Using startup research and analytics, Simone Brunozzi walks through the key concepts of lean startups and helps you take your entrepreneurship to the next level. This content was produced for the 2011 San Francisco Spring semester of Founder Institute by Founder Institute mentor Simone Brunozzi, lean startup expert and technology evangelist. Follow him on Twitter to learn more: https://twitter.com/simon

1. Startup Research
@ Founder Institute
March 8th, 2011
Spring 2011 San Francisco Semester
Simone Brunozzi
Amazon Web Services
Technology Evangelist, APAC
1

2. Quick intro
I'm Simone Brunozzi.
33, Italian. Singapore.
Amazon (Web Services).
Keywords: Public Speaker, Technology, Cloud
I met 500 startups in 3 years.
We only have 20 minutes, so let's start.
2

3. What is special about Startups?
(Hi-Tech) startups have:
a) Lower bootstrapping costs
b) Higher risk
c) Higher potential (more scalable)
"Lean" startup possible
(versus traditional "Waterfall" model)
3

4. Lean startups
Rapid prototypes
Designed to test market assumptions
Use customer feedback to evolve them
(faster than traditional software practices)
(This will be important later)
4

5. What makes them "lean"?
FOSS +
Agile Dev +
Cloud Computing +
Mashups +
3rd party APIs +
Collab tools
(e.g. Kickstarter, StackOverflow, Guru.com)
5

6. This is what you will get from me
1.
2.
3.
6

7. Example 1: DebianCE (2004)
1. Context
2. Idea
3. Startup research details
4. What happened
5. Results
6. Back to startup research details
7. Other mistakes
8. Conclusions
7

8. 1. Context
Company: Wedoit (Me + my brother Marco)
Money: Self-funded
Where: Assisi (St. Francis of), Italy
Activity: Consulting (web, DB, Linux)
Startup project:
DebianCE (Debian Certified Engineer)
8

9. 2. Idea
Passionate about Linux Debian
Debian is stable, secure, has a great community
Strong need for Professional Certification (???)
Let's do it!
9

10. 3. Startup Research Details
Market: Linux certification
Size: (?) 1,000s in Italy
Growing: (?) yes because Linux is growing
Market attributes: new, fragmented
Why do I care: I love(d) Linux
Finding data: look at competitors, find number of clients
Competitors: LPI (Linux Professional Institute), Red Hat CP
Market research: ask friends/LUGs/online
Can you win: if I create something innovative, less boring
When do you walk away: if I cannot sell it in one year
10

11. 4. What happened
1. Created the idea, business plan. Exciting!
2. Logo, website, brochures
3. Created V1 of the certification platform
4. Met with potential partners (ITHUM, Rome)
5. We went Live!
6. Waited
8. Total of 5 "interested" customers in 3 months
9. Waited ... zzz ...
11

12. 5. Results
COSTS:
900 hours of work (27,000 euros?)
Other: 4,000 euros
REVENUES:
None.
12

13. 6. Back to startup research details
What was the mistake?
13

14. 6. Back to startup research details
Market: Linux certification
Size: (?) 1,000s in Italy
Growing: (?) yes because Linux is growing
Market attributes: new, fragmented
Why do I care: I love(d) Linux
Finding data: Competitors: find number of clients
Competitors: LPI, Red Hat CP
Market research: Ask friends/LUGs/online
Can you win: if I create something innovative/useful
When do you walk away: if I cannot sell it in one year
14

15. 7. Other mistakes...
Vision and Values YES
Startup Research NO (bad)
Naming and Branding YES
Mentor Idea Review YES
Startup Legal and IP YES
Cofounders, Hiring and Firing NOT NEEDED (YES LATER)
Revenues, Costs and Profits YES
Product Development YES
Mentor Progress Review NO (bad)
Outsourcing, Partners and Suppliers YES
Marketing and Sales YES
Presentation and Publicity YES
Fundraising NOT NEEDED
Graduation FAIL!
15

16. 8. Conclusions
Was this a mistake then?
1. I've learned a lot
2. I found my girlfriend (2006-
16

17. 8. Conclusions
Was this a mistake then?
1. I've learned a lot
2. I found my girlfriend (2006-2008)
BIG MISTAKE! :)
Seriously, I'm kidding. I never regret it.
17

18. This is what you will get from me
1. One Failure
2.
3.
18

19. Example 2: Second Life (2007)
1. Context
2. Idea
3. Startup research details
4. What happened
5. Results
6. Back to startup research details
7. Other mistakes
8. Conclusions
19

20. 1. Context
2007: I'm CTO in a University in Italy...
... But I have time for a cool side project
Second Life becomes very popular in 2007
I am an Expert
I am from Assisi
20

21. 2. Idea
I want to ride the Second Life Gold Rush
How? Build the Basilica of Saint Francis of Assisi
I want to show it to the world
How to make money?
Use it as a marketing tool for Assisi
(pilgrims, church, schools, virtual visits, goods...)
I need funding? Yes.
21

22. 3. Startup Research Details
Market: Second Life / Pilgrims / Education / Architects
Size: (?) 5M and growing
Growing: Hell yeah
Market attributes: New, fragmented
Why do I care: I love(d) Second Life
Finding data: (?) Difficult. Let's take risks.
Competitors: None
Market research: (?) Build it and they will come
Can you win: If I stand out
When do you walk away: After one year, if no results
22

23. 23

24. 24

25. 4. What happened
1. Found an investor.
2. Found a technical partner to build it (Spain)
3. Built the Basilica: "Second Life Assisi"
4. July 2007: "The most beautiful building ever
built in Second Life", Philip Rosedale (met in SF)
5. September 2007: Live!
6. Tried to sell
8. Tried to sell ... zzz ..
25

26. 26

27. 5. Results
COSTS: (total -45,000 Euros)
600 hours of my work (18,000 Euros?)
15,000 Euros from investor
Over time: 12,000 Euros from my own pocket
REVENUES: (total +16,000 Euros)
Consulting and building gigs
NET: -33,000 Euros
27

28. 6. Back to startup research details
What was the mistake?
28

29. 6. Back to startup research details
29
Market: Second Life / Pilgrims / Education / Architects
Size: (?) 5M and growing (WHO ARE THEY?)
Growing: Hell yeah (GOOD)
Market attributes: New, fragmented
Why do I care: I love(d) Second Life
Finding data: (?) Difficult. Let's take risks.
Competitors: None
Market research: (?) Build it and they will come
Can you win: If I stand out
When do you walk away: After one year, if no results

30. 7. Other mistakes
Vision and Values YES
Startup Research NO (bad)
Naming and Branding NO
Mentor Idea Review NO
Startup Legal and IP NO
Cofounders, Hiring and Firing NOT NEEDED (SURE?)
Revenues, Costs and Profits NO
Product Development YES
Mentor Progress Review NO (bad)
Outsourcing, Partners and Suppliers YES
Marketing and Sales YES
Presentation and Publicity YES
Fundraising YES
Graduation FAIL!
30

31. 8. Conclusions
Was this a mistake then?
1. I've learned a lot
2. I found another girlfriend (2008-
31

32. 8. Conclusions
Was this a mistake then?
1. I've learned a lot
2. I found another girlfriend (2008- Just kidding!
2. I found my job at Amazon.com !
http://bit.ly/how-i-got-hired-by-amazon
32

33. By the way, on Second Life...
Why my Startup failed?
Why most projects on Second Life failed as well?
Because Second Life is essentially good...
33

34. By the way, on Second Life...
Why my Startup failed?
Why most projects on Second Life failed as well?
Because Second Life is essentially good...
...FOR PORN :)
34

35. This is what you will get from me
1. One failure
2. Another failure
3.
35

36. 36

37. 1. Follow the manual
37
Market:
Size:
Growing:
Market attributes:
Why do I care:
Finding data:
Competitors:
Market research:
Can you win:
When do you walk away:

38. 1B. Avoid common mistakes
38
Market: Identify the right market
Size:
Growing:
Market attributes: Do you really know what it means?
Why do I care: You should LOVE it (not just the $$$)
Finding data: Test your * as soon as you can
Competitors:
Market research:
Can you win:
When do you walk away: Minimize the cost of plan B

39. Example: market attributes
39
1. Pure competition
2. Pure monopoly
3. Monopsony: Only one buyer
4. Monopolostic competition: Range of prices
5. Oligopoly: Few sellers
6. Oligopsony: (???)
7. Price discrimination: Emirates' "Honeymoon"
Does it matter to you?

40. Example: market attributes
40
1. Pure competition
2. Pure monopoly
3. Monopsony: Only one buyer
4. Monopolostic competition: Range of prices
5. Oligopoly: Few sellers
6. Oligopsony: Few buyers
7. Price discrimination: Emirates' "Honeymoon"
Does it matter to you?

41. How to avoid common mistakes?
41
UNDERSTAND what you are doing.
IF YOU DON'T, LIMIT the Damage.

42. 2. Test your * ASAP
Test your *
as soon as you can.
Period.
42

43. 2. Test your * ASAP
Think of an example
43

44. 2. Test your * ASAP
Ebay
Yahoo!
Facebook (kind of)
44

45. 3. Find what works/matters for you
45
Market:
Size:
Growing:
Market attributes:
Why do I care:
Finding data: learn / find a co-founder that can help
Competitors:
Market research:
Can you win:
When do you walk away:

46. 4. Do it until you master it
Exercise:
Do your Startup Research in two of the following.
You are Sergey Brin OR Larry Page in 1996.
You are Mark Zuckerberg in 2003.
You are Dennis Crowley in 2009.
You are Craig Newmark in 1995.
You are Founder of * that failed.
You are Founder of * that was BIG then it failed.
46

47. 1. Follow the manual
2. Test your * ASAP
3. Find what works for you
4. Do it until you master it
47

48. This is what you will get from me
1. One failure:
2. Another failure:
3. Some options:
48

49. This is what you DID get from me
1. One failure: DebianCE
2. Another failure: Assisi in Second Life
3. Some options:
Follow the manual
Test your * ASAP (my favourite)
Find what works for you
Do it until you master it
49

50. Useful Advice, or Crap?
1) Limited Time
2) I'm not a Successful Entrepreneur
3) But, I'm a good observer
4) I want to be different than the other Mentors
5) You should have Failure in mind
6) I still think that Lean/Simple wins more often
7) I hate numbered lists.
50

51. Thanks!
Simone Brunozzi
Twitter: @[*** & Garfunkel]
Blog: www.[my last name].com
Email / Linkedin: You should be able to find it
Download: http://slidesha.re/2011-03-08_sf
51
photocredits:@lucasartoni

52. Thanks!
Simone Brunozzi
Twitter: @simon
Blog: www.brunozzi.com
Email / Linkedin: You should be able to find it
Download: http://slidesha.re/2011-03-08_sf
52
photocredits:@lucasartoni