blink traffic: stevia angesty ian christopher michael feng richard kidarsa

Blink Traffic: Stevia AngestyIan ChristopherMichael FengRichard Kidarsa

Stanford UniversityENGR 245: The Lean

LaunchpadWinter 2011

Final Project Report

Initial Product Idea

Shanghai Lahore

Bangkok Jakarta

Mobile application providing crowd-sourced real time 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 information services

• Interviewed 8 corporate customers in Indonesia

Inrix Interview

Market Leader in Traffic Data Services

Customer Segments:

Public Sector

Automotive

Media

Mobile

Pass/Fail

Customer Segment: CorporateInterviewed 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

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

FAIL


High Acquisition

Cost

Huge Penetration

Barrier

Good Drivers +

Fuel Usage Tracking

Corporates are not our initial target market

Business Canvas 2


• Interviewed market leader in consumer traffic applications (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

2009 (est) 2010 20110

500,0001,000,0001,500,0002,000,0002,500,000

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 savvyUser

Loyalty

* Indonesian Social App* Partnered with Retail

Companies

SLOWconnection

Disdus Interview

Troublesomepaymentmethod

* Indonesian Groupon* Potential partnership

for advertising

Hard to monetize before

critical mass

B2C Customer Feedback

98web 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 reduction in heavy traffic would save a person1:

50hsaved per year

$42gasoline costs per

year2 $1/month

Blink Subscription:

1. Assumes 5 working days per week and 50 workweeks per year2. Assumes gasoline usage is 30% of normal usage during heavy traffic


120web and phone

surveys in Indonesia

46%CARPOOL

52%USE DRIVERS

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

Blackberry iPhone iPad other smartphones None0%5%

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

28%

4%8%

20%

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 creation via website

How Big is the Market?1. Located outside the U.S., Western Europe, and Australia2. Mobile penetration rate * population >= 4 million3. Population density >= 2500 per sq km4. 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: 24Total mobile users: 203.7 million

Market Growth Plan

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 > ChurnRatio of early stage virality rate to churn rate = 2.00x

Demand creation via website

“Not a landing page”No Indonesian version

1 32

Doesn’t show the product

Demand creation via website - results

1 2 30

20406080

22

68 74Clicks

1 2 30.00%0.50%1.00%1.50%2.00%

0.59%

1.25%1.56%

CTR

1 2 30

0.5

1

1.5 1.34

0.54 0.62

CPC

1 2 30.00%

2.00%

4.00%

0.00%

2.94%4.05%

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 application• Iterated based on user feedback• Talked to potential partners

Server Backbone with OSM and Hadoop

Front End

Client

OSM DATA BLINK DATA

MAP MANAGER

AGGREGATION

USER/EVENT MANAGER

TRAFFIC DATA

Blackberry application testing

• Iterate through different versions

Ver1

Ver2

Ver3

First release issuesDevice cannot

connect to internet

Different provider setting

for Indonesia

Downloading problems

Fix website,Provide

instructions

People don’t want to leave

feedback

Pop up windowto force people

to give feedback

Second release issues

Bad GPSsignal

Use data-assisted 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

Feedback on 3rd release:

User can locate others on map

20 downloads since release 3

days ago

Battery life

Adjust server ping rate

Privacy

Implement privacy toggle

Implemented chatting

5 new users introduced via

sharing

Key Partners

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 time 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 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 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 time 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 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 and technological environment differ tremendously from market to 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


2


3


4


5


6


7


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

Employees per city 5 10 20 30

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

CostsMonthly salary per employee $1000Setup 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%

RevenuesAd revenues start when users per city exceed 10,000 Views per month per active user 67.75Advertising 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: MarketsRank

(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% 9,072,0702 Kolkata India 12,700,000 531 23,900 3,400 8.30% 63.22% 8,028,9404 Lagos Nigeria 13,400,000 738 18,150 2,400 6.80% 50.30% 6,740,2005 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% 5,700,00010 Shanghai China 10,000,000 746 13,400 7,400 10.10% 62.80% 6,280,00011 Lima Peru 7,000,000 596 11,750 9,200 7.80% 95.50% 6,685,00012 Beijing China 8,614,000 748 11,500 7,400 10.10% 62.80% 5,409,59213 Delhi India 14,300,000 1,295 11,050 3,400 8.30% 63.22% 9,040,46015 Manila Philippines 14,750,000 1,399 10,550 3,500 6.70% 73.60% 10,856,00017 Jakarta Indonesia 14,250,000 1,360 10,500 4,300 6.00% 73.10% 10,416,75021 Cairo Egypt 12,200,000 1295 9,400 6,200 5.30% 76.80% 9,369,60025 Sao Paulo Brazil 17,700,000 1968 9,000 10,900 7.50% 100.00% 17,700,00027 Mexico City Mexico 17,400,000 2072 8,400 13,800 5.00% 79.80% 13,885,20028 Santiago Chile 5,425,000 648 8,400 15,500 5.30% 100.00% 5,425,00029 Singapore Singapore 4,000,000 479 8,350 62,200 14.60% 100.00% 4,000,00032 Istanbul Turkey 9,000,000 1166 7,700 12,300 7.30% 92.20% 8,298,00035 Rio de Janeiro Brazil 10,800,000 1580 6,850 10,900 7.50% 100.00% 10,800,00037 Hong Kong Hong Kong 7,100,000 1100 6,455 45,600 5.70% 100.00% 7,100,00038 Bangkok Thailand 6,500,000 1010 6,450 8,700 7.60% 81.00% 5,265,00047 Buenos Aires Argentina 11,200,000 2266 4,950 15,000 7.80% 100.00% 11,200,00052 Belo Horizonte Brazil 4,000,000 868 4,600 10,900 7.50% 100.00% 4,000,00090 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 StatementYear 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)

blink traffic: stevia angesty ian christopher michael feng richard kidarsa

Documents

corporate users influencers

passfail customer segment

corporate customers

drivers responsibility

engineering expertise

business expertise

trip9customer segment

programming role