Lean Canvas Intro - Uber example 🚘 - YouTube

Hi! This is Ana at Railsware. Today we'll have a look at the lean canvas - a tool

designed by Ash Maurya to help startups analyze the strengths and weaknesses of

their business model, and also we will practice using lean canvas on the Uber

example. To work out your business activities you need a business plan. A

good business plan requires a massive amount of work. But how can you verify

your idea before investing so much time and effort? Lean canvas can

help you with that. You need a lean canvas if you want to create a product that

will be in demand in the fast-changing market. This tool allows startup founders

to mitigate the risk and uncertainty associated with a product inception. The

lean canvas is a one-page document consisting of nine boxes to be filled in.

It originates from Alex Osterwalder's business model canvas. Initially the last

one was designed for well-established businesses and not really applicable to

startups. That's where lean canvas comes in. Its key difference from the business

model canvas is its problem-solution oriented approach and focus on the

customer. To address this, the four business model canvas boxes namely: key

partners, key activities, key resources, and customer relationships were replaced

with problem, solution, key metrics, and unfair advantage respectively.

That helps founders focus their products on resolving their customers problems

instead of specific features of the product. In practice, it doesn't take a

huge amount of time to fill in the lean canvas. We recommend you to stick

to the following order, but it's not obligatory, and you're free to choose the

way you feel comfortable with. Let's do this together through the example of the

world known peer-to-peer ride-sharing app - Uber, back when it was getting off

the ground.

We should start by defining the target customer. Many startup founders suffer

from a common misconception called "everybody needs my product". Narrow down

the customer segments as accurately as possible. You'll be able to expand it

later on if you blossom out. Uber offers its service to passengers and

drivers. The passenger segments can display narrower by demographics, type of

usage, and socio-economic characteristics. Drivers also divide into users who opt

for Uber as a full-time job solution, and those who leverage it in addition to

their main job. It's best to mark each segment in different colors your

convenience. In the early adapters section you can specify the actual

people who will be the first to use the raw product and provide feedback.

These may include first customers, developers, friends, and even you, the

starter founder. In the problem box we refer to customer problems that your

product is meant to solve. If you have several customer segments with different

problems, you may make separate canvases for each of them. Here we have specified

problems for passengers and drivers separately. Therefore, we've got such

problems as expensive taxi service, availability of cabs, long waiting time

during the rush hours, advance booking is often required, and lack of driver

profile for passengers. Drivers need extra income, a part-time job opportunity,

and awareness of who they are going to drive. In the existing alternatives

section you should place your closest competitors that are already solving the

specified problems. We'll split the Uber existing alternatives according to

different user segments. So passengers can opt for public transport, a taxi

service, or ride with a friend. And drivers are limited to taxi service

and other full or part-time jobs to get income.

The product you are going to create must bring revenue. Usually entrepreneurs

use the cost based approach where you need to calculate costs and add a margin.

However, we recommend you to rely on the average value required for the customer

to solve the problem. For example, Uber takes around 25% of the pay for each

ride. All problems you specified in the neighboring box should be matched by

the relevant solutions. Explain what experience the customers are meant to

have. Uber offers a cheaper ride opportunity, wide car network, fast

pickup, route tracking, as well as drivers and passengers ratings to solve the mentioned

problems. Cooperation with your target customers will allow you to learn their

needs and offer the most suitable solution. It's no accident, that the

unique value proposition box takes the central part of the link canvas. The

unique value proposition is a brief message which is meant to attract

customers attention. You need to describe the uniqueness of your product and show

it's key difference from the existing alternatives. Uber attracts customers not

only with its speed and low price, but also a package of services in one app,

which allows you to find a safe ride 24/7/365.

Drivers, in turn, opt for uber as they can work on their own schedule, manage their

revenue, navigate the route through the app, and forget about taxi license

issues. In the lower part of the unique value proposition box there is a place

for creating a high-level concept - a short and easy to understand statement

about your product. It's kind of elevator pitch you will use when addressing

your product. As an example, Uber is like taxi but cheaper, safer and

more flexible. Even the most ground breaking product on

the market can fail if the customers are not aware of it. Specify

communication channels to reach out to your target audience. In our canvas,

Uber relies on PR, word-of-mouth and user referrals. Define key tracking

metrics to measure the progress of your business. Initially, you can deal with one

key metric like minimum success criteria - meaning the outcome that can be deemed a

success. Later on you can expand your lean canvas with other vital metrics.

As for Uber, they factor in the number of users and rides, money earned and

referred users. The fixed and variable costs find their place in the cost

structure box. These may include costs for the office

rent, hardware, recruitment, market research etc. It's enough to narrow your

time window to a particular milestone like a product release or achieving the

first 100 customers. Once your cost structure box is filled in, you can

balance it with revenue streams and get answers to such questions as "how many

customers do I need to pay off the investments?", "where is the break-even

point?" and others related to the winning outcome. In our example let's focus on

cost for product development, infrastructure and support, as well as

the marketing expenses, and salaries. The last step in the lean canvas is your own

unfair advantage. This term denotes a special thing about your idea that your

competitors are not able to copy or obtain in any possible way. Unfair

advantage may include a good reputation, exclusive access to some data, personal

authority, community, or any other unique advantage. It's not necessary to seek out

your competitive advantage right now. You can fill in this box later when some

other things have started to go in your favor. When Uber was founded, its unfair

advantage was the experience the application offered: low priced rides at

the push of the button.

That's it! Remember that your lean canvas can and needs to be changed once you get

new feedback from your customers. While you're in a startup mode, you are still

testing various hypotheses. Some get confirmed, some don't. But make sure you

adjust your lean canvas according to the facts, and not how you wish the things were.

This was the introduction to the lean canvas model from Railsware. If you're

interested in the content like this, press thumbs up and subscribe for the

Railsware YouTube channel. Thank you very much for being here with me, and have a

wonderful day!