1. Simone Brunozzi gave a presentation on startup research and lessons learned from his own failures and successes. 2. He discussed two startup failures - DebianCE, a Linux certification program, and a Second Life project to recreate the Basilica of Saint Francis of Assisi. 3. Brunozzi emphasized the importance of properly researching the market, understanding attributes like size and growth, having a product to test assumptions quickly, and being prepared to pivot or abandon ideas that don't work.

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

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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

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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. A proper Startup Research:multiple options 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 Also called: Customized Manual 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 manual2. Test your * ASAP3. Find what works for you4. 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 photo credits: @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 photo credits: @lucasartoni