How Big is the Market? Blinktraffic E245 final presentation

Final Project ReportBlink Traffic: Stevia Angesty Stanford University Ian Christopher ENGR 245: The Lean Michael Feng Launchpad Richard Kidarsa Winter 2011

Ini$al Product Idea Mobile applica+on providing crowd-‐ Shanghai Lahore sourced real +me traﬃc map in developing countries Bangkok Jakarta

Meet the Team Stevia AngestyMichael FengRichard KidarsaIan ChristopherBackground: Investment Banking and Private Engineering, BusinessBackground: Computer Science EngineeringEquity in AsiaExpertise: Indonesian connections, logisticsExpertise: Programming Indonesian connections Programming,experienceExpertise: Finance, MarketingRole: Technical framework, server-side Client application development, websiteRole: Financials, Strategy Liaising with customers and partners,developmentmarket research

Business Canvas 1

What we did (part 1) •  Interviewed market leader in traﬃc informa+on services •  Interviewed 8 corporate customers in Indonesia

Inrix Interview Market Leader in Traﬃc Data Services Customer Segments: Public Sector Media Automo$ve Mobile

Pass/Fail Criteria •  Companies in Indonesia do not have the technology to detect traﬃc •  Large companies in Indonesia distribute at least 200 corporate Blackberries to their employees •  At least 2 companies have strong interest in buying traﬃc applica+on

Customer Segment: Corporate Interviewed 8 poten$al 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 The Dispatchers: Customer Sounds cool. It’d be Archetypes more efficient than relying on drivers. Users

Customer Segment: Corporate Customer The Managers: Archetypes We’d love to have the app if it works Users Influencers and Recommenders

Customer Segment: Corporate Influencers and Customer Recommenders The Procurement Dept: Our drivers know the Archetypes the traffic better than you! Users Economic Buyers, Decision Makers

Customer Segment: Corporate Influencers and Archetypes Recommenders The Drivers: Are you questioning our expertise? International, local, large, and small companies Users Saboteurs Economic Buyers, Decision Makers

Pass/Fail Criteria FAIL•  Companies in Indonesia do not have the technology to detect traﬃc •  Most don’t but large, sophis+cated ones do •  Large companies in Indonesia distribute at least 200 corporate BlackBerries to their employees •  Largest mul+na+onal bank gives out approximately 10 •  At least 2 companies have strong interest in buying traﬃc applica+on •  0 out of the 8 companies we surveyed

Customer Segment: Corporate Corporates are not our initial target market

What we did (part 2) •  Interviewed market leader in consumer traﬃc applica+ons (Waze) •  Interviewed 2 Indonesian web startups •  Surveyed 98 Indonesian commuters

Waze Interview 100% crowdsourced traffic targeting consumers 2,500,000 2,000,000 Recently raised $25 Users 1,500,000 1,000,000 million Series B 500,000 round 0 2009 (est) 2010 2011 •  How did they grow? Social and gaming features •  What markets are they focusing on? North America •  What are the key challenges? Data costs, cultural differences •  How do they make money? They don’t…yet

Jagoan Interview * Indonesian Social App * Partnered with Retail Companies User friendly interface while SLOW User looks savvy connec$on Loyalty

Disdus Interview * Indonesian Groupon * Poten$al partnership for adver$sing Troublesome Hard to payment mone$ze before method cri$cal mass

B2C Customer Feedback 98 2½h 1h $8 web and phone spent in heavy surveys in spent in car per traﬃc (<6mph) on gasoline per Indonesia day per day day

B2C Customer Feedback 20% of reduc,on in heavy traﬃc would save a person1: Blink Subscrip$on: 50h $42 saved per year gasoline costs per year2 $1 /month1. Assumes 5 working days per week and 50 workweeks per year 2. Assumes gasoline usage is 30% of normal usage during heavy traﬃc

B2C Customer Feedback 120 52% Plenty of $me to use mobile devices while web and phone surveys in USE DRIVERS commu$ng Indonesia 46% 1.  Mo$vated by 3-‐person HOV lanes 2.  Alterna$ve: pay “carpool CARPOOL jockeys” $2.50 per trip

B2C Customer feedback1 Blackberry leads usage but iPhone/iPads important Conclusion: Focus on Blackberry first and iPhone/Pad second What mobile device do you use in the car? 45% 40% 40% 35% 30% 28% 25% 20% 20% 15% 10% 8% 4% 5% 0% Blackberry iPhone iPad other None smartphones 1. Data obtained from web and phone surveys of 120 potential customers

B2C Customer feedback1 What do you do with your Never Rarely Sometimes Often Always >= Sometimes smartphones in the car? 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% Community and game mechanics are Socialize with friends Play games 11 33 6 17 28 39 28 11 44 17 86% 58% critical to driving usage and viralityHow often would you use these Never Rarely Sometimes Often Always >= Sometimes features of our application? 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% 1. Data obtained from web and phone surveys of 120 potential customers

What we did (part 3) •  Assessed market size •  Tested demand crea+on via website

How Big is the Market? 1.  Located outside the U.S., Western Europe, and Australia 2.  Mobile penetra+on rate * popula+on >= 4 million 3.  Popula+on density >= 2500 per sq km 4.  GDP growth rate >= 5% China: Beijing, Shanghai, Shenzhen Total cities: 24 Mediterranean: Istanbul North Asia ex-China: Taipei, Hong Kong, Total mobile users: 203.7 million Seoul Latin America: Mexico City Africa: Cairo, Lagos South Asia: SE Asia: Mumbai, Delhi, Jakarta, Surabaya, South America: Kolkata Bangkok, Singapore, Rio de Janeiro, Sao Kuala Lumpur, Manila Paulo, Bella Horizonte, Lima, Santiago. Buenos Aires

Market Growth Plan Rest of World Rest of Asia • Brazil (Rio de • India (Mumbai, Janeiro, Belo Kolkata, Delhi) Horizonte • China (Bejing, • Buenos Aires Southeast Shanghai, • Cairo Asia: Shenzhen) • Istanbul • Surabaya • Hong Kong • Lagos • Bangkok • Taipei • Lima Jakarta • Singapore • Seoul • Mexico City • Bangkok • Santiago • Kuala Lumpur • ManilaMarket 1 2 3 4Cumulative number 1 6 15 25of citiesCumulative mobile 10.4 36.9 109.6 203.7users (millions) Detailed income statement and assumptions in Appendix

Success Depends on Virality > Churn Ra+o of early stage virality rate to churn rate = 2.00x

Demand crea$on via website 1 2 3 “Not a landing page” Doesn’t show the No Indonesian version product

Demand crea$on via website -‐ results Clicks CTR 100 74 2.00% 1.56% 68 1.25% 50 22 1.00% 0.59% 0 0.00% 1 2 3 1 2 3 People need to use the product CPC us to maximize learning click for Conversions per 1.5 1.34 6.00% 4.05% 1 0.62 4.00% 2.94% 0.54 0.5 2.00% 0.00% 0 0.00% 1 2 3 1 2 3

What we did (part 4) •  Developed server backbone integrated with OSM and Hadoop •  Built a working Blackberry applica+on •  Iterated based on user feedback •  Talked to poten+al partners

Server Backbone with OSM and Hadoop OSM DATA BLINK DATA MAP MANAGER TRAFFIC USER/EVENT DATA MANAGER Front End AGGREGATION Client

Blackberry applica$on tes$ng •  Iterate through diﬀerent versions Ver1 Ver2 Ver3

First release issues Device cannot Diﬀerent connect to provider semng internet for Indonesia Downloading Fix website, problems Provide instruc$ons People don’t Pop up window want to leave to force people feedback to give feedback

Second release issues Bad GPS Use data-‐assisted signal GPS Show Users dislike instruc$ons and Pop-‐ups pop-‐up once Users have old Support older OS Blackberry OS

Second release feedback result User wants to So far 50 Want traﬃc data see their friends downloads

Third release Implemented User can locate 20 downloads chamng others on map since release 3 days ago 5 new users introduced via sharing Feedback on 3rd release: Privacy Baoery life Implement Adjust server privacy toggle ping rate

Key Partners AGM Market share: 44% mobile Interested in partnering if phone service & 18% Disdus will adver+se Blink Blink can provide them free Large companies are hard to negotiate. Blink will internet mobile phone service traffic informa+on in their website focus more on partnering with other Startups Currently looking for mobile applica+on to AGM owns trucking fleet Blink will adver+se Disdus partner to increase internet (>100 trips/week) in Java in the Blackberry service usage. Telkomsel region which can help Blink applica+on wants a large number of in genera+ng traffic data users before partnering

Final Business Canvas

Epilogue: What we learned •  MVP has to iinclude virality, not just traffic to nclude virality, not just traffic •  Legal-‐ese is difficult to handle. It took us a long +me to understand this •  Users need to test the product in order to maximize learning •  We need to assume tthat users are ttechnically lliterate ssume hat users are echnically i illiterate •  Simplicity is everything from the user’s perspec+ve •  Users who like our idea are not the same as early adopters / promoters •  Need to balance tech planning and implementa+on •  Difficult learning curve to master technologies like EC2 and Apache •  Blackberry is not developer-‐friendly and it spreads to the server •  Gelng user feedback is a lot harder than we originally thought •  Difficult to approach customers large and small the second +me around •  From mindsets to trends to technical literacy, the tech landscape is different in parts of the world. •  We cannot spend too much +me thinking off / wri+ng an elegant solu+on, but you also cannot write garbage •  Code organiza+on 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 ttechnological environment ddiffer remendously from mmarket to market indsets and echnological environment iffer t tremendously from arket to market

Epilogue: •  Is this a viable business? –  Poten+al 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 aqer the class? –  YES! “You gotta be in front of the wave to catch it”

Business Canvas Change Progress 1

Business Canvas Change Progress FINAL

THANK YOU!

Appendix: Key Assump$ons 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 Revenues Costs Ad revenues start when users per city Monthly salary per employee $1000 exceed 10,000 Setup costs per city $100,000 Views per month per active user 67.75 Technology costs per 1000 us Advertising eCPM 1.00 ers $20 Fixed promotion costs per city $10,000 Premium revenues start when users pe Annual promotion costs per a r city exceed 200,000 ctive user $1 Premium percentage of regular users 17% Tax rate 25% Premium pevenue per user per month 1.00

Appendix: Markets Rank Land area Density GDP GDP Mobile phones Market (Global City / Urban area Country Population Density) (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% 9,072,070 2 Kolkata India 12,700,000 531 23,900 3,400 8.30% 63.22% 8,028,940 4 Lagos Nigeria 13,400,000 738 18,150 2,400 6.80% 50.30% 6,740,200 5 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% 5,700,000 10 Shanghai China 10,000,000 746 13,400 7,400 10.10% 62.80% 6,280,000 11 Lima Peru 7,000,000 596 11,750 9,200 7.80% 95.50% 6,685,000 12 Beijing China 8,614,000 748 11,500 7,400 10.10% 62.80% 5,409,592 13 Delhi India 14,300,000 1,295 11,050 3,400 8.30% 63.22% 9,040,460 15 Manila Philippines 14,750,000 1,399 10,550 3,500 6.70% 73.60% 10,856,000 17 Jakarta Indonesia 14,250,000 1,360 10,500 4,300 6.00% 73.10% 10,416,750 21 Cairo Egypt 12,200,000 1295 9,400 6,200 5.30% 76.80% 9,369,600 25 Sao Paulo Brazil 17,700,000 1968 9,000 10,900 7.50% 100.00% 17,700,000 27 Mexico City Mexico 17,400,000 2072 8,400 13,800 5.00% 79.80% 13,885,200 28 Santiago Chile 5,425,000 648 8,400 15,500 5.30% 100.00% 5,425,000 29 Singapore Singapore 4,000,000 479 8,350 62,200 14.60% 100.00% 4,000,000 32 Istanbul Turkey 9,000,000 1166 7,700 12,300 7.30% 92.20% 8,298,000 35 Rio de Janeiro Brazil 10,800,000 1580 6,850 10,900 7.50% 100.00% 10,800,000 37 Hong Kong Hong Kong 7,100,000 1100 6,455 45,600 5.70% 100.00% 7,100,000 38 Bangkok Thailand 6,500,000 1010 6,450 8,700 7.60% 81.00% 5,265,000 47 Buenos Aires Argentina 11,200,000 2266 4,950 15,000 7.80% 100.00% 11,200,000 52 Belo Horizonte Brazil 4,000,000 868 4,600 10,900 7.50% 100.00% 4,000,000 90 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 Statement Year 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% 45,65Premium users - - 5 252,455 503,865 927,475 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)

How Big is the Market? Blinktraffic E245 final presentation

Steve Blank

How Big is the Market?