Hello, in this session
we will go over a really, really important topic
during the entrepreneurial journey
which is consumer discovery and validation
Please pay attention to the class
Are you ready? let's begin
Suppose that you start your businesses,
then probably your business idea
can be based on the consumer's problem
You notice that consumers right now face unmet needs,
and then this consumer's problem
has not been solved properly yet
So that's why you prepare for your solution,
and your solution is your idea and also is your businesses
This is called as a problem-solution perspective
But the more important issue inside the problem-solution perspective is that
many times, the reality is different from your hypothesis
So probably,
you cannot have many consumers than you thought
Why?
There are basically two reasons, in my opinion
The first reason would be your assumption about consumers' needs
and consumers' problem was not true
Your assumption is wrong because no one wants to have a solution.
Why?
Because they don't feel there's problems
No one wants to purchase a solution if they don't have a problem
But you prepare the solution for those kind of problems
No one wants to fix it
And second reason why you don't have consumers is that your assumption is right
So you pick up, correct your problems
But the real issue is that your timing is not right
So you are in the wrong time
So that's why you don't have consumers
The startups, your startups are ready
But consumers are not ready
It has happened many times
Look at this chart
CB Insight, provides us several kind of statistics
And then, according to the CB Insight statistics,
there are top 20 reasons why startup fails
Number one reason is what?
Number one reason is no market needs
Same thing happened
Consumers don't feel any problem
For your solutions
So that's why you cannot attract any consumers
I will give you an example
Look at him
He tried to solve the problem
about the consumers for presentation
So he thought that, there are so many people suffer from
lack of the skill about the presentation,
but they want to present very well
But there is no way to improve their presentation skills
I think it could be a great problem
nobody properly solved this kind of problem yet
So that's why I prepared for the solution
This is my solution
There is a boy, he is who hoped to make a presentation very well
And then he prepared for the solution, which is the ratemyspeech
The basic idea of the ratemyspeech is that
you record your presentation
and you upload your video to some of the community,
online community, which is a ratemy, website
Then other people who register for the ratemy.com
watches your presentation
then they rate the performance of your presentation
So basically, he started these types of businesses that record on presentation
and get the feedback from us, from others
Then what happened? Think about it
Can you take a video from your presentation
and upload your video to somewhere else,
to receive the feedback from, anybody, from random guy?
Probably not
Why? Because, I don't want it
actually, I know my presentation skill is weak,
but in order to improve my presentation skill,
should I upload my video of the presentation?
how to take a video about my presentation?
Wow, it is not convenient
I'm not feeling comfortable
So this is the reason, the consumers avoid these types of solutions
So there's no one who wants to use these types of solutions
And there's not enough incentive to do it
You know what I mean?
Let's look at another example
look at him
He thought that,
so many people use the valuable item just only once
For example, snow blower
I purchased the snow blower for upcoming winter,
but I used this snow blower only once in this winter
And I just put this expensive snow blower into my garage
I never used it again
Wow, it's so waste
it is so wasting
So that's why he thought that, why not?
Why not
allowing others to use my unused item,
unused devices, in exchange for the money?
Then I can make additional money
So he created some kind of solution, which is why own it?
Why own it?
You just borrow the devices from somewhere else,
or you can just lend your devices to somebody else
and then you can make money
And then we will use our resources efficiently
That is his idea, based on consumer's problem and solution
so he made a mobile application
So the consumers can open up the mobile application,
and they can just simply borrow or rent the devices,
like a snowblower or a lawnmower, something like that
But what happened, consumers, people,
simply don't want to rent their devices,
or don't want to borrow the devices from somewhere else
And think about it
It was also very dangerous
so how to rent your devices to somebody else?
Then probably somebody else should visit your places
Think about strangers visiting your places
Wow, it could be very dangerous
They can be deaf, they can kill, they can be terrorist
nobody knows who they are
so it is not safe
safe way is not just simply not to rent anything
So that's why he cannot attract any consumers
So this business failed
Look at another one
his idea was very interesting
Because he thought that,
there are so many conferences out there
And then after conference, what happened?
Nothing, nothing happened
so we cannot make any friends out of conference
Wow, it is so waste. And then
He thought that, why we cannot make friends out of conference?
Because there is no community,
no online community for the conference participants,
gather together again after the conference
So that's why he talked about his idea with conference organizers
And then conference organizers
many conference organizers agree with his idea
And then conference organizers said that,
yes, it could be really great if you make those kind of community
So that's why he put a lot of effort and energy
to create some kind of after-conference community
for example, like a Facebook,
specialized Facebook for the after-conference
This is kind of concept
So his idea was Eventvue. Eventvue
He started with these businesses that is supplying social community
like a Facebook for the conference, participant
What happened?
Conference organizers were not interested
in these types of businesses
Although they said that, yes, it might be great,
but that is their opinion
But when they try to pay the service,
then they don't feel any incentive to pay this,
pay the service for these types of solution
So conference organizers were not interested
in actually paying the fee to those kind of communities
So that's why he failed
Let's look at this picture
I asked Chet GPT to draw the webtoon-style pictures
Well, this is a real startup example
This is Zume Pizza
Zume Pizza was a very successful one
The concept of Zume Pizza is like this
You just open up your mobile application,
then you place the order, then later what happens
there is some restaurant, a hidden restaurant over there,
and then inside the restaurant, there is a conveyor belt and robot arms,
so the robot basically made the baked pizza
You know what I mean?
Robot baked pizza
So there is a complicated technology in it,
advanced technology, AI, and robot, and others
Then later people pick up the pizza
and deliver the pizza to the door
Then later, they the founding team had an additional plan
which is baking on the way
Baking on the way means they prepare for the big truck,
and inside the truck, there is 56, mobile oven,
Basically, you drove the street, down the street,
and then you arrive at the destination
once you arrive at the destination,
you just finish baking the pizzas
Then you can deliver the very freshly made pizzas right now
to the consumers
So great
And how to estimate the timing and estimate the location,
it's all based on the complicated the technology,
data analysis technology in it AI technology in it
So they calculate already,
and then they optimize the location and distance
and timing, something like that
So their purpose is to deliver very fresh pizza on time
This is the idea
What do you think?
So why they started these businesses?
Let's look at this
The founders started these businesses
based on their assumption about consumers' problem
They thought that there is a huge problem
in terms of the pizza delivery
What are they?
First one, pizza delivery is sometimes slow,
and also the pizza is kind of low-quality pizza delivery
So people probably want better,
fresher pizza delivery faster
Then second reason, second problem would be
there is an inconsistent pizza quality
from traditional pizza delivery
because there is a traffic jam, then it takes a long time
So the restaurant-made pizza often arrives soggy or cold
because of the delivery issues
So that's why we should revolutionize the pizza deliveries
So they started these businesses
What about the reality?
What about reality?
It sounds great?
Yes, great
What about a little bit expensive, though?
Are you willing to premium prices on this
baking on the way types of pizza or robot-made pizza?
To eat the robot-made pizza,
you want to pay kind of 30% more?
Are you ready to do it?
In the reality, slow, low-quality pizza deliveries,
most consumers
were satisfied with the existing pizza delivery
I'm okay for the Domino's
I'm okay for the Papa John's
because they are tasty and cheap, efficient
Why not?
Why should we pay more money on the robot-made pizzas?
I don't care
Second reason, inconsistent
food quality from the traditional deliveries
Well, most consumers were not demanding
oven-baked on-the-way pizzas
Sometimes I feel there's an inconsistent pizza quality,
but I think it's okay
Just my simple, simple lunch is fine
In order to eat fresh pizzas,
I don't want to pay the premium prices for the robot,
Robot arms-made or oven-baked on-the-way pizza
I don't want it, I don't care
That's why what happened,
Zume Pizza has raised around $445 million
as outside funding
led by SoftBank Vision Fund
It was successful, so that's why the Zume Pizza
was valued at over $1 billion once,
but it shut down its pizza service in 2020
So, what is the best takeaway from this story?
So, the story is clear
Assumption, your assumption is sometimes
different from your reality
Second reason why you don't have consumers,
second reason is that your assumption is right,
but your timing is wrong
What if your problem is too early or too late?
Then you cannot attract proper consumers
So remember, success or failure
is about timing issues
So timing issue account for 42%
of the start of failure
Look at him. He is an NYU student
who wished to know
where his friends have a party
Actually, he want to be invited to his friend's party
Probably, he's isolated
Anyway, he want to know where they are
That's why he created one of the service,
which is a Dodgeball
Dodgeball is kind of a location-based
social networking services,
and it can be provided by the mobile phone
The simple idea is like this
You just text the message to your friends,
and your friends receive the message
about the information and where they are, about the party
And then, if you are willing to attend this party,
then you press one, Yes
If you don't want to go there, and you press two, no
It's pretty simple
Then your friends know your willingness to
participate in this party or not
And you, you knew where they are
But what happened?
Think about it, what happened?
He started this business, I think, a little bit early
How early?
it was not very successful
because there is no smartphone and Facebook
So, that's why not too many people can use these services
At that time, the mobile phone was not smart,
and you just received the text message
Like this, you got the text message,
like your friends, I don't know,
your friends who is at Ace Bar,
this is a location, Ace Bar in Manhattan
Will you attend this party or not?
Press one or two
What do you think?
You can simply just call them
Hey, hey, Mr. Bae, we are at the, Ace Bar
Will you attend this party or not?
You just simply call them,
and you don't have to make a complicated text message to them
Where are we?
We are Ace Bar Wall Street, nearby Wall Street,
there is some blah, blah
You can just explain it
So, that's why not too many people use this problem,
not too many people feel the same way of the problem
So, that's why this company,
although it was a little bit successful
because Google acquired this company in 2005,
but later on, Google shut down this service
Then what happened?
Anyway, he addressed
I think it's a great solution, great,
I mean, great problems
He addressed the good problem, though
Although his service was a little bit early,
then later on, what happened?
He started similar services again
So, location-based, some kind of software services
He started, full-scale
I think the concepts are pretty much similar
And then what happened?
He successfully attracted tons of consumers
How many?
45 million consumers
Then what happened?
This sort of has raised more than $400 million as outside funding
What do you think?
Same solutions based on same problems
But what happened?
His timing was great
Look at him
Well, this is a kind of another example
about this issue, timing
So he thought a very interesting idea
So we get online
Then why not
why not making group purchase of the single item?
Then what happened?
We can purchase tons of item
Then we can get the discount because we have bargaining power
So let's get online first
So he created quickly his service,
which is the letsbuyit.com today
letsbuyit.com
Let's buy it together, right?
As long as we get online,
As long as we purchase the bulk item,
then we can get 20% or 30% discount
Wow, it's really great
Then what happened?
Unexpected to his expectation
Not too many people get online
I'm sorry about that
Not too many people get online
They don't know what it is
They don't know what is the group purchase
They don't know the concept
Its concept was premature, and they don't know what it is
They don't want to get online
They want to pay something online
because they don't have any experience on it
So that's why this business was not successful
Then what happened
After many years later, what happened?
Somebody else initiated very similar businesses
This is Groupon
The Groupon idea is pretty much the same
So we get online and make a group purchase
Then we can get the discount
This Groupon service was booming, was exploding
And then what happened?
Groupon became huge, successful company
So anyways, he got the right problem,
but his solution was great, but problem was timing
His entering timing was too early in the market
When you start your businesses,
you'd better identify the consumer's problem very well,
and also you prepare for the exact solution
for your consumer's problem,
and you need to think about when is the right timing
Look at this example
The left picture,
the left picture is deep ocean fishing boat
This is Dongwon. Have we heard about Dongwon?
Dongwon is a well-known company in Korea,
which is a great company for the tuna
And then, the Dongwon started around 1960s
Around that time, world number one, global number one,
tuna company was Starkist
Have we heard about Starkist?
Delmont, America
Delmont, America had Starkist
So the Starkist is the branch of the Delmont group
The Delmont orange
Anyway, Starkist opened up a canned tuna factory
in the island of Samoa in Pacific Ocean
So this is a factory
In 1963, Starkist Samoa factory
So basically, inside this factory,
The Starkist made a canned tuna
And who supplied the tuna?
Yes, of course, Dongwon
Dongwon, the deep ocean fishing boat,
catch the tuna a lot and supply most of the tuna
to the Samoa factory of the Starkist
Then the interesting thing is the Dongwon
is the world number one tuna catching boat
And they catch the tuna a lot
No one beat their record
Because Dongwon has some kind of great know-how
and they had the skill to catch the tuna
So there's so many people
ask the CEO of the Kim Jae-chul of the Dongwon, why not?
Why not starting your own canned tuna factory in Korea?
Then you can make more money
Why you just supply your tuna to the Starkist factory only?
So is there any reason?
Then CEO Kim Jae-chul replied
those kind of questions like this
Well, think about it
Canned tuna is a great item,
but only the country,
only the country that exceed,
that exceed, $2,000 as GDP per capita
can consume the canned tuna
Below the $2,000 GDP per capita
those countries are not ready to consume this kind of tuna
Korea, at that time, Korea's GDP per capita
is way below than $2,000
Then the Kim Jae-chul, CEO Kim Jae-chul said that,
probably I expect to
we expect to reach out $2,000 around early 1980s
Then at that time,
probably the Korean people are ready to consume the canned tuna
Then, so we develop, prepare the factory,
canned tuna factory in Korea before 1980s
Then, we can start producing canned tuna
Then the late 1970s, early 1980s,
he prepared the canned tuna factory in Korea
Then he started making canned tuna
and supply the canned tuna to the Korean people
because at that time,
the Korea's GDP per capita exceed $2,000
What do you mean by that?
The Korean people are ready to consume the canned tuna
Then what happened?
Dongwon became the Korea number one canned tuna company
Then later made the tons of money and save this money
and purchase Starkist in 2008
So the Dongwon right now
became global number one canned tuna company
This is the story
Wow, what do you think?
CEO Kim Jae-chul and founder of the Dongwon
He's very smart
He knew when to enter the market
So although you have a great idea,
although you have a great solution,
but having great idea,
having great solution is not enough
You need to figure out when to enter the market
So timing issue can kill
or can save your businesses
Please remember that