Lessons learned MBA 6262_Blog 1_ Gurudev Ramesh

Welcome to my first blog on lessons learnt in the course MBA6262. The book I chose for this course work is The Lean Startup by Eric Ries. The reason for choosing this book is because of the business idea I had in mind already, and I wished to know how to validate the idea and bootstrap the process of developing the product/prototype effectively. I found this book to be a perfect fit for my purpose.

The Lean Startup comprises of 3 segments- “Vision”, “Steer” and “Accelerate”. Fortunately, we had a clear vision at an early stage of ideation of our product (Canwash). The idea did not come out of blue. One of our team members works at a local laundromat as a part time employee. He realised that the customers faced difficulty in coming and dropping off their clothes and having to wait for it to be washed. So we decided to make an online platform to provide the convenience of doing their laundry/ dry cleaning at their fingertips.

As soon as we conceived this idea, we decided to “Validate” it to our prospective customers. Our primary customers were those who use wash and fold services regularly and our preliminary validations were successful with this customer segment. As a part of “Build, measure, learn, feedback loop” we decided to go a step further. We wanted to see whether the customers were ready to pay for the services, as we did not want to build something which customers were not ready to pay for. We started testing our initial hypothesis of the “perceived pain point of the customers”, which was doing the laundry on their own, by talking to specific focus groups such as student community and working professionals. These focus groups were selected because we believed these people weren’t sensitive about the prices and also assumed the convenience of saving time will influence them to be our customers.

Once we started collecting the data from real customers in the form of face to face interviews and online surveys, to our surprise we found that our initial assumption of the “customer pain” was wrong. Either they became habituated doing it on their own or did not feel the task as time consuming (Students), or they already had someone else doing it for them. So our offering was not so compelling to them after all. That’s when we realized that either our target focus groups were wrong or our hypothesis was wrong. So we shifted our focus group to the large families, where we could find all our previous customer segments at one place. A typical large family has couples who are working professionals, have kids to look after and sometimes their old parents. Our value proposition of saving time and convenience will fit them the best. Another focus group was working professionals, who wear suit or uniform to work every day, and needs them to be washed or dry cleaned regularly.

We conducted the experiment again to validate the assumed customer segments. Our results were positive for large family focus group and for suit and tie professionals while customers of age 45+, who actually use the local laundromat for dry cleaning often, are not so tech savvy. In fact, they were not using popular services like “Uber” or “AirBnB” which are meant for convenience at a cheaper cost. We were unaware that our product by itself will be a barrier for us.

On the other side of our business model who we assumed as a key partner for operating the business which are laundromats are now slowly moving towards our customer segment. Because we are adding the new value proposition for them by increasing their visibility in the market, getting more orders which in turn increases their revenue.

In the “Build, validate, learn, feedback loop”, we validated our idea and found we were targeting the wrong customer segments, uncovered our hidden barriers and learned who our customers were.

Once we discovered and validated all the guesses of our initial business model through the validated learning of talking to real people, we built our “Minimum Viable Product”. It is a facebook page and a landing page to target the mass audience and to check whether we could get any tractions in the form of early signups or not. We have reached more than 2000 people but the conversion rate is less than a percent. To know about our further progress and how our business model is going to evolve, if we are going to pivot the entire idea or preserve it, Stay tuned for the next blog.

Reference

Ries, Eric. The Lean Startup. New York: Crown Business, 2011. Print.