Blinktraffic E245 final presentation

Blink Traffic: Stevia Angesty Ian Christopher Michael Feng Richard Kidarsa

Stanford University ENGR 245: The Lean

Launchpad Winter 2011

Final Project Report

Ini$al Product Idea

Shanghai Lahore

Bangkok Jakarta

Mobile applica+on providing crowd-‐sourced real +me traffic map in

developing countries

Meet the Team

Michael Feng

Background: Investment Banking and Private Equity in Asia

Expertise: Finance, Marketing

Role: Financials, Strategy

Stevia Angesty

Background: Engineering, Business

Expertise: Indonesian connections, logistics experience

Role: Liaising with customers and partners, market research

Ian Christopher

Background: Computer Science

Expertise: Programming

Role: Technical framework, server-side development

Richard Kidarsa

Background: Engineering

Expertise: Programming, Indonesian connections

Role: Client application development, website

Business Canvas 1

What we did (part 1)

•  Interviewed market leader in traffic informa+on services

•  Interviewed 8 corporate customers in Indonesia

Inrix Interview

Market Leader in Traffic Data Services

Customer Segments:

Public Sector

Automo$ve

Media

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 applica+on

Customer Segment: Corporate Interviewed 8 poten$al 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

Users

The Dispatchers: Sounds cool. It’d be more efficient than relying on drivers.

Customer Archetypes


Users Influencers and Recommenders

The Managers: We’d love to have the app if it works

Customer Archetypes


Users

Influencers and Recommenders

Economic Buyers, Decision Makers

The Procurement Dept: Our drivers know the the traffic better than you!

Customer Archetypes


Users

Influencers and Recommenders

Economic Buyers, Decision Makers

Archetypes

Saboteurs

The Drivers: Are you questioning our expertise?

International, local, large, and small companies

Pass/Fail

Criteria •  Companies in Indonesia do not have the technology to detect traffic •  Most don’t but large, sophis+cated ones do

•  Large companies in Indonesia distribute at least 200 corporate BlackBerries to their employees •  Largest mul+na+onal bank gives out approximately 10

•  At least 2 companies have strong interest in buying traffic applica+on •  0 out of the 8 companies we surveyed

FAIL


Corporates are not our initial target market

Business Canvas 2


•  Interviewed market leader in consumer traffic applica+ons (Waze)

•  Interviewed 2 Indonesian web startups •  Surveyed 98 Indonesian commuters

Waze Interview

•  How did they grow?

•  What markets are they focusing on?

•  What are the key challenges?

•  How do they make money?

100% crowdsourced traffic targeting

consumers

0 500,000

1,000,000 1,500,000 2,000,000 2,500,000

2009 (est) 2010 2011

Use

rs Recently raised $25

million Series B round

Social and gaming features

North America

Data costs, cultural differences

They don’t…yet

Jagoan Interview

User friendly interface while looks savvy

User Loyalty

* Indonesian Social App * Partnered with Retail

Companies

SLOW connec$on

Disdus Interview

Troublesome payment method

* Indonesian Groupon * Poten$al partnership

for adver$sing

Hard to mone$ze before cri$cal mass

B2C Customer Feedback

98 web and phone

surveys in Indonesia

2½h

spent in car per day

1h

spent in heavy traffic (<6mph)

per day

$8

on gasoline per day


20% of reduc,on in heavy traffic would save a person1:

50h saved per year

$42 gasoline costs per

year2

$1 /month

Blink Subscrip$on:

1. Assumes 5 working days per week and 50 workweeks per year 2. Assumes gasoline usage is 30% of normal usage during heavy traffic


120 web and phone

surveys in Indonesia

46% CARPOOL

52% USE DRIVERS

Plenty of $me to use mobile devices while commu$ng

1.   Mo$vated by 3-‐person HOV lanes

2.   Alterna$ve: pay “carpool jockeys” $2.50 per trip

B2C Customer feedback1

Blackberry leads usage but iPhone/iPads important

40%

28%

4% 8%

20%

0% 5%

10% 15% 20% 25% 30% 35% 40% 45%

Blackberry iPhone iPad other smartphones

None

What mobile device do you use in the car?

Conclusion: Focus on Blackberry first and iPhone/Pad second

1. Data obtained from web and phone surveys of 120 potential customers

1. Data obtained from web and phone surveys of 120 potential customers

B2C Customer feedback1

What do you do with your smartphones in the car?

Never Rarely Sometimes Often Always >= Sometimes

Work 39 17 33 6 17 50% Gather traffic information 66 28 17 6 0 20% Read news 39 22 22 28 0 46% Browse internet 28 17 11 33 28 62% Socialize with friends 11 6 28 28 44 86% Play games 33 17 39 11 17 58%

How often would you use these features of our application?

Never Rarely Sometimes Often Always >= Sometimes

Report incidents 22 28 22 33 17 60% Join a chat 33 28 44 17 0 50% Play mini-games 44 28 28 22 0 41% Ask and respond to questions 39 39 28 17 0 37% Find your friends and followers 22 39 22 28 6 48% Earn points for driving more 33 39 22 22 11 44%

Community and game mechanics are critical to driving usage and virality

Business Canvas 3


•  Assessed market size

•  Tested demand crea+on via website

How Big is the Market? 1.  Located outside the U.S., Western Europe, and Australia

2.  Mobile penetra+on rate * popula+on >= 4 million

3.  Popula+on density >= 2500 per sq km

4.  GDP growth rate >= 5%

South Asia: Mumbai, Delhi, Kolkata

Africa: Cairo, Lagos

SE Asia: Jakarta, Surabaya, Bangkok, Singapore, Kuala Lumpur, Manila

North Asia ex-China: Taipei, Hong Kong, Seoul

China: Beijing, Shanghai, Shenzhen

Mediterranean: Istanbul

South America: Rio de Janeiro, Sao Paulo, Bella Horizonte, Lima, Santiago. Buenos Aires

Latin America: Mexico City

Total cities: 24 Total mobile users: 203.7 million

Market Growth Plan

Jakarta

Southeast Asia: • Surabaya • Bangkok • Singapore • Bangkok • Kuala Lumpur • Manila

Rest of Asia • India (Mumbai, Kolkata, Delhi)

• China (Bejing, Shanghai, Shenzhen)

• Hong Kong • Taipei • Seoul

Rest of World • Brazil (Rio de Janeiro, Belo Horizonte

• Buenos Aires • Cairo • Istanbul • Lagos • Lima • Mexico City • Santiago

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 Ra+o of early stage virality rate to churn rate = 2.00x

Demand crea$on via website

“Not a landing page” No Indonesian version

1 3 2

Doesn’t show the product

Demand crea$on via website -‐ results

22

68 74

0

50

100

1 2 3

Clicks

0.59% 1.25%

1.56%

0.00%

1.00%

2.00%

1 2 3

CTR

1.34

0.54 0.62

0 0.5

1 1.5

1 2 3

CPC

0.00%

2.94% 4.05%

0.00% 2.00% 4.00% 6.00%

1 2 3

Conversions per click

People need to use the product for us to maximize learning

Business Canvas 4


•  Developed server backbone integrated with OSM and Hadoop

•  Built a working Blackberry applica+on •  Iterated based on user feedback •  Talked to poten+al partners

Server Backbone with OSM and Hadoop

Front End

Client

OSM DATA BLINK DATA

MAP MANAGER

AGGREGATION

USER/EVENT MANAGER

TRAFFIC DATA

Blackberry applica$on tes$ng

•  Iterate through different versions

Ver1

Ver2

Ver3

First release issues

Device cannot connect to internet

Different provider semng for Indonesia

Downloading problems

Fix website, Provide

instruc$ons

People don’t want to leave

feedback

Pop up window to force people to give feedback

Second release issues

Bad GPS signal

Use data-‐assisted GPS

Users dislike Pop-‐ups

Show instruc$ons 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

Feedback on 3rd release:

User can locate others on map

20 downloads since release 3

days ago

Baoery life

Adjust server ping rate

Privacy

Implement privacy toggle

Implemented chamng

5 new users introduced via

sharing

Key Partners

Market share: 44% mobile phone service & 18% internet mobile phone service

Currently looking for mobile applica+on to partner to increase internet service usage. Telkomsel wants a large number of users before partnering

Interested in partnering if Blink can provide them free traffic informa+on

AGM owns trucking fleet (>100 trips/week) in Java region which can help Blink in genera+ng traffic data

Disdus will adver+se Blink in their website

Blink will adver+se Disdus in the Blackberry applica+on

AGM

Large companies are hard to negotiate. Blink will focus more on partnering with other Startups

Final Business Canvas

•  MVP has to include virality, not just traffic •  Legal-‐ese is difficult to handle. It took us a long +me to understand this

•  Users need to test the product in order to maximize learning

•  We need to assume that users are technically illiterate

•  Simplicity is everything from the user’s perspec+ve

•  Users who like our idea are not the same as early adopters / promoters

•  Need to balance tech planning and implementa+on

•  Difficult learning curve to master technologies like EC2 and Apache

•  Blackberry is not developer-‐friendly and it spreads to the server

•  Gelng user feedback is a lot harder than we originally thought

•  Difficult to approach customers large and small the second +me around

•  From mindsets to trends to technical literacy, the tech landscape is different in parts of the world.

•  We cannot spend too much +me thinking off / wri+ng an elegant solu+on, but you also cannot write garbage

•  Code organiza+on 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 and technological environment differ tremendously from market to market

Epilogue: What we learned

•  MVP has to include virality, not just traffic •  Legal-‐ese is difficult to handle. It took us a long +me to understand this

•  Users need to test the product in order to maximize learning

•  We need to assume that users are technically illiterate

•  Simplicity is everything from the user’s perspec+ve

•  Users who like our idea are not the same as early adopters / promoters

•  Need to balance tech planning and implementa+on

•  Difficult learning curve to master technologies like EC2 and Apache

•  Blackberry is not developer-‐friendly and it spreads to the server

•  Gelng user feedback is a lot harder than we originally thought

•  Difficult to approach customers large and small the second +me around

•  From mindsets to trends to technical literacy, the tech landscape is different in parts of the world.

•  We cannot spend too much +me thinking off / wri+ng an elegant solu+on, but you also cannot write garbage

•  Code organiza+on 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 and technological environment differ tremendously from market to market

Epilogue:

•  Is this a viable business?

–  Poten+al 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 aqer the class?

– YES!

“You gotta be in front of the wave to catch it”

Business Canvas Change Progress

1


2


3


4


5


6


7


FINAL

THANK YOU!

Appendix: Key Assump$ons

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

Employees per city 5 10 20 30

Rent per city 1,000 2,000 5,000 10,000

Costs Monthly salary per employee $1000 Setup costs per city $100,000 Technology costs per 1000 users $20 Fixed promotion costs per city $10,000 Annual promotion costs per active user $1 Tax rate 25%

Revenues Ad revenues start when users per city exceed 10,000 Views per month per active user 67.75 Advertising eCPM 1.00

Premium revenues start when users per city exceed 200,000 Premium percentage of regular users 17% Premium pevenue per user per month 1.00

Appendix: Markets Rank

(Global Density)

City / Urban area Country Population Land area Density GDP GDP Mobile phones Market

(in sqKm) (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 5 6 7 8 9 10

Active users 200 7,329 268,559 1,535,297 2,980,314 6,056,792 13,783,296 21,013,877 33,175,710 36,705,798 39,698,300 % of market 0.0% 0.1% 1.9% 3.2% 2.0% 4.0% 5.1% 7.7% 12.1% 13.3% 14.2%

Premium users - - 45,655 252,455 503,865 927,475 2,332,870 3,572,359 5,639,871 6,239,986 6,748,711

Basic users 200 7,329 222,904 1,282,842 2,476,449 5,129,317 11,450,427 17,441,518 27,535,839 30,465,812 32,949,589

Revenues

Advertising - 64,502 614,266 1,445,797 3,180,516 6,551,758 12,404,549 18,487,439 23,697,673 25,988,931

Premium - 45,655 1,846,731 3,819,142 9,198,477 19,113,580 36,267,426 55,890,537 71,641,922 78,568,768 Total Revenues - 110,157 2,460,997 5,264,939 12,378,993 25,665,338 48,671,976 74,377,976 95,339,594 104,557,698

Costs Market Entry Costs 100,000 - 500,000 900,000 - 1,000,000 - - - -

Employee Salaries 60,971 62,800 399,824 756,995 1,809,328 3,008,931 4,821,172 6,152,098 8,395,482 9,511,708

Technology 550 20,152 220,947 503,758 1,127,276 2,320,268 4,388,843 6,575,357 8,428,461 9,243,384

Rent 12,000 12,000 75,000 148,000 348,000 582,000 959,000 1,210,000 1,760,000 2,085,000 Promotion 121,697 182,198 1,435,261 2,879,322 6,240,609 11,424,743 20,684,296 29,383,836 37,824,415 41,264,727 Total Costs 295,218 277,150 2,631,032 5,188,075 9,525,213 18,335,942 30,853,311 43,321,292 56,408,358 62,104,819

Operating cashflow (295,218) (166,993) (170,034) 76,865 2,853,780 7,329,396 17,818,665 31,056,685 38,931,236 42,452,880

Taxes paid - 5,626 290,449 514,985 1,176,461 2,465,737 4,946,514 7,764,171 9,732,809 10,613,220

Net income (295,218) (172,619) (460,483) (438,120) 1,677,319 4,863,659 12,872,151 23,292,514 29,198,427 31,839,660

Retained earnings (295,218) (467,836) (928,320) (1,366,440) 310,880 5,174,539 18,046,689 41,339,203 70,537,630 102,377,290

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)

Blinktraffic E245 final presentation

Education

Transcript of Blinktraffic E245 final presentation