Pratt COMD: Business & Design Designing My Business: Victor Lombardi Assignment Create an outline of what kind of business you want to create, reusing this sample as a template. Answer the questions below but don't feel you have to write long explanations at this point. Essentially you should know enough about your business idea to discuss it in class. Business Idea Constraints 1. The idea must use your design skills in a direct way. 2. The first year revenue must be at least 10 times the startup costs. The startup costs are only what you spend during the time you're preparing the business, before you 'open the doors.' 3. Set the year-one revenue at least high enough to pay your own salary. What is the working name of the business? Delaborate What does the business do? Delaborate is a mobile service that helps busy people be happier by using positive psychology to provide them behavior recommendations. How does the business work? The service works over SMS, and feels like you are texting a friend. Like a friend, the service subtly evaluates your situation and provides advice, make recommendations, and helps you improve your outlook and behavior. The techniques borrow from the research findings of Positive Psychology. One example is "Three Good Things" that allows people to track what makes them happy each day and identify patterns that help them actively pursue positive actions. The products will include some advertising. The advertising will be sparse, unintrusive, and naturally woven into the advice, without being deceptive. For example, "You say you feel better when you eat right. Instead of eating salty or sweet snacks, try having a fruit smoothie instead. (I love the smoothies at Jamba Juice on 354 23rd St.)." Who are the customers and consumers? Generally, college-educated adults in metropolitan areas with middle to upper incomes. They have busy lifestyles and access to enough products and information to make prioritizing their time difficult. It is expected the consumer will also be the customer. What are the startup costs, initial revenue, and initial profits? For comparison, see The Cost of Bootstrapping Your App (http://37signals.com/svn/archives2/the_cost_of_bootstrapping_your_app_the_figures_behind_dropsend_part_one_.php). Subtracting from their costs the branding and design work we can do in-house, the estimated costs are $25,000. So our revenue goal is $250,000, or about $20,000 per month. We initially plan to generate equal revenue through SMS tolls and advertising. Subscriptions: The cost to the user should be negligible so not to discourage interaction, i.e. less than a cent per message. If there are an average of two messages per person per day, and we charge 1/2 cent per message, we make one cent per person per day. Over a month, that's 30 cents per person. To generate $10,000, we need over 33,000 customers. Advertising: We estimate we can charge $20 per ad, requiring us to sell 500 ads per month. $10,000 revenue per month / $20 price per ad 500 number of ads we need to sell Additional research will explore the right CPM and a better estimate of ad impressions. The following table illustrates how advice offered by the service can appeal to advertisers. Advice Product or Service Making Better Decisions Book: Paradox of Choice Expert advice on common issues Getting Married Dating websites Don't Be a Lawyer Other graduate programs Being a Happier Parent Day care, boarding schools, day camp Having Happier Kids Hobbies and activities for kids Avoiding painful situations Financial services, other life planning services Avoiding Inaction Inexpensive versions of expensive desires, e.g. vacations Money to secure the basics Job boards Don't work overtime for the money Leisure activities Join a group, make more friends Directories of community groups, Meetup.com Spontaneous decisions over planned variety A tool for easier use of habitual tasks, like your favorite takeout meal Limit indulgences Premium versions of alchohol, chocolate, restaurants, etc. Sun Vacations Exercise Gyms, clubs, sports equipment Eating well Healthy foods How will the business grow after becoming established? The service can become an umbrella service to other lifestyle information. Anything that the service recommends is fair game for a partnership or advertiser. Additionally we can consider a few options: - Reuse the platform to create additional services - License the tools to other providers, especially wireless providers - License tools to websites - Create partnerships to share and co-market customer-facing products Is this a cyclical business? Sales of advertising will probably decline during economic recessions, but we expect - like dieting and exercise - there will always be a need for self-help and coaching-like services. Since the user charge is so low, we hope this will not fluctuate. Which generic strategy does this follow? Differentiation: it competes with self-help materials, coaching, and psychologists, but allows the customer to engage the service in an independent, active way. How does this contribute to the triple bottom line? Profits? By generating a modest profit. People? By helping people live happier lives. Planet? By creating an electronic service, it cuts down on paper and transportation needed to deliver similar services offline. What additional research needs to be done before investors will fund the idea? Market Research Questions: How big is the market of people that will like this kind of self-help service, seeks lifestyle information, and uses SMS? Does customer research suggest this product will create a new market? Plan: research the online self-help and lifestyle information markets for comparison, and how many active SMS users there are. Use customer research to project what percentage of this market we can capture. Findings: "The American Self-Help Clearinghouse lists more than 1,000 Self-Help groups worldwide. Amazon.com carries more than 20,000 Self-Help titles. And according to MarketResearch.com, Americans spend a staggering $8.5 BILLION a year on Self-Help products." According to American Writers & Artists http://www.awaionline.com/thegoldenthread/2006/tgt_220.php "235 billion SMS were sent in the first quarter of 2006, 36 per user on average." http://www.cellular.co.za/stats/statistics_north_america_gsm.htm Customer Research Questions: Will customers like this kind of interaction? Do they understand how to use it? How do they react to the ads? How do they react to the toll charges? Plan: Create a simulation and perform user testing with 10 potential users in my target audience. Findings: Initial tests made it difficult to communicate the product behavior using a slide show; the prototype wasn't realistic enough. The next step is to develop an IM Bot to act as a cheap, more realistic prototype. Competitive Research Questions: What competitors are there? What do they base their approach on (what research)? What is their revenue model? Plan: Search for competitors online. Findings: "Hodder Education Uses Motivational SMS Text Messages To Launch its Series Of Self-help Books. SMS motivates it says. http://www.textmarketer.co.uk/news.php?action=fullnews&id=103 Closest competitor is ReflectiveHappiness.com. - The approach does a good job of making the material less academic, but it's still too long and arduous. The consumer needs to fill out surveys to get a baseline; if I'm depressed, will I do this? Then the consumer doesn't get any feedback after the text but a score. What does that mean? - Very generic too. Seems like the person would have a basic idea of what is making them unhappy: partner, job, etc. - How it works: the tests are simple and result in essentially a 'how happy did you rate yourself' score based on a number of different ways of thinking about the question. Then you do two exercises offline, then take the same tests again and compare scores. So they avoid any fancy backend algorithms, but also imply that the exercises in observation are the same as learning about yourself and making changes, but that's only implied. - $10/month Product Research Questions: How can I create this kind of recommendation engine? How do I set up an SMS service? Plan: Research avatars like Neopets, IM bots. Research SMS infrastructure. Go to BarCamp and ask others how they would build it. Findings: "SMS messages has a maximum 160 characters." http://www.textmarketer.co.uk/sms-marketing/sms-text-marketing.htm - Short Code Reg: http://www.usshortcodes.com/index.html -- Very expensive, and for this reason will need investment before registering one. - Debate on which tech to use: http://opengardensblog.futuretext.com/archives/2005/06/which_mobile_de_1.html -- Essentially SMS is a good choice as it's the most widely deployed technology in mobile - Google may establish user familiarity with SMS as a standard through sheer force of its popularity: http://www.google.com/sms/ - A gateway is needed in between my software and mobile provider: http://www.clickatell.com/brochure/products/developer_solutions.php - I could develop the software on a messaging platform like Jabber that can talk to SMS gateways: http://en.wikipedia.org/wiki/Jabber Research Conclusions The technology is certainly feasible. There are enough competitors in other media to indicate there's desire for this type of media interaction. But this product has unique behavior and will require a more realistic prototype and alpha testing with potential customers to determine if it is viable or not.