My final project for Advanced Entrepreneurial Opportunities:
In this assignment, I worked to create a comprehensive, research based assessment of an application idea of a startup company created by myself. This is a reflection on some of my knowledge of business analysis including: addressing the problem, analyzing potential customers, the value proposition, minimal viable prototype, pricing models, placement strategy, promotional strategy, sales process, revenues and cost, funding, and team creation. Please scroll to view the entire analysis.
Abstract
People are searching for unique, new things to do or places to go when visiting a new city, or even within their home city or town. From my personal experience, college students specifically grow tired of going to the same places and are looking for fresh ideas. THE UNDERGROUND will provide categories such as: Restaurants, Parties, Night-Life, Shopping, Nature, etc. People and businesses within the city will post unique spots that will promote small business growth. The goal of this application is to find new things to do within towns that aren’t on the tourist map. The postings will be a reddit format rather than dictated by the company who creates the application. People can upvote and comment on postings, so sorting on popularity is possible. Small businesses will be able to promote their business with a general post or pay to put their business at the top of a search.
1. The Problem
What is the problem?
People are searching for unique, new things to do or places to go when visiting a new city, or within their home city or town. Applications like this are often oriented around large tourist destinations like New York, Rome, or Paris. Acquiring information on a city is difficult, and much of the information is posted by the organization owning the application, or the businesses themselves. Thus, making the information about the businesses biased. Creating an application that has the users post for themselves is a solution to this problem.
What evidence supports that the problem exists?
According to an article written about Yelp by the OriginalReview, the biggest problems is the censorship of certain reviews and promotion of fake reviews. Thus, making it “harder, especially for new—or newish—restaurants, to gain and hold onto the reviews they need to make a favorable impression” (Original Review, 2018). This causes bias results in the reviews section and keeps popular business on top while smaller businesses struggle to compete.
Is the problem urgent, underserved, unworkable, and/or unavoidable?
The problem is not urgent. People find ways to get this information, but it takes a lot of searching. Tourists, many locals, and college student’s top priority often is entertainment. Finding a way to enhance that priority will be received well by the targeted consumer. The problem is underserved. Currently many of the applications and websites cater to tourists that don’t want to go to the main attractions. Many are created by a single platform gathering the information themselves. By expanding the information gathering to the people, new places and things to do will be posted regularly. The problem is unworkable in the way that it will target marketing towards small business. Underserved businesses will receive marketing and publicity that will promote their services rather than big business. The problem is not unavoidable.
Is the problem conspicuous and/or critical?
It is a C2C and B2C in that way that consumers as well as small businesses post local spots to promote. It is conspicuous due to the underlying marketing promotion aspect that companies can participate in. The problem is critical due to the fact that small Businesses are being overrun by large organizations that have more marketing capital and cheaper prices. There needs to be a cultural or economic shift that promotes small business over big business, or those businesses will continue to fail and deplete. The application itself will not solve the problem entirely, but it can be a small part of the solution to a critical problem.
2. The Customer
Who is the target customer?
Our target customer is 18-40. Someone who travels a lot would find the application more helpful. However, the application is for locals too, especially if they are trying to connect with new people or find unknown spots. Therefore, our focal customers will be tourists and locals. Tourist are people visiting a new city that don’t want to head to the general tourist spots suggested. They want to fully immerse themselves in living like a local and experiencing the city from a more genuine perspective. Locals are people who want to connect with more people and businesses that are not popular.
What are their needs and wants?
Finding unknown spots in nature, or local parties, and restaurants are hard to find, even if you’re a local in the area. As a college student, I know that students are always looking for something new to do. There isn’t anywhere to find information like this right now, other than word of mouth. The customer wants a way of finding new places to go and explore in their own town, or maybe a new city they’re unfamiliar with. According to CNBC, a study done by the Harris group found that “… 72 percent of millennials prefer to spend money on experiences than material things” (Saiidi, 2016). This shows that there is an increasing need for new experiences in the market.
What is the market size?
95% of people aged 18-34 read reviews for local businesses (Murphy, 2019). Therefore, 95% of the applications target population would align with the applications purpose.
Yelp is by far the largest competitor, so viewing their consumer market will give key insights into the market potential. They currently have 145 million unique yelpers (Smith, 2019). Yelps target customer is similar to our applications, so all of those consumers would also align with the app.
3. The Value Proposition
What gains will customers experience?
Customers will gain an inside scoop on local activities and small businesses such as restaurants, parties, bars, clubs, events, nature activities, and things of that nature. Users will have instant access to a database of unique local entertainment. The application is replacing business-driven marketing with consumer-led information provides a higher level of “real” feedback. The app provides a way to conserve your leisure time for higher value activities that better match customer’s desired experience.
What pains will customers experience?
The main barrier is educating the consumer about the value and origin of the information. User will experience a technical barrier in searching for and downloading Mobile App. People are not always willing to switch their standard applications just because they are familiar with the UI of the other application. Therefore, users may experience difficulty changing to the new interface of our application.
4. The Minimum Viable Prototype
Who are the competitors and their customers?
Yelp is the biggest competitor in the industry and has an extremely large user base. According to Yelp’s metric fact sheet, they amass 69 million unique visitors per month ("An Introduction to Yelp Metrics as of March 31, 2019", 2019). Yelp has all the local restaurants, places, and things to do around a user. With postings of reviews and photos from customer experience.
WithLocals is an application that focuses on 50 popular tourism cities across the world. The application Finds local guides and tours for you to see the city with a local. It is free, but the user has to pay for a tour or guide ("Explore Withlocals", 2019).
PartyWith finds parties around the user in 150 cities across the world. The user can have their own “party profile” where they can connect with other people and meet up. The application costs $0.99. This is a competitor due to the fact that our application will have a party posting section for users ("Locals & Travelers", 2019).
Jetzy is a location-based application where the user can connect with locals or other travelers through chat options. The app is point-based so the user can cash-in those points for free rewards. This is the most similar to our application proposal due to the coupon feature ("Jetzy app", 2019).
SpottedByLocals is an application that spans across 76 cities. Tour guides are provided by locals with a variety of filters for searching. They pride themselves on having insider tips rather than highlights ("City Guides by Insiders", 2019).
What are our minimum viable features?
Our minimum viable features include: user input search criteria, returns a list of local unique experiences, Account creation / Login, Search Parameters, Sort by (rating, cost, location), Post/Input a new Unique Location with details, discounts, directions, price, pictures, Rate an Experience, and post Photos/ Videos.
Why are these features valuable and rare?
The features are similar to the competition, but the type of data posted is different. The data posted contains crowd-sourced unique local experiences instead of business-sourced mainstream events and locations. Crowdsourcing is extremely valuable due to the fact that it collects large amount of qualitative data directly from the user, to be used by other users to achieve goals. Coupons available on the website are valuable to the customer because they will be saving money rather than spending it.
What is our prototype?
Prototype is available at : https://balsamiq.cloud/scodoyr/pkr1qmg
5. The Price
What are the competitors’ pricing strategies and prices?
Most of the competitors have free applications. This includes yelp, withlocals, Jetzy, etc. Other apps cost $1.99 or above such as PartyWith. Few have in-app purchases such as ShowAround. Yelp is the largest competitor and is a free application. However, they do not offer discounts and will not offer some the unique information that our application will.
What is our pricing strategy and prices?
Our pricing strategy is to offer customers discounts for various restaurants and places. The application is free, so customers are saving money but using the app. This will entice them to use our app over others that may be more popular.
6. The Placement Strategy
What are our distribution channels?
The application will use a direct and reverse channel. Customers will access information about events, places, and things to do directly in the application, making it a direct channel. We will have complete control over the process. However, if customers chose to do so, they can post a review and receive a discount at some restaurants to entice people to post. Thus, making it a reverse channel due to the fact that they are providing the producer with a good (information).
Who are our intermediaries?
We will only use agents for the application. With this application format, it wouldn’t make logical sense to have a wholesaler, retailer, or distributor. However, we plan to have restaurants give discounts for people to post. They will receive free advertising from it, bringing in customers, thus receiving profit from the partnership. Restaurants can tell customers about the discount through the application, thus acting as an agent of the application.
7. The Promotional Strategy
What is the advertising plan and budget?
We would use advertising through Restaurants using the discount feature on the app. Restaurants offering the discount through the app can promote the it in the store (0$).
What is the public relations plan?
Promoting the app through Instagram influencers will have a huge reach and appeal with our target population. Specifically, influencers who travel a lot would be a good fit for a model customer. The cost will vary based on the number of followers the person has. (About $2000)
What is the personal selling plan?
We will be using personal selling, because that type of advertising will make the application feel like it is really for local’s usage. Using personal selling by going on college campuses would create a good word-of-mouth effect. There would be a booth with stickers to hand out, or something of that nature ($500).
What is the direct marketing plan and budget?
Direct marketing would be a good fit for the application in the first year. Sending emails to potential customers would require obtaining those emails in some way, and I don’t see how we would acquire them without a large budget.
What is the sales promotion plan and budget?
We will partner with restaurants that want advertisement through the application. Sales promotions will be offered if a customer posts about those restaurant offering discounts (0$). This is a simple way to draw customers to the application over the competition.
8. The Sales Process?
What is our sale process?
In the prospecting stage, our team will examine the current users to see how to cater to those customers. We believe the largest user groups at the beginning of the application launch will be college students and tourists.
Once we have searched for potential user groups, we will go to college campuses to reach out to these users. Our team will promote the application and listen to feedback from these users. The tourists will be harder to target in a singular area. Therefore, promoting this application and addressing needs through areas like airports may be our best option.
Our sales pitch will focus on the overall experience of the application. We will highlight how to application will help users blend into a city unfamiliar. The app brings new opportunities to the user and will change the way they see the city they live in or are visiting.
Many user grievances will be that they are satisfied with current applications and do not want the barrier of adapting a new user interface. We will match our UI to other familiar applications to many people. The posting database will match that of reddit’s with threads and comments. Therefore, users will be familiar with the interface and will be able to adapt seamlessly.
After addressing concerns of the user, they may ask “what is the price?”. The application is free, so the user is not losing anything by giving our application a try. We are confident that after doing these steps that the user will at least download our application to see if it meets their goals.
The following up process for our application will be best suited to be completed through the application. One week after the user downloads the application, they will receive a survey to fill out in return for a discount on a meal, product, etc. This survey will analyze if the user is satisfied with the application. The timeline of one week will be a metric to see if they have adapted to the UI by that time.
9. The Revenues and Costs
What are our itemized estimated costs in year one and year two?
Year 1:
Advertising ($2,500)
Simple data acquisition ($1,000)
UI creation ($1,000)
Maintaining application ($1,000)
Year 2:
Advertising ($2,000)
Maintaining application ($1,000)
What types of revenue streams are used by competitors?
Yelp uses subscription-based charges for restaurants, which corresponds to recurring revenue. According to an article on feedough, these fees are monthly and range from $249 - $2000 (Pahwa, 2017). Yelp also receives revenue from ads purchased from businesses. Other competitor’s applications generate revenue from the actual application fee. These application include SpottedByLocals or PartyWith and correspond to a transactional revenue stream.
What types of revenue streams will we use?
THE UNDERGROUND will use a transactional revenue model. Companies will take out ads within the application so that users using the application will see their business when looking for restaurants, places, etc. Since the application is focused on small businesses rather than big business, ads will only show up if you are in the city with that business, therefore giving us more opportunity to have different and more ads throughout our application based on location. Users will not have to pay for the application, so our only source of revenue will be from these ads.
What are our estimated revenues in year one and year two?
Due to the fact that the application is not popular during year one, the businesses that would pay for this ad space is less likely due to the fact that our user base will be very small. In year one, we aim to have $10,000 in revenue from these ads. Businesses can pay a one-time fee to have their ad on the application for one month. In year two, THE UNDERGROUND’s user base will expand, and therefore the costs for the ads will increase. The revenue is likely to increase to $50,000 due to the fact that we will be expanding the cities we are in as well.
10. The Funding Plan
What are our funding requirements?
Our team needs to fund the collection of a small amount of data for cities to get some posts up before the first user downloads the application. After this, we need to be able to support the launch of our company while we are waiting for user numbers to increase so that the ad money is more substantial. Both of these steps will need funding to be completed. This requires about $10,000 to launch and maintain the application.
Who are our candidate sources of funding?
The University of Maryland’s Dingman Center of Entrepreneurship looks to invest $100,000 to $1,000,000 in seed/early stage companies. Since all of our founders are currently or previously University of Maryland students, this is a great source for our funding.
11. The Team. While this is not a team project, this section addresses the future team that you would build to purse this idea.
Who are the founders?
I am the hipster of the group. I am an Information science major with a minor in Technological Entrepreneurship. My experience with UX design, creativity, and understanding of business aspects makes me a good fit for the hipster of the group. Michael Beck is a Computer Science graduate with a minor in statistics from the University of Maryland. He currently works as a computer programmer at Capital One. His intelligence, logical thinking, and experience coding makes him the Hacker of the group. Peter Robinson currently runs his own business in the music industry. He has a business degree from the University of Maryland. His entrepreneurial drive makes him a good match for the Hustler of our team.
Who are the advisors?
Since our company is just starting up, most of our advisors are close friends and family due to the fact that many of them are qualified to help build the start-up.
Buffi Gresh is my mother; she has extensive experience in technology and sales. She has built her own software business and is now global head of business value consulting. With this expertise she has a well-rounded understanding of how successful tech businesses operate, and will be a dedicated advisor.
Jon Neal is my father. He comes from a computer science background but is not head of marketing and sales at Instamed. His marketing experience will help guide us if we decide to do marketing ourselves. His knowledge gained from being a founder at Instamed will be useful to our own startup.
Michael Gresh is my step-father. He created a successful startup called “spider dance” during the time the internet was becoming mainstream. He has a deep understanding of what it takes to have success in a digital world. Currently, he is a vice president at Citigroup and can code in many languages. His expertise in business and technology will be extremely beneficial to us.
Brian Miller is a family friend. Brian has worked as a business development manager as well as overseeing sales for his company. Brian’s expertise will help build the foundation for our startup to grow. Being a family friend, he will be committed to our vision and dedicated to helping us succeed.
Tim Hwang is one of the founders of fiscal note. Fiscal note combines journalism along with products and services that provide access to large quantities of data, news, and analysis for all levels of government. The company has raised over $230 million in venture capital and acquisition financing. He has a deep understanding of how to build up a business successfully. We would be eager to learn from his experiences with a technological / journalism based start up since that is our focus as well.
Who are the key partners?
Atlas Obscura has a list of unique things to do in many cities from Rome to College Park ("Atlas Obscura", 2019). Teaming up with them to gather information like that from cities would be beneficial for our content development as well as theirs. We would use a joint team for certain types of data information gathering (fun places to go, unique eats, etc).
Our application could also work with all trails for the nature portion of the application. Instead of gathering our own information, we can use the information already on the all trails database. All trails could receive the inputs from users about trails (new and old) to update their website ("All Trails", 2019).
The Culture trip posts interesting articles about various cities. These include anything from places to visit, markets, things to do, etc. Currently they only have information on big cities (Culture Trip, 2019). We could combine information so their spread is larger to include smaller towns, while we can use their information on the larger cities.
Gravy is a big data analytical company. They collect data from people in the area to track events going on every day (Gravy Analytics, 2019). They would benefit from our user inputted data while we would benefit from the quantitative data and events in the area.
References
An Introduction to Yelp Metrics as of March 31, 2019. (n.d.). Retrieved from
https://www.yelp.com/factsheet
Explore Withlocals. (2019). Retrieved from https://www.withlocals.com/
Locals & Travelers. (2019). Retrieved from https://www.partywith.co/
Jetzy app. (2019). Retrieved from https://www.jetzyapp.com/
City Guides by Insiders. (2019). Retrieved from https://www.spottedbylocals.com/
Pahwa, A. (2017). Yelp Business Model | How Does Yelp Make Money? Retrieved from https://www.feedough.com/yelp-business-model-how-does-yelp-make-money/
Atlas Obscura. (2019). Retrieved from https://www.atlasobscura.com/
All Trails. (2019). Retrieved from https://www.alltrails.com/
Culture Trip. (2019). Local Inspiration From Around The World. Retrieved from
https://theculturetrip.com/
Gravy Analytics. (2019, May 08). WHERE WE GO IS WHO WE ARE. Retrieved from
https://gravyanalytics.com/
Murphy, R. (2019, April 10). Local Consumer Review Survey | Online Reviews Statistics &
Trends. Retrieved from https://www.brightlocal.com/research/local-consumer-review-
survey/
Smith, C. (2019, May 08). 80 Amazing Yelp Statistics. Retrieved from
https://expandedramblings.com/index.php/yelp-statistics/
Saiidi, U. (2016, May 06). Millennials are prioritizing 'experiences' over stuff. Retrieved from
https://www.cnbc.com/2016/05/05/millennials-are-prioritizing-experiences-over-
stuff.html
Original Review. (2018, August 08). The Many Problems with Yelp. Retrieved from
https://www.originalreview.us/blog/the-many-problems-with-yelp/
