Startup Research (Founder Institute, San Francisco, March 8th, 2011)

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Startup Research@ Founder InstituteMarch 8th, 2011Spring 2011 San Francisco Semester

Simone BrunozziAmazon Web Services Technology Evangelist, APAC

11Quick introI'm Simone Brunozzi.33, Italian. Singapore.Amazon (Web Services).Keywords: Public Speaker, Technology, CloudI met 500 startups in 3 years.

We only have 20 minutes, so let's start.2What is special about Startups?(Hi-Tech) startups have:a) Lower bootstrapping costsb) Higher riskc) Higher potential (more scalable)

"Lean" startup possible (versus traditional "Waterfall" model)3Lean startupsRapid prototypesDesigned to test market assumptionsUse customer feedback to evolve them (faster than traditional software practices)

(This will be important later)

4What makes them "lean"?FOSS + Agile Dev + Cloud Computing + Mashups + 3rd party APIs + Collab tools

(e.g. Kickstarter, StackOverflow, Guru.com)5This is what you will get from me1. 2. 3. 6Example 1: DebianCE (2004)1. Context2. Idea3. Startup research details4. What happened5. Results6. Back to startup research details7. Other mistakes8. Conclusions71. ContextCompany: Wedoit (Me + my brother Marco)Money: Self-funded Where: Assisi (St. Francis of), ItalyActivity: Consulting (web, DB, Linux)

Startup project: DebianCE (Debian Certified Engineer)82. IdeaPassionate about Linux DebianDebian is stable, secure, has a great communityStrong need for Professional Certification (???)Let's do it!93. Startup Research DetailsMarket: Linux certificationSize: (?) 1,000s in ItalyGrowing: (?) yes because Linux is growing Market attributes: new, fragmentedWhy do I care: I love(d) LinuxFinding data: look at competitors, find number of clientsCompetitors: LPI (Linux Professional Institute), Red Hat CPMarket research: ask friends/LUGs/onlineCan you win: if I create something innovative, less boringWhen do you walk away: if I cannot sell it in one year104. What happened1. Created the idea, business plan. Exciting!2. Logo, website, brochures3. Created V1 of the certification platform4. Met with potential partners (ITHUM, Rome)5. We went Live!6. Waited8. Total of 5 "interested" customers in 3 months9. Waited ... zzz ...115. ResultsCOSTS:900 hours of work (27,000 euros?)Other: 4,000 euros

REVENUES:None.126. Back to startup research detailsWhat was the mistake?136. Back to startup research detailsMarket: Linux certificationSize: (?) 1,000s in ItalyGrowing: (?) yes because Linux is growing Market attributes: new, fragmentedWhy do I care: I love(d) LinuxFinding data: Competitors: find number of clientsCompetitors: LPI, Red Hat CPMarket research: Ask friends/LUGs/onlineCan you win: if I create something innovative/usefulWhen do you walk away: if I cannot sell it in one year147. Other mistakes...Vision and Values YESStartup Research NO (bad)Naming and Branding YESMentor Idea Review YESStartup Legal and IP YESCofounders, Hiring and Firing NOT NEEDED (YES LATER)Revenues, Costs and Profits YESProduct Development YESMentor Progress Review NO (bad)Outsourcing, Partners and Suppliers YESMarketing and Sales YESPresentation and Publicity YESFundraising NOT NEEDEDGraduation FAIL!158. ConclusionsWas this a mistake then?

1. I've learned a lot2. I found my girlfriend (2006-

168. ConclusionsWas this a mistake then?

1. I've learned a lot2. I found my girlfriend (2006-2008)

BIG MISTAKE! :)

Seriously, I'm kidding. I never regret it.17This is what you will get from me1. One Failure2. 3. 18Example 2: Second Life (2007)1. Context2. Idea3. Startup research details4. What happened5. Results6. Back to startup research details7. Other mistakes8. Conclusions191. Context2007: I'm CTO in a University in Italy...... But I have time for a cool side project

Second Life becomes very popular in 2007I am an ExpertI am from Assisi202. IdeaI want to ride the Second Life Gold RushHow? Build the Basilica of Saint Francis of AssisiI want to show it to the world

How to make money?Use it as a marketing tool for Assisi(pilgrims, church, schools, virtual visits, goods...)

I need funding? Yes.213. Startup Research DetailsMarket: Second Life / Pilgrims / Education / ArchitectsSize: (?) 5M and growingGrowing: Hell yeahMarket attributes: New, fragmentedWhy do I care: I love(d) Second LifeFinding data: (?) Difficult. Let's take risks.Competitors: NoneMarket research: (?) Build it and they will comeCan you win: If I stand outWhen do you walk away: After one year, if no results2223

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4. What happened1. Found an investor.2. Found a technical partner to build it (Spain)3. Built the Basilica: "Second Life Assisi"4. July 2007: "The most beautiful building ever built in Second Life", Philip Rosedale (met in SF)5. September 2007: Live!6. Tried to sell8. Tried to sell ... zzz ..2526

5. ResultsCOSTS: (total -45,000 Euros)600 hours of my work (18,000 Euros?)15,000 Euros from investorOver time: 12,000 Euros from my own pocket

REVENUES: (total +16,000 Euros)Consulting and building gigs

NET: -33,000 Euros276. Back to startup research detailsWhat was the mistake?286. Back to startup research details29Market: Second Life / Pilgrims / Education / ArchitectsSize: (?) 5M and growing (WHO ARE THEY?)Growing: Hell yeah (GOOD)Market attributes: New, fragmentedWhy do I care: I love(d) Second LifeFinding data: (?) Difficult. Let's take risks.Competitors: NoneMarket research: (?) Build it and they will comeCan you win: If I stand outWhen do you walk away: After one year, if no results7. Other mistakesVision and Values YESStartup Research NO (bad)Naming and Branding NOMentor Idea Review NOStartup Legal and IP NOCofounders, Hiring and Firing NOT NEEDED (SURE?)Revenues, Costs and Profits NOProduct Development YESMentor Progress Review NO (bad)Outsourcing, Partners and Suppliers YESMarketing and Sales YESPresentation and Publicity YESFundraising YESGraduation FAIL!308. ConclusionsWas this a mistake then?

1. I've learned a lot2. I found another girlfriend (2008-

318. ConclusionsWas this a mistake then?

1. I've learned a lot2. I found another girlfriend (2008- Just kidding!

2. I found my job at Amazon.com !http://bit.ly/how-i-got-hired-by-amazon32By the way, on Second Life...Why my Startup failed?Why most projects on Second Life failed as well?

Because Second Life is essentially good...33By the way, on Second Life...Why my Startup failed?Why most projects on Second Life failed as well?

Because Second Life is essentially good...

...FOR PORN :) 34This is what you will get from me1. One failure2. Another failure3. 35A proper Startup Research:multiple options361. Follow the manual37Market: Size: Growing: Market attributes: Why do I care: Finding data: Competitors: Market research:Can you win: When do you walk away:1B. Avoid common mistakes38Market: Identify the right marketSize: Growing: Market attributes: Do you really know what it means?Why do I care: You should LOVE it (not just the $$$)Finding data: Test your * as soon as you canCompetitors: Market research:Can you win: When do you walk away: Minimize the cost of plan BExample: market attributes391. Pure competition2. Pure monopoly3. Monopsony: Only one buyer4. Monopolostic competition: Range of prices5. Oligopoly: Few sellers6. Oligopsony: (???)7. Price discrimination: Emirates' "Honeymoon"

Does it matter to you? Example: market attributes401. Pure competition2. Pure monopoly3. Monopsony: Only one buyer4. Monopolostic competition: Range of prices5. Oligopoly: Few sellers6. Oligopsony: Few buyers7. Price discrimination: Emirates' "Honeymoon"

Does it matter to you? How to avoid common mistakes?41UNDERSTAND what you are doing.IF YOU DON'T, LIMIT the Damage.2. Test your * ASAPTest your * as soon as you can.Period.

422. Test your * ASAPThink of an example

432. Test your * ASAPEbayYahoo!Facebook (kind of)

443. Find what works/matters for you45Market:Size: Growing: Market attributes: Why do I care: Finding data: learn / find a co-founder that can helpCompetitors: Market research:Can you win: When do you walk away:Also called:Customized Manual4. Do it until you master itExercise:Do your Startup Research in two of the following.

You are Sergey Brin OR Larry Page in 1996.You are Mark Zuckerberg in 2003.You are Dennis Crowley in 2009.You are Craig Newmark in 1995.You are Founder of * that failed.You are Founder of * that was BIG then it failed.461. Follow the manual2. Test your * ASAP3. Find what works for you4. Do it until you master it47This is what you will get from me1. One failure:2. Another failure:3. Some options:48This is what you DID get from me1. One failure: DebianCE2. Another failure: Assisi in Second Life3. Some options:Follow the manualTest your * ASAP (my favourite)Find what works for youDo it until you master it

49Useful Advice, or Crap?1) Limited Time2) I'm not a Successful Entrepreneur3) But, I'm a good observer4) I want to be different than the other Mentors5) You should have Failure in mind6) I still think that Lean/Simple wins more often

7) I hate numbered lists.50

Thanks!Simone Brunozzi

Twitter: @[*** & Garfunkel]Blog: www.[my last name].comEmail / Linkedin: You should be able to find itDownload: http://slidesha.re/2011-03-08_sf51photo credits: @lucasartoni

Thanks!Simone Brunozzi

Twitter: @simonBlog: www.brunozzi.comEmail / Linkedin: You should be able to find itDownload: http://slidesha.re/2011-03-08_sf52photo credits: @lucasartoni