wird to do at first. But I got use to it and got some very interesting insights. Insights that made me change my original assumption on how people use these kind of services and what risk that comes along when letting people in power of the content. To my surprise many people used the web application of Yelp on there mobile, because they searched businesses through Google and found the Yelp business profile in the search result. This made me think – because I originally did not plan to make a web application of the product. But now it seems that this would be a mistake. The most important finding though, is that the user is not willing to pay for this service, if it is to generate user-recommendations. So now I am working on a different business model that has to do with ticket sales and advertising.
3) After starting my research I have been working on developing my pitching skills – every time you find something new, you start to see you product in a new light, forcing you to change you pitch. This has been very healthy and made my business idea more and more clear, even thought more knowledge brings more unanswered questions too. I view it as a healthy sign of getting closer to something useful.
The Present Idea
Too structure all this new information, I have started to use the Lean Canvas as a way of structuring my present view of the business, based on the findings I constantly get:
I'm very pleased with this opportunity of going to San Francisco and the experience of the business environment in Silicon Valley. It is definitely not the last time I have been here. As Danes we can learn a lot from this place when it comes to entrepreneurship. But I think it is important to emphasis the fact that it is a culture and mentality and not just a model or busniess cluster that makes this place special. If we strive for this environment in Denmark I'm convinced that facilitating and promoting entrepreneurship early on in the education system is the essences and central strategy for being successful in this goal.
I hope to be able to give share, by creating a new way of discovering the many amazing events and places Copenhagen night-life has to offer – bringing together local artist, businesses and you.
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