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Final Project Report
Blink Traffic:
Stevia Angesty
Ian Christopher
Michael Feng
Richard Kidarsa
Stanford University
ENGR 245: The Lean
Launchpad
Winter 2011
Initial Product Idea
Mobile application providing crowdLahore
Shanghai
sourced real time traffic map in
developing countries
Bangkok
Jakarta
Meet the Team
Stevia Angesty
Michael
Feng
Ian Christopher
Richard
Kidarsa
Background: Engineering,
Investment Banking
Business
and Private
Background: Engineering
Computer Science
Equity in Asia
Expertise: Indonesian connections, logistics
Expertise: Programming,
Programming Indonesian connections
Expertise: Finance, Marketing
experience
Role: Client
Technical
application
framework,
development,
server-sidewebsite
Role: Liaising
Financials,
with
Strategy
customers and partners,
development
market research
Business Canvas 1
What we did (part 1)
• Interviewed market leader in traffic information
services
• Interviewed 8 corporate customers in Indonesia
Inrix Interview
Market Leader in Traffic
Data Services
Customer Segments:
Public
Sector
Media
Automotive
Mobile
Pass/Fail
Criteria
• Companies in Indonesia do not have the technology to detect traffic
• Large companies in Indonesia distribute at least 200 corporate Blackberries to
their employees
• At least 2 companies have strong interest in buying traffic application
Customer Segment: Corporate
Interviewed 8 potential business sector customers:
“We have our own proprietary traffic system”
“Traffic is driver’s responsibility. We will evaluate the fuel usage”
“We only give out limited number of corporate Blackberries to employees”
“Tardiness is tolerable. We use motorcycles if it is too late”
cTc
Customer Segment: Corporate
The Dispatchers:
Sounds cool. It’d be
more efficient than
relying on drivers.
Customer
Archetypes
Users
Customer Segment: Corporate
Customer
Archetypes
Users
The Managers:
We’d love to have the
app if it works
Influencers
and
Recommenders
Customer Segment: Corporate
Customer
Archetypes
Users
Influencers
and
Recommenders
Economic Buyers,
Decision Makers
The Procurement Dept:
Our drivers know the
the traffic better than
you!
Customer Segment: Corporate
Archetypes
Influencers
and
Recommenders
The Drivers:
Are you questioning
our expertise?
International, local, large, and small
companies
Users
Saboteurs
Economic Buyers,
Decision Makers
Pass/Fail
Criteria
FAIL
• Companies in Indonesia do not have the technology to detect traffic
• Most don’t but large, sophisticated ones do
• Large companies in Indonesia distribute at least 200 corporate BlackBerries to
their employees
• Largest multinational bank gives out approximately 10
• At least 2 companies have strong interest in buying traffic application
• 0 out of the 8 companies we surveyed
Customer Segment: Corporate
Good Drivers
High
Huge
+
Corporates
our
initial
target
market
Acquisition are not
Penetration
Fuel Usage
Cost
Barrier
Tracking
Business Canvas 2
What we did (part 2)
• Interviewed market leader in consumer traffic
applications (Waze)
• Interviewed 2 Indonesian web startups
• Surveyed 98 Indonesian commuters
Waze Interview
Users
100% crowdsourced
traffic targeting
consumers
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
Recently raised
$25 million Series
B round
2009 (est)
2010
• How did they grow?
2011
Social and gaming features
• What markets are they focusing on? North America
• What are the key challenges?
Data costs, cultural differences
• How do they make money?
They don’t…yet
Jagoan Interview
* Indonesian Social App
* Partnered with Retail
Companies
User friendly
interface while
looks savvy
SLOW
connection
User
Loyalty
Disdus Interview
* Indonesian Groupon
* Potential partnership
for advertising
Troublesome
payment
method
Hard to
monetize before
critical mass
B2C Customer Feedback
98
web and phone
surveys in
Indonesia
2½h
1h
$8
spent in car per
day
spent in heavy
traffic (<6mph)
per day
on gasoline per
day
B2C Customer Feedback
20% of reduction in heavy traffic would save a person1:
50h
$42
saved per year
gasoline costs per
year2
1. Assumes 5 working days per week and 50 workweeks per year
2. Assumes gasoline usage is 30% of normal usage during heavy traffic
Blink Subscription:
$1
/month
B2C Customer Feedback
120
52%
web and phone
surveys in
Indonesia
USE DRIVERS
46%
CARPOOL
Plenty of time to use
mobile devices while
commuting
1. Motivated by 3-person
HOV lanes
2. Alternative: pay “carpool
jockeys” $2.50 per trip
B2C Customer feedback1
Blackberry leads usage but iPhone/iPads important
Conclusion:
Focus on Blackberry first and iPhone/Pad second
What mobile device do you use in the car?
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
40%
28%
20%
8%
4%
Blackberry
iPhone
iPad
other
smartphones
1. Data obtained from web and phone surveys of 120 potential customers
None
B2C Customer feedback1
What do you do with your
smartphones in the car?
Never
Rarely
Sometimes
Often
Always
>= Sometimes
Work
Gather traffic information
Read news
Browse internet
Socialize with friends
Play games
39
66
39
28
11
33
17
28
22
17
6
17
33
17
22
11
28
39
6
6
28
33
28
11
17
0
0
28
44
17
50%
20%
46%
62%
86%
58%
Community and game mechanics are
critical to driving usage and virality
How often would you use these
features of our application?
Never
Report incidents
Join a chat
Play mini-games
Ask and respond to questions
Find your friends and followers
Earn points for driving more
22
33
44
39
22
33
Rarely Sometimes
28
28
28
39
39
39
1. Data obtained from web and phone surveys of 120 potential customers
22
44
28
28
22
22
Often
Always
>= Sometimes
33
17
22
17
28
22
17
0
0
0
6
11
60%
50%
41%
37%
48%
44%
Business Canvas 3
What we did (part 3)
• Assessed market size
• Tested demand creation via website
How Big is the Market?
1.
2.
3.
4.
Located outside the U.S., Western Europe, and Australia
Mobile penetration rate * population >= 4 million
Population density >= 2500 per sq km
GDP growth rate >= 5%
China:
Beijing, Shanghai,
Shenzhen
Total cities: 24
Total mobile users: 203.7 million
Mediterranean:
Istanbul
Latin America:
Mexico City
North Asia ex-China:
Taipei, Hong Kong,
Seoul
Africa:
Cairo, Lagos
South America:
Rio de Janeiro, Sao
Paulo, Bella Horizonte,
Lima, Santiago. Buenos
Aires
South Asia:
Mumbai, Delhi,
Kolkata
SE Asia:
Jakarta, Surabaya,
Bangkok, Singapore,
Kuala Lumpur, Manila
Market Growth Plan
Rest of
World
Rest of Asia
Southeast
Asia:
Jakarta
•
•
•
•
•
•
Surabaya
Bangkok
Singapore
Bangkok
Kuala Lumpur
Manila
• Brazil (Rio de
Janeiro, Belo
Horizonte
• Buenos Aires
• Cairo
• Istanbul
• Lagos
• Lima
• Mexico City
• Santiago
• India
(Mumbai,
Kolkata, Delhi)
• China (Bejing,
Shanghai,
Shenzhen)
• Hong Kong
• Taipei
• Seoul
Market
1
2
3
4
Cumulative number
of cities
1
6
15
25
Cumulative mobile
users (millions)
10.4
36.9
109.6
203.7
Detailed income statement and assumptions in Appendix
Success Depends on Virality > Churn
Ratio of early stage virality rate to churn rate = 2.00x
Success Depends on Virality > Churn
Ratio of early stage virality rate to churn rate = 1.50x
Success Depends on Virality > Churn
Ratio of early stage virality rate to churn rate = 1.0x
Demand creation via website
1
“Not a landing page”
No Indonesian version
2
Doesn’t show the
product
3
Demand creation via website - results
Clicks
80
60
40
20
0
68
74
22
1
1.5
CTR
2
3
0.62
1
2
3
4.00%
0.00%
2
4.05%
2.94%
2.00%
0
1
0.59%
6.00%
0.54
0.5
1.25%
1.56%
People need to use the product
for us to maximize
learningper click
CPC
Conversions
1.34
1
2.00%
1.50%
1.00%
0.50%
0.00%
3
0.00%
1
2
3
Business Canvas 4
What we did (part 4)
• Developed server backbone integrated with OSM
and Hadoop
• Built a working Blackberry application
• Iterated based on user feedback
• Talked to potential partners
Server Backbone with OSM and Hadoop
OSM DATA
BLINK DATA
MAP MANAGER
USER/EVENT
MANAGER
TRAFFIC
DATA
Front End
AGGREGATION
Client
Blackberry application testing
• Iterate through different versions
Ver1
Ver2
Ver3
First release issues
Device cannot
connect to
internet
Different
provider setting
for Indonesia
Downloading
problems
Fix website,
Provide
instructions
People don’t
want to leave
feedback
Pop up window
to force people
to give feedback
Second release issues
Bad GPS
signal
Use dataassisted GPS
Users dislike
Pop-ups
Show
instructions and
pop-up once
Users have old
Blackberry OS
Support older OS
Second release feedback result
User wants to
see their friends
Want traffic data
So far 50
downloads
Third release
Implemented
chatting
User can locate
others on map
20 downloads
since release 3
days ago
5 new users
introduced via
sharing
Feedback on 3rd release:
Privacy
Implement
privacy toggle
Battery life
Adjust server
ping rate
Key Partners
AGM
Telkomsel
cell phone service
provider
AGM
Disdus
trucking company
web startup
Market share: 44% mobile
phone service & 18%
internet mobile phone
service
Interested in partnering if
Blink can provide them free
traffic information
Disdus will advertise Blink
in their website
Currently looking for
mobile application to
partner to increase internet
service usage. Telkomsel
wants a large number of
users before partnering
AGM owns trucking fleet
(>100 trips/week) in Java
region which can help Blink
in generating traffic data
Blink will advertise Disdus
in the Blackberry
application
Large companies are hard to negotiate. Blink will
focus more on partnering with other Startups
Final Business Canvas
Epilogue: What we learned
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
MVP has to
to include
include virality,
virality,not
notjust
justtraffic
traffic
Legal-ese is difficult to handle. It took us a long time to understand this
Users need to test the product in order to maximize learning
We need to assume
assume that
that users
users are
aretechnically
technicallyilliterate
illiterate
Simplicity is everything from the user’s perspective
Users who like our idea are not the same as early adopters / promoters
Need to balance tech planning and implementation
Difficult learning curve to master technologies like EC2 and Apache
Blackberry is not developer-friendly and it spreads to the server
Getting user feedback is a lot harder than we originally thought
Difficult to approach customers large and small the second time around
From mindsets to trends to technical literacy, the tech landscape is different in parts of the world.
We cannot spend too much time thinking off / writing an elegant solution, but you also cannot
write garbage
Code organization really starts to become more and more important as you LOC grows. By 5,000
LOC it will be crucial to have a well organized code base.
User mindsets
mindsets and
and technological
technologicalenvironment
environmentdiffer
differtremendously
tremendouslyfrom
frommarket
market
toto
market
market
Epilogue:
• Is this a viable business?
– Potential to solve a hair-on-fire problem for a huge and growing market
– Small capital investment needed to validate business model
– High ROI
• Will we pursue it after the class?
– YES!
“You gotta be in front of the wave to catch it”
Business Canvas Change Progress
1
Business Canvas Change Progress
2
Business Canvas Change Progress
3
Business Canvas Change Progress
4
Business Canvas Change Progress
5
Business Canvas Change Progress
6
Business Canvas Change Progress
7
Business Canvas Change Progress
FINAL
THANK YOU!
Appendix: Key Assumptions
Growth stages
Early
Mid
Late
Plateau
Market penetration rate
0.0%
3.0%
10.0%
15.0%
Churn rate
50%
50%
20%
10%
Virality coefficient
0.75
0.60
0.20
0.10
Promotion % increase
10%
3%
2%
Population growth
5
10
20
30
1,000
2,000
5,000
10,000
Employees per city
Rent per city
Revenues
Ad revenues start when users per city
exceed
Views per month per active user
Advertising eCPM
10,000
67.75
1.00
Premium revenues start when users pe
r city exceed
Premium percentage of regular users
Premium pevenue per user per month
200,000
17%
1.00
Costs
Monthly salary per employee
Setup costs per city
Technology costs per 1000 us
ers
Fixed promotion costs per city
Annual promotion costs per a
ctive user
Tax rate
$1000
$100,000
$20
$10,000
$1
25%
Appendix: Markets
Rank
(Global
Density)
City / Urban area
Country
Population
Land area
Density
GDP
GDP
Mobile phones
(in sqKm)
Market
(per sqKm)
per capita
growth rate
per capita
size
1
Mumbai
India
14,350,000
484
29,650
3,400
8.30%
63.22%
9,072,070
2
Kolkata
India
12,700,000
531
23,900
3,400
8.30%
63.22%
8,028,940
4
Lagos
Nigeria
13,400,000
738
18,150
2,400
6.80%
50.30%
6,740,200
5
Shenzhen
China
8,000,000
466
17,150
7,400
10.10%
62.80%
5,024,000
6
Seoul/Incheon
South Korea
17,500,000
1,049
16,700
30,200
6.10%
97.20%
17,010,000
7
Taipei
Taiwan
5,700,000
376
15,200
35,100
8.30%
100.00%
5,700,000
10
Shanghai
China
10,000,000
746
13,400
7,400
10.10%
62.80%
6,280,000
11
Lima
Peru
7,000,000
596
11,750
9,200
7.80%
95.50%
6,685,000
12
Beijing
China
8,614,000
748
11,500
7,400
10.10%
62.80%
5,409,592
13
Delhi
India
14,300,000
1,295
11,050
3,400
8.30%
63.22%
9,040,460
15
Manila
Philippines
14,750,000
1,399
10,550
3,500
6.70%
73.60%
10,856,000
17
Jakarta
Indonesia
14,250,000
1,360
10,500
4,300
6.00%
73.10%
10,416,750
21
Cairo
Egypt
12,200,000
1295
9,400
6,200
5.30%
76.80%
9,369,600
25
Sao Paulo
Brazil
17,700,000
1968
9,000
10,900
7.50%
100.00%
17,700,000
27
Mexico City
Mexico
17,400,000
2072
8,400
13,800
5.00%
79.80%
13,885,200
28
Santiago
Chile
5,425,000
648
8,400
15,500
5.30%
100.00%
5,425,000
29
Singapore
Singapore
4,000,000
479
8,350
62,200
14.60%
100.00%
4,000,000
32
Istanbul
Turkey
9,000,000
1166
7,700
12,300
7.30%
92.20%
8,298,000
35
Rio de Janeiro
Brazil
10,800,000
1580
6,850
10,900
7.50%
100.00%
10,800,000
37
Hong Kong
Hong Kong
7,100,000
1100
6,455
45,600
5.70%
100.00%
7,100,000
38
Bangkok
Thailand
6,500,000
1010
6,450
8,700
7.60%
81.00%
5,265,000
47
Buenos Aires
Argentina
11,200,000
2266
4,950
15,000
7.80%
100.00%
11,200,000
52
Belo Horizonte
Brazil
4,000,000
868
4,600
10,900
7.50%
100.00%
4,000,000
90
Kuala Lumpur
Malaysia
4,400,000
1606
2,750
14,700
7.10%
100.00%
4,400,000
Total mobile users: 203.7 million
Appendix: Base Case Income Statement
Year
0
1
2
3
4
268,55
Active users
200
% of market
0.0%
Premium users
-
7,329
9
0.1%
-
1,535,297 4
1.9%
45,65
5
3.2%
200
7,329
4
-
2
6,056,792
2.0%
503,86
252,455 5
222,90
Basic users
5
6
7
8
9
10
2,980,31
13,783,296 21,013,877
4.0%
5.1%
2,332,87
927,475 0
7.7%
3,572,35
33,175,710
12.1%
36,705,798
13.3%
39,698,300
14.2%
9
5,639,871
6,239,986
6,748,711
11,450,427 17,441,518
27,535,839
30,465,812
32,949,589
12,404,549
18,487,439
23,697,673
25,988,931
9,198,477
19,113,580 36,267,426
55,890,537
71,641,922
78,568,768
12,378,993
25,665,338 48,671,976
74,377,976
95,339,594
104,557,698
-
-
-
6,152,098
8,395,482
9,511,708
6,575,357
8,428,461
9,243,384
0
1,210,000
1,760,000
2,085,000
6,240,609
11,424,743 20,684,296
29,383,836
37,824,415
41,264,727
9,525,213
18,335,942 30,853,311
43,321,292
56,408,358
62,104,819
17,818,665
4,946,51
4
31,056,685
38,931,236
42,452,880
7,764,171
9,732,809
10,613,220
12,872,151
23,292,514
29,198,427
31,839,660
18,046,689
41,339,203
70,537,630
102,377,290
2,476,44
1,282,842 9
5,129,317
Revenues
64,50
Advertising
1,445,79
614,266 7
45,65
Premium
-
5
3,819,14
1,846,731 2
110,15
Total Revenues
6,551,75
3,180,516 8
5,264,93
-
7
2,460,997 9
100,000
-
500,000 0
Costs
900,00
Market Entry Costs
62,80
Employee Salaries
60,971
0
756,99
399,824 5
20,15
Technology
550
2
12,000
0
503,75
75,000 0
Promotion
121,697
8
295,218
582,00
Taxes paid
(295,218)
2,631,032 5
-
(166,993)
5,62
6
959,00
5,188,07
76,86
Operating cashflow
4,388,84
3
348,000 0
1,435,261 2
0
2,320,26
2,879,32
277,15
Total Costs
4,821,17
2
1,127,276 8
148,00
182,19
3,008,93
1,809,328 1
220,947 8
12,00
Rent
1,000,00
- 0
(170,034) 5
7,329,39
2,853,780 6
514,98
290,449 5
2,465,73
1,176,461 7
4,863,65
Net income
(295,218)
(172,619)
(460,483)
(438,120)
1,677,319 9
5,174,53
Retained earnings
(295,218)
(467,836)
(928,320)
(1,366,440)
310,880 9
Appendix: Blink Customer Archetypes
Commuters in large developing market cities:
-
Working professionals with cars
-
Working professionals using public transport
-
Students
-
Stay-at-home partners (Tai-Tai’s)