The Use-Case Canvas for Symbid

Symbid is an Amsterdam based equity crowdfunding platform for companies.

The Use-Case Canvas for 1 use-case of the company is shown below. The use-case in focus is where the company offers equity crowdfunding services to startups.

The Use-Case Canvas for AdviceRobo

AdviceRobo is an Amsterdam based alternate credit scoring company offering credit scoring & lending portfolio risk management services for Banks & FIs. Credit scores are generated through identity check and psychometric tests.

The Use-Case Canvas for 1 use-case of the company is shown below. The use-case in focus is where the company offers credit scoring services for thin files to Banks & FIs.

The Use-Case Canvas for PaymentGenes

PaymentGenes is a Amsterdam based company offering consulting and recruitment services to Payment & Fintech companies.

The Use-Case Canvas for 1 use-case of the company is shown below. The use-case in focus is where the company offers consulting services to payment startups.

The 2 Types of Business Ideas

From the customer’s perspective, broadly all business ideas can be divided into 2 categories – the “Help Me” ideas and the “Show Me” ideas.

Help Me Ideas: These are business ideas which aim to solve a current pain-point of the customer. The customer is feeling a pain and the idea’s goal is to solve the same. For example, TripAdvisor was a business idea which aimed to solve the customer pain of not having enough and trusted information to make decisions about travel.

Show Me Ideas: These ideas, on the other hand, have a goal to enlighten customers about how things can also be done. The customer may be reasonably happy with the solution which is already available in the market. The Show Me Idea will show the customer a better way to do the same thing. For example, Uber would be a classical example which was able to provide a better customer experience using technology.

Having said the above, all ideas of a particular category also have certain elements of the other category. A Help Me Idea will also partly play the role of a Show Me Idea and vice versa.

THE USE-CASE CANVAS

Building a product which customers may want is the key to good business idea. Hence working out Use Cases for your product is very essential. Once, you figure out the Use-Cases, analyzing them is also a must.

The Use-Case Canvas enables you to do that. It clearly defines the use-case, the market targeted, all external stakeholders and all other details which can help assess whether the use-case is strategically valuable and sustainable.

Note: The Canvas should be used for 1 use-case. Multiple use-cases should be analysed with multiple canvases.

Are You Guilty of Self-Validation?

This is a big bias entrepreneurs tend to have when starting up. I have been very guilty of this.

How do you know your business idea is good? Do you feel it or do your potential customers say that? A lot of the times we feel that there ‘should’ be a need which our product/service caters to. This should can be quite risky. Before proceeding with the idea, a proper validation is a must. Self-validation, i.e. validating the idea yourself, is a trap entrepreneurs often tend to fall into.

A proper and adequate validation involves doing the following:

Assessing whether a need exists: Some good ideas to do this are

- Talk to/survey potential customers

- Identify whether customers are interested in your product by analysing their current behavior

- Create a MVP and test out your hypothesis

- Conduct a comprehensive research (including primary and secondary research)

Is the market big enough: Try to estimate the potential market size the idea is catering to.

Will the customers be willing to pay for your product/service: Analyse whether your business idea has advantages and customer would be willing to pay for it.

This is very crucial as following up on an idea which has not been adequately and appropriately validated can result in waste of time, energy and resources.

Top Reasons Why Startups Fail

Startup Failure is considered a taboo in many parts of the world. However, it is a phenomenon which is highly prevalent and cannot be avoided. Nearly 90% of startups fail within the first 3 years of operations. Top 20 reasons why start-ups fail include the following:

#1 – Building a solution looking for a problem, i.e., not targeting a “market need”

#2 – Ran out of cash

#3 – Not the right team

#4 – Get out-competed

#5 – Pricing/Cost Issues

#6 – A “User Un-Friendly” Product

#7 – I got this product. Now I just need a business model.                

#8 – Poor Marketing

#9 – Being inflexible and not actively seeking or using customer feedback

#10 – Release product at the wrong time

#11 – Lose Focus

#12 – Disharmony with Investors/Co-founders

#13 – Pivot Gone Bad

#14 – Lack Passion and Domain Expertise

#15 – Location, Location, Location

#16 – No Financing or Interested Investors

#17 – Legal Challenges

#18 – Do not use your connections or network                

#19 – Burn Out

#20 – Failure to pivot when necessary

Source: CB Insights via Seraf Investor

The Power of the “Crowd”

We live in a world where customer is the king and her preferences are changing ever so quickly. For an entrepreneur, it becomes very difficult to understand customer preferences and requirements and to find a good product-market fit in the process. Hence in this world we are living in, tapping into the “Crowd” makes complete sense.

The “Crowd” refers to a mass of people who may be connected or not connected to you. Crowdholding is a platform which tries to connect entrepreneurs with the “Crowd” so that they can derive the host of benefits the latter has to offer.

The benefits of the “Crowd” are listed below.

Diverse Opinions – The “Crowd” is a heterogeneous lot of people coming from different backgrounds and demographics. They all come together as they have 1 common interest – engaging with entrepreneurs around their business ideas. This ensures that suggestions and opinions received by entrepreneurs on the platform are diverse and focus on different areas of the business.

Unbiased Feedback – Since the entrepreneur has no previous attachment with the people engaging with his/her business idea, the feedback received can be safely assumed as unbiased.

Implied Agreement – Any opinions which are reiterated time and again can serve as implied agreements by the “Crowd”. Since these implied agreements are opinions of a number of people, the entrepreneur can use the same in further design and development of the product.

Statistically Significant – Even statistically, data collected from a bigger sample of people has more significance when compared with data collected from fewer persons. This data collected can be analysed by clubbing into categories and trends can be identified which again can be used in product development.

Cheaper – Finally Crowdsourcing feedback and ideas consumes lesser time and lower cost when compared with other means to do so.

So if you are a budding entrepreneur and have a business idea, put it on Crowdholding and let the Power of the Crowd assist you in realizing your dream.

Startup Idea - Marketplace for Unconventional Advertising

The Problem – Limited advertising options and increasing advertising budgets have led to steep rises in advertising rates of these options. This has affected the return advertisers can get on their advertising spend, at times making it unreasonable for them to do so.

The Solution/Startup Idea – A marketplace connecting sources of unconventional advertising with potential advertisers. This includes adverts in places like gyms, hotels, salons, educational campuses, residential areas etc.

Rationale – A host of unconventional advertising sources exist which are largely untapped. Tapping these would tend to bring down the advertising costs of advertisers, help them target better and also generate additional revenue of vendors of these new advertisement options.

Target Market –

Customers – Advertisers (especially local businesses, SMEs etc.); New vendors of advertisements (local options like gyms, schools, hotels, salons, spas etc. and online options like blogs, personal websites).

Geography – Global (launch can be in a particular city/country)

Current Competition – This unconventional advertising market is still untapped.

Competitive Advantage – The market is largely untapped. A first mover advantage can prove to be a significant competitive advantage. Also the volume and quality of the data will create barriers to entry in the future.

‘The Brexit Effect’ in Business

A human tendency we often tend to ignore in business is what I call the “Brexit effect”. This is when some people find fault with a product/service and spread their discontent to their near and dear ones. This tends to spread quickly and eventually becomes a movement. This may be a difficult task as negative feelings spread much faster than positive ones. The mood in this group of people becomes one of “we want change”, without assessing clearly the alternate they may be changing to. This effect can prove to be a big risk for any established business and must be addressed before it gains significant traction.

This effect may sound unreasonable and trivial. However, I feel this is the effect which has had serious implications on public decisions in the recent past (some events which we all know about ;) and is a problem established businesses are always grappling with.

The 3 Ways to Source Anything

All business processes have multiple components. These components involve products and services which can either be produced by the business itself (i.e. in-house production), sourced from a few specialized entities (i.e. outsourcing) or can be sourced from a large number of outsiders (i.e. crowd-sourcing). The advantages and disadvantages of each are given below:

In-house Production

-          It generally tends to be cheaper as the margin on those products/services are kept inhouse. Also the business has better control over the process and quality and hence is less dependent on outside entities.

-          The downside is that this option has higher fixed costs and the required skills may be missing in the production. Also this option is operationally challenging.

Outsourcing

-          The biggest advantage of this option is lower fixed costs. This ensures that the business is in a better position to handle business cycles. Also outsourcing to specialized entities tends to ensures better quality of products and services.

-          The downside is that the business becomes dependent on outsiders. As a result, gaps in information flow and  communication can emerge.

Crowd-Sourcing

-          This option is highly scalable and provides the business with large and cheap operational capacity.

-          The biggest drawback in this option is that quality control is a big challenge.

All 3 options can be used by any business. The business must assess its priorities and make a decision accordingly.

Scope of Fintech Products & Services

source: McKinsey & Company

The Price of a Haircut

A haircut is a necessity (for most) and is a repeat activity which we get done periodically. I have moved to Tilburg and have found the price of a haircut to be quite high here. I paid EUR 29 which is a big amount for a student like myself. This got me thinking how a haircut should be priced and what factors determine the price.

Pricing of a haircut can be fixed in 2 ways:

Fixed Pricing: This is what most barbers follow. The price is fixed for a haircut and differences exist based on the gender of the customer. This pricing strategy has its pros and cons.

-     It guarantees a fixed revenue to the barber irrespective of the hair characteristics of the customer.

-     The problem is that some hair is longer and denser and hence more difficult and time taking to cut. Hence the ones with such hair are subsidized by the customers with shorter hair.

-     Also there is no choice for the customer. It is a take it or leave it strategy for the customer.

Variable Pricing: Here prices are set based on a time based rate. A price per minute can be set and based on the time taken to cut hair of a customer, the final price can be determined. A minimum final price can be set to ensure that atleast a minimum revenue is generated on every haircut.

-     The benefit of this strategy is that all customers pay based on the same rate and no cross subsidization takes place, as in the above case.

-     Also this pricing considers the value of the haircut to the customer in setting the final price. If a customer has longer hair or wants a more styled haircut which will take a longer time, he/she has to pay more.

-     The drawback of this strategy is that it based on trust and there can be a trust issue between the barber and the customer. A customer may feel that the barber is deliberately taking longer than required for the haircut.

-     Also understanding the customer’s requirements before the actual haircut takes time. This time needs to be somehow taken into account into the pricing. This will be tricky.

To summarise, a haircut pricing is also an interesting and important strategy for a barber and should be decided so as to create good value both for the barber and the customer.

Other than the pricing strategy, the level of pricing also matters. It depends on the following factors:

Brand: Big branded chain of barbers command a premium.

Facilities: The more facilities offered by a barber can justify a premium pricing for the outlet. Facilities can include a good waiting area, hygiene, latest equipment etc.

Positioning: A focused positioning or targeting a niche can also justify a premium price for a barber. An example is my barber here in Tilburg. This is a place called De MeesterBarbier which is a men’s only barber. All facilities and designs inside are structured to please their target market, i.e. men. There are men’s magazines, musical equipment, drinks etc. which create a great customer experience and hence they can charge the high price for the haircut.

How to Come Up With a New Product Idea?

Key Metrics in E-Invoicing

Key Metric – Network Effects

E-invoicing is conversion of manual invoices into electronic ones. Sending and receiving electronic invoices is great as it saves time and effort for businesses.

Sending and receiving invoices in the same format, automatic tracking of receivables and payables, reconciliation, alerts on bad debts etc. are some of the benefits for users. Hence, for a user to fully enjoy the benefits, stakeholders in the supply chain should also avail the e-invoicing option and hence network effects has a strong role to play.

Secondary Metric – Cost Savings

As mentioned above as well, electronic invoicing helps businesses save time, effort and cost and also tends reduce the risk of any errors in the invoicing process. However, there is an investment which a user must make in terms of time and effort to switch to the e-invoicing option. The long term cost and time savings will be the major factor which will push the user to do so.

Key Metric in Robo-Advisory

Key Metric – Roll Over Rate

Robo-advisors invest people’s money based on an algorithm. Getting users to try out the service may be achieved through marketing efforts, but getting users to stay invested is the key for building a sustainable business. Hence, the rolling over of investments is the key metric for any robo-advisory startup. 

Key Metrics in Crowdfunding

Key Metric – Number of Investors on the Platform

Crowdfunding connects projects and investors. Project owners would tend to list their ads on maximum number of platforms as it might increase their chances of raising money. However, what matters for a platform to be successful and result in conversions is the number of investors on the platform.

The greater the number of investors, more project owners would get lured to the platform, the higher would be the chances of conversion which would then result in positive spiral resulting in more investors and projects.

Secondary Metric – Ratio of Investors to Campaigns on the Platform

New projects tend to bring in new investors from their own network. However, for a project to be successfully funded, the investors existing on the platform should be sufficient to fund a large part of the project. Hence, for a platform to show a high campaign success rate, the ratio of investors to projects should be as high as possible. 

ADVISORY – Interesting Startup Trend for 2017

What is the winning formula for generating a business idea? Identify a problem and find a solution for it. Soon you see multiple startups in the rat race trying to offer better solutions to gain a share of the market. Now what this has led to is another problem, one which gets very little attention. For a user, there are so many options to choose from. Which one to go for?

This is where I feel an Advisor has a big role to play. An advisor, who should be the one in direct touch with user, has the responsibility of understanding the user’s exact requirement and suggesting products based on it. This decision making dilemma of users is the problem where the role of the advisor become useful. This, according to me, holds true for any industry, any requirement, B2B & B2C and so on.

Some issues I see with this model are:

Cost: An advisor needs to make money and this may add to the cost a user has to pay. However I feel finding a better solution for the problem might be more valuable than this cost for a user.

Conflict of Interest: This probably is a bigger problem and might lead to trust issues with the user. Some advisors might try to push those products where they get better commissions/make more money. This would be detrimental to the interest of the user. Giving independent and genuine advice is the need for a user and this must be the underlying premise for any advising service.

The OILS Framework for Growth Hacking

Growth Hacking is a now a commonly used term which basically involves generating growth in the most efficient and cost effective way. The idea is to come up with hacks which are focused and targeted to end users so as to get the best ROI on any resources spent.

The OILS Framework is a good way to come up with hacks which may aid growth of the business.

O – OLVP Definition: This involves defining the One Line Value Proposition of the company.

I – Identify Target Customer: Here based on the OLVP defined, the target customer is identified precisely.

L – Locate Customer: The above identified customer is analyzed and frequented locations and behavior is located.

S – Select Channels to Target: Based on the above locations identified, some channels are selected and targeted to reach out to these customers.

Hacks generated from the framework have to be tested and analyzed over time to judge the effectiveness and outcome of the same.

THE OLVP - One Line Value Proposition

An OLVP is a description of the offering of a startup in 1 sentence. If the OLVP is blur or cannot be written in 1 sentence, this tends to signal that there may be some ambiguity in what the startup has to offer to its customers.

An example of an OLVP is:



TransferWise: A money transfer service for immigrants to send money at cheaper rates.

Defining an Investor

Just like companies, investors are also different and have unique characteristics which define them. Companies looking to offer services or pitch to investors should understand the nature of the investor to have a better chance of being able to do so.

The following are the characteristics which define an investor:

Type of Investor: Individual or Institutional

If Institutional,

Structure of Firm: Type of firm, Organizational structure

Registration Details: Governing rules, Tax implications

Nature of Work: Personal investment or Investment company

Background of Team/Person: Skills, Experience

Risk Appetite: High/Medium/Low, Acceptable value at risk, Attitude towards loss (loss is bad, loss teaches you, its ok it happens)

Return Expectations: Any particular expectations, Goals in mind

Type of Investments: Ratio of investable amount to annual income (refer to Hierarchy of Personal Investments), Active or Passive investments, Time commitment, Term of investment

New Year Resolutions for Fintech for 2017

The year 2017 will play an important role in the growth of Fintech. Some of the resolutions which will drive growth in this area are:

Address security concerns & strengthen backend infrastructure – both in the transaction as well as the platform. Businesses involving online transfers of money such as e-payments, online money transfers and crowdfunding carry the most risk.

Scale to compete with incumbents – scale will lead to economies which will further drive competitiveness.

Adhere to new regulation – with the rise of Fintech, regulators are becoming active in order to stay ahead of the curve. Fintech startups must find the right balance between providing a value-added service and adhering to regulation.

Build a profitable business model – building a profitable business is a necessity as it is not possible to forceful tactics to drive incumbents out of the market.

Enhance customer experience by ensuring promises are delivered – to get a foot into this space, a very high standard of service is required.

Enhanced usage of the blockchain – the advantages of a distributed ledger must be utilized as a tool to deliver enhanced value and build differentiation.

The Hierarchy of Personal Investments

Just like we have Maslow’s Hierarchy when it comes to human needs and desires, I feel personal investments also follow a hierarchy based on the total amount of money available for investments.

The Base

When a person’s income starts exceeding expenses, that person may start looking for investing this surplus. At this stage, this person tends to be very cautious and invests with a motive of reducing risk on the capital invested.

Suggested Investments – Bonds, Fixed Deposits

The Shift

This is when the person’s surplus keeps growing and the person now starts thinking about being more aggressive with investments. A shift is seen in the investment approach of the person and investments with higher risk are typically looked at in this phase.

Suggested Investments – Mutual Funds, Real Estate

The Acceleration

Once the person starts saving more money, the risk appetite of the person starts going up at an increasing pace. The demand for greater returns drives the investing approach in this stage.

Suggested Investments – Stocks, Currencies, ETFs, REITs, Commodities, Indices, Bitcoin

The Peak

At this stage, the person starts looking at not only passive investing as above, but may actually start looking at active investments as well. The aim is to maximize returns using money and active participation in the asset operations and growth.

Suggested Investments – Crowd-Funding, Private Equity

My Strongest Addiction

Startups and Entrepreneurship have become an addiction for me. Looking for pain-points in daily life and thinking of how to do things better tends to keep me constantly occupied. I am hoping that the MBA I am pursuing now can help me look beyond, look at the broader picture, learn new and useful skills and give me a perspective which I am devoid of at present.

#startuplove #thinkbeyond

Key Metric – Landing Page Bounce Rate

The Landing Page Bounce Rate (LPBR) is a key metric in user conversions. This measures the percentage of people who leave soon after landing on your website. The only page the visitor interacts with is the landing page and that too for a short time.

Implications of a high landing page bounce rate can be:

Poor targeting of ad placements: If ad placements are not targeted well, visitors coming onto the portal may not be relevant and hence may decide to leave quickly.

Poor user experience: Visitors might be relevant but poor design may drive them away. This might be due to visitors not being able to completely understand the offering of the business. Another reason can be that these visitors may not want to trust the website due to this first experience.

Depends of landing page: A low landing page bounce rate may not be considered bad always. For example, if a user lands onto the contact us pages of a website, he/she might just want the number or email id and would leave upon getting the same.

The effect of a high LPBR is that it tends to reduce your ROAS, i.e. return on advertising spend. As a business, you should try to place your advertisements in relevant spots so that leads generated are relevant and useful for your business.

The best example for this is the Nigerian email scam. It is a fraud where a person gets an email such as below:

The aim of the fraud is that the person receiving the email gets interested in the ‘free money’ offered by the sender, replies back and after a few communications shares his/her bank details.

The email draft above is so direct and clearly smells of fraud. So I used to wonder why does the sender draft an email like this which looks so obvious? The reasoning behind this is ingenious. The sender of this email wants to target only those people who are very gullible and greedy and will even reply back to such an email. In a way, this email which clearly smells of fraud is a filter to weed out people who are highly gullible and will fall for something like this. Their aim is to reduce the bounce rate of people replying back so that they can concentrate only on the ones who potentially can fall for the fraud.