Implementation of the lean-startup-method using the example of an android application

[My bachelor‘s thesis was kind of special, because it wasn‘t written alone, but in a team of three people.]

Introduction

In this work we will go through the start-up process using the method introduced by Steve Blank [1]. Our goal is to create a business model using a webservice or a smartphone application and to built a working prototype.

The Lean startup process

For this method, we had to create a basic business idea as a starting point. Every part of this idea should be treated like a hypothesis and needs to be evaluated later on in the process.

The evaluations are conducted using a Minimum Viable Product (MVP). An MVP is the most basic possible form of the finished product, while still containing the basic function of the final product. It is used to collect feedback on our hypotheses concerning the product itself from possible customers.

Disproved hypotheses will be replaced with new ones. This process ends when all our assumptions are proven correct.

In this process lies the possibility for a so-called pivot. A pivot takes place after a fundamental hypothesis has been disproven. In this case the modell needs to take a new direction which can be completly different than in the first iteration.

Using this method, it is far less likly for our business model to fail because of wrong assumptions about the needs of our customers, the costs of certain aspects of our idea or similar misjudgments.

The Idea

We created the idea for a smartphone application that would help people organize their betting groups for soccer games. It will track the bets and statistics and will support private and public betting groups. Furthermore it will update as soon as the results of the games are in.

The Evaluation

The sentence Steve Blank emphasizes all the time is „Get out of the building.“ He tells us to constantly evalute our assumptions and change them accordingly.

That is what we did. We asked a lot of our fellow students for their opinion and even built a few surveys. One of those was even held at the Christmas market in Magdeburg, where we tried to find interested people that were no students. Our intend was to diversify our sample.

The hypotheses were changed according to the feedback. Overall we had to change only a few things and did not experience a pivot. I will just name one important change as example. We learned from the feedback we got, that most people were not willing to pay for the basic app, like we intended at first. The would rather take a free app with advertisment. Opposed to the majority, the core of our target group was willing to pay either for a few more advanced features, like more detailed statistics, or even for the whole app.

The Risks

Through our evaluation we learned of a few risks concerning our business model.

Firstly there are a few rival applications, but all of them lacked some features which we could try to provide.

Secondly our idea was possibly considered as a form of gambling by german law. This would mean we had to get a licence, which was practically impossible for us. The final decision if we would need one took longer than we had time to write our thesis. I cannot say if there is a result by now.

But we did plan accordingly. We found possible countries in which we could get a licence quite easily. This would allow us to work Germany thanks to european law.

The Outlook

According to our estimated plan for the next few months, we would need approximatly 413.000€ from possible investors. With this investment we would be able to further the development and marketing of the application. We expect to generate a positive balance after roughly 14 months.

After this point the investors will get a share of 35% of our monthly revenue, which will be ramped up to 50% or even 75% if our revenue is big enough. The payments will continue until the investor received five times his investment from us. We estimate that this debt will be paid after four years.

[1] Blank, Steve. The Startup Owners Manual The Step By Step Guide for Building a Great Company (1.Auflage). 2012.

3 thoughts on “Implementation of the lean-startup-method using the example of an android application

  1. Josi says:

    Hi Norman,
    I cannot understand your own critical view on the structure… The one you presented here makes it very easy for me as a reader to follow! I really appreciate that your sections fitted coherently with the other sections AND that the sentences inside the single sections also were coherently structured. What I want to say: I could understand the content of your Bachelor thesis very well 🙂
    One small thing: I was a bit lost in the very beginning. After I read your introduction, I was still clueless what exactly you were doing and felt a bit stupid as reader. I might have gone a bit more into detail about the method, as not everyone knows Steve Blank. However, the rest of the text of course made clear to me what it’s about ^^
    All in all, I am not sure if your self-criticism really is justified because I as reader comprehended your text very well. Btw, I also like your English 😉

    Greets,

    Josi

    • Norman says:

      Thank you!

      I really tried to write something I wasn’t ashamed to show anyone. That’s why I revised my thesis.
      I spared you guys a whole section about our prototype and countless screenshots of it, the journey” it took us to find our idea and a whole chapter about a business case. That last one was full of tables and graphs and badly estimated numbers.
      Also it seems as if we didn’t define a lot of terms we were using, which I added in the introduction of the short version. I think we were told to assume a certain level of knowledge about the topic in our readers, but it feels strange that terms just start popping up without getting introduced.

      Therefore I still think that my criticism concerning my thesis is justified, but I’m glad to hear that I have improved. 🙂

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