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Thrive ENGR 245 Lean LaunchPad Stanford 2018

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business model, customer development, e245, engr245, lean launchpad, lean startup, stanford, startup, steve blank,

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Thrive ENGR 245 Lean LaunchPad Stanford 2018

  1. Helping self-employed keep more of what they make INTERVIEWS Wendy De La Rosa PhD, Marketing & BS Finance Sahil Yakhmi MBA & BS Computer Science Sean X. Li BS MS&E and CS Parker Ence MBA & BS Economics Trent Hazy MBA & BS Product Design MARKET TYPE DAY 1: App for low-income gig workers to predict and save for taxes 120 Niche DAY 72: SaaS platform for self-employed to create and manage S- Corporations
  2. Cost Structure -Software Development -Sales & Marketing Key Activities - Software product dev - Attract 1099 users - Create multi-sided platform value Key Resources - Core application to automate 1099 financial planning - Human: marketing, software UX/UI, development Original Business Model Canvas Key Partners - User acquisition partners - Tax, accounting, legal service providers - Software dev and distribution resources (app store, cloud providers, etc) Value Propositions - Save Time & Money: Simple and automated tax and financial planning - Good PR, contractor and employee morale, and legal risk mitigation - Good PR, contractor and employee morale, and legal risk mitigation - New customers and revenue Customer Relationships - Self-serve / Automated - ⬤⬤⬤ Dedicated personal assistance (enterprise sales) Customer Segments - 1099 Professionals (commissioned sales, programmers, nurses, etc.) - Gig two-sided platforms (Lyft, Upwork, TaskRabbit, etc.) - Employers with many 1099 contract workers (Google, Hospitals, etc.) - Financial product providers (Geico, Vanguard, Blue Cross, etc.) Channels - Direct or Indirect (Partner), Web+Mobile - ⬤⬤⬤ Direct, Salesforce + Web, Mobile Revenue Streams - Subscription fees - ⬤⬤ per user fee - Broker/referral commissions when users purchase Week [1]
  3. Cost Structure -Software Development -Sales & Marketing Key Activities - Software product dev - Attract 1099 users - Create multi-sided platform value Key Resources - Core application to automate 1099 financial planning - Human: marketing, software UX/UI, development Original Business Model Canvas Key Partners - User acquisition partners - Tax, accounting, legal service providers - Software dev and distribution resources (app store, cloud providers, etc) Value Propositions - Save Time & Money: Simple and automated tax and financial planning - Good PR, contractor and employee morale, and legal risk mitigation - Good PR, contractor and employee morale, and legal risk mitigation - New customers and revenue Customer Relationships - Self-serve / Automated - ⬤⬤⬤ Dedicated personal assistance (enterprise sales) Customer Segments - 1099 Professionals (commissioned sales, programmers, nurses, etc.) - Gig two-sided platforms (Lyft, Upwork, TaskRabbit, etc.) - Employers with many 1099 contract workers (Google, Hospitals, etc.) - Financial product providers (Geico, Vanguard, Blue Cross, etc.) Channels - Direct or Indirect (Partner), Web+Mobile - ⬤⬤⬤ Direct, Salesforce + Web, Mobile Revenue Streams - Subscription fees - ⬤⬤ per user fee - Broker/referral commissions when users purchase Week [1] We had no idea who our customer was
  4. Stage 1 Stage 2 Stage 3 Today PRODUCT: Tax management: predict & save CUSTOMER: Low-income 1099 workers (i.e. Uber drivers) - B2C
  5. “I don’t worry about taxes. The IRS lets me make monthly payments for what I owe.” - Michelle, Uber Driver DISCOVERIES: Freelancer interviews invalidated value prop and customer segment hypothesis... Stage 1 Stage 2 Stage 3 Today
  6. Cost Structure -Software Development -Sales & Marketing Key Activities - Software product dev - Attract 1099 users - Create multi-sided platform value Key Resources - Core application to automate 1099 financial planning - Human: marketing, software UX/UI, development Original Business Model Canvas Key Partners - User acquisition partners - Tax, accounting, legal service providers - Software dev and distribution resources (app store, cloud providers, etc) Value Propositions - Save Time & Money: Simple and automated tax and financial planning - Good PR, contractor and employee morale, and legal risk mitigation - Good PR, contractor and employee morale, and legal risk mitigation - New customers and revenue Customer Relationships - Self-serve / Automated - ⬤⬤⬤ Dedicated personal assistance (enterprise sales) Customer Segments - 1099 Professionals (commissioned sales, programmers, nurses, etc.) - Gig two-sided platforms (Lyft, Upwork, TaskRabbit, etc.) - Employers with many 1099 contract workers (Google, Hospitals, etc.) - Financial product providers (Geico, Vanguard, Blue Cross, etc.) Channels - Direct or Indirect (Partner), Web+Mobile - ⬤⬤⬤ Direct, Salesforce + Web, Mobile Revenue Streams - Subscription fees - ⬤⬤ per user fee - Broker/referral commissions when users purchase
  7. Stage 2 PRODUCT: One-Stop-Shop for 1099 Benefits (retirement, health, taxes) CUSTOMER: Large 1099 employers (Google, Facebook, Intuit) - B2B Stage 1 Stage 3 Today
  8. Stage 2 “It sounds harsh, but we go out of our way to make sure we don’t provide anything that looks like a benefit to our contractors.” - HR Director DISCOVERIES: Employers are scared of 1099 misclassification risk from providing benefits Stage 1 Stage 3 Today
  9. DISCOVERIES: “You are going way too broad. It’s better to get a small number of customers to love you.” - Steve Weinstein (Office Hours) Ohhhh #*$% Stage 2 Stage 1 Stage 3 Today
  10. REGROUPING: Internal brainstorm and pitch session Stage 2 Stage 1 Stage 3 Today
  11. Stage 2 DISCOVERIES: Reviewed interview notes: high income 1099s were the enthusiastic ones Stage 1 Stage 3 Today “Some of our best customers are Real Estate Agents… You should consider targeting this group.” - CEO, Everlance Agents & Brokers 1) Ability to pay 2) Big tax savings 3) No misclassification
  12. Cost Structure -Software Development -Sales & Marketing Key Activities - Software product dev - Attract 1099 users - Create multi-sided platform value Key Resources - Core application to automate 1099 financial planning - Human: marketing, software UX/UI, development Updated Business Model Canvas Key Partners - User acquisition partners - Tax, accounting, legal service providers - Software dev and distribution resources (app store, cloud providers, etc) Value Propositions One stop shop for retirement, tax, and health insurance benefits: - Simplify buying benefits for contractors - Help 1099 employers attract and retain contractors - Drive new revenues for financial product providers Customer Relationships - Self-serve / Automated - ⬤⬤ Dedicated personal assistance (enterprise sales) Customer Segments - 1099 Professionals (commissioned sales, programmers, nurses, etc.) - Employers with many 1099 contract workers (Google, Hospitals, etc.) - Financial product providers (Geico, Vanguard, Blue Cross, etc.) Channels - Direct or Indirect (Partner), Web+Mobile - ⬤⬤ Direct, Salesforce + Web, Mobile Revenue Streams - Subscription fees - per user fee - Broker/referral commissions when users purchase
  13. PRODUCT: Tax management: predict & save CUSTOMER: High-income brokers (starting w/ real-estate & insurance) - B2C Stage 1 Stage 2 Stage 3 Today
  14. Stage 3 Channels: Facebook Ad Experiment Many interviews with CPAs → many methods to reduce 1099 taxes for customers. But which value prop is strong enough to support digital B2C customer acquisition? Stage 1 Stage 2 Today
  15. Channels: Facebook Ad Experiment Many interviews with CPAs → many methods to reduce 1099 taxes for customers. But which value prop is strong enough to support digital B2C customer acquisition? Stage 3 Stage 1 Stage 2 Today WINNER: 1.8% CTR Beat others by 2x
  16. Cost Structure -Software Development -Sales & Marketing Key Activities - Software product dev - Attract 1099 users - Create multi-sided platform value Key Resources - Core application to automate 1099 financial planning - Human: marketing, software UX/UI, development Updated Business Model Canvas Key Partners - User acquisition partners - Tax, accounting, legal service providers - Software dev and distribution resources (app store, cloud providers, etc) Value Propositions 1099 Tax prediction and savings tool - Drive new revenues for financial product providers Customer Relationships - Self-serve / Automated - Dedicated personal assistance (enterprise sales) Customer Segments - 1099 Professionals (real estate & insurance brokers) - Financial product providers (Geico, Vanguard, Blue Cross, etc.) Channels - Direct or Indirect (Partner), Web+Mobile - Direct, Salesforce + Web, Mobile Revenue Streams - Subscription fees - Broker/referral commissions when users purchase
  17. Stage 3 PRODUCT: S-Corp Creation & Management: Save on Taxes, Reduce Liability CUSTOMER: High-income brokers (starting with real-estate & insurance) - B2C Stage 1 Stage 2 Today Identified problem + solution… but does the business make sense?
  18. Final MVP https://teamthrive.herokuapp.com/ “This is exactly what I need for my business” - Grant Koury, Insurance Broker
  19. 1. Savings Calculator (FREE) – Calculate: How much you’ll save with an S-Corp 2. Incorporation ($100) – Set up your S-Corp quickly, without touching government forms 3. Ongoing Company Maintenance ($16/mo) – Pay yourself (payroll) – File quarterly forms and taxes – Renew franchise with state Customer Relationships GET KEEPStage 3 Stage 1 Stage 2 Today GROW More fintech tools and services for self-employed: Health Insurance, Retirement
  20. KEY PARTNERS - User acquisition partners (unions, trade organizations, conferences) - Tax, accounting, legal service providers - Software dev and distribution resources (app store, cloud providers, etc) KEY RESOURCES - Core application to automate incorporation and maintenance - Human: marketing, CPA, lawyer, software UX/UI, development KEY ACTIVITIES - Customer acquisition - Predict tax savings - Create new S-corps (filings, documents) - S-Corp management (compliance, tax, payroll, licenses) Key Activities, Resources, Partners Stage 3 Stage 1 Stage 2 Today Validated through interviews, research, modeling:
  21. Modeling Tax Code to Predict Savings Stage 3 Stage 1 Stage 2 Today KEY ACTIVITIES: Typical user (>$75K) saves $4,000+ per year
  22. Cost Structure -Software Development -Sales & Marketing Key Activities - Software product dev - Attract 1099 users - Create multi-sided platform value Key Resources - Core application to automate 1099 financial planning - Human: marketing, software UX/UI, development Updated Business Model Canvas Key Partners - User acquisition partners - Tax, accounting, legal service providers - Software dev and distribution resources (app store, cloud providers, etc) Value Propositions 1099 Tax prediction and savings tool - Drive new revenues for financial product providers Customer Relationships - Self-serve / Automated - ⬤⬤ Dedicated personal assistance (enterprise sales) Customer Segments - 1099 Professionals (commissioned sales, programmers, nurses, etc.) - Financial product providers (Geico, Vanguard, Blue Cross, etc.) Channels - Direct or Indirect (Partner), Web+Mobile Revenue Streams - One time incorporation fee ($100) - Subscription fees ($16/ month)
  23. “It’s very difficult to monetize free platforms. You need millions of users…I wished we would have charged from the beginning.” -Donna Wells, ex-CMO of Mint REVENUE STREAMS: Invalidated 2-sided platform hypothesis. Now charging SaaS fees directly Stage 3 Stage 1 Stage 2 Today
  24. Convert to Paid User2 2.00% Conversion Estimate Paid Acquisition1 $0.58 - $0.89 CPC 1.84% CTR Actual - Facebook Ads $29 - $44 Customer Acquisition Cost Stage 3 Stage 1 Stage 2 Today Quarterly Churn2 8% Estimate Pricing1 $100 + $16/mo Proposed $557 Gross Lifetime Value Discount Rate3 5% Estimate > Cost Structure Our most important cost is CAC, which must be less than LTV
  25. $10B Total Addressable Market (60M US independent contractors) * (50% earning above $50K) * (60% not incorporated) * ($557 LTV) $777M Served Available Market (3.1M US real estate and insurance agents ) * (60% earning above $50K) * (75% not incorporated) * ($557 LTV) Sources: IRS Entrepreneur CNSNews 2018 2019 2020 Active Users 434 7,055 39,196 New Filings 2,700 21,938 111,059 Filing Fees $ 270,000 $ 2,193,750 $ 11,105,859 Maintenance Fees $ 31,516 $ 763,362 $ 4,656,468 Gross Revenue $ 301,516 $ 2,957,112 $ 15,762,327 Market Sizing & Revenue Forecast
  26. Competitive Landscape
  27. Our Advantage Uniquely designed for 1-person corporation Everything they need and nothing they don’t
  28. KEY PARTNERS - User acquisition partners (unions, trade organizations, conferences) - Tax, accounting, legal service providers - Software dev and distribution resources (app store, cloud providers, etc) CUSTOMER SEGMENTS High-Income (+$75K) 1099 Professionals Real Estate Brokers Sales People KEY RESOURCES - Core application to automate incorporation and maintenance - Human: marketing, CPA, lawyer, software UX/UI, development KEY ACTIVITIES - Customer acquisition - Predict tax savings - Create new S-corps (filings, documents) - S-Corp management (compliance, tax, payroll, licenses) CUSTOMER RELATIONSHIPS - Self-serve / Automated - Get: Tax calculator - Keep: Incorporation, ongoing corp maintenance - Grow: Health, retirement COST STRUCTURE -Software Development -Legal fees -Sales & Marketing Final Business Model Canvas CHANNELS - Direct B2Contractor - Digital: Web+Mobile REVENUE STREAMS - One-time incorporation fee ($100) - Subscription fees ($16 / month) Week [10] VALUE PROPOSITIONS - Cut self-employment tax by ~75% - Save time on filing forms (2+ hrs) - Reduce legal liability - Autopilot S-Corp maintenance (hard → easy)
  29. KEY PARTNERS - User acquisition partners (unions, trade organizations, conferences) - Tax, accounting, legal service providers - Software dev and distribution resources (app store, cloud providers, etc) CUSTOMER SEGMENTS High-Income (+$75K) 1099 Professionals Real Estate Brokers Sales People KEY RESOURCES - Core application to automate incorporation and maintenance - Human: marketing, CPA, lawyer, software UX/UI, development KEY ACTIVITIES -Maintain a secure dashboard -Link to bank accounts -File regulatory forms -Pay quarterly taxes -Limit regulatory liability CUSTOMER RELATIONSHIPS - Self-serve / Automated COST STRUCTURE -Software Development -Legal fees -Sales & Marketing Final Thrive Business Model Canvas CHANNELS - Direct - Web+Mobile REVENUE STREAMS - One-time incorporation fee ($100) - Subscription fees ($200 / year) Week [10] VALUE PROPOSITIONS - Cut self-employment tax by ~75% - Save time on filing forms (2+ hrs) - Reduce legal liability - Autopilot S-Corp maintenance (hard → easy)
  30. Continuing with Thrive Continuing + Low-Income 1099s Data science internship Searching for new startup idea Pursuing product management What’s next?

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