MEMSI – The Startup 101
By Eric Wong ’19
1. The Team
Here at the MEMSI program they identify three types of people: hustlers, hipsters, and hackers. The Hustlers are your deal closers, the ones who bring the money in. The Hipsters are your designers, the ones who understand the user’s needs. The Hackers are your realizers, the ones who know how to bring the idea into the physical world. Every successful startup needs to have a good diversity of personalities and skills.
2. The idea
The more overrated aspect of startups is the idea but that isn’t to say that it isn’t important, just not as important as its usually said to be. The philosophy at MEMSI is Disciplined Entrepreneurship, a framework developed by Bill Aulet that maps a 24-step guide focusing upon the problem, not the solution. Under this framework, identifying and understanding a problem is king. At the start of the process, focus solely upon problems and not technologies.
The Hitchhiker’s Guide to Success – Disciplined Entrepreneurship
Disciplined Entrepreneurship is a 24-step framework developed by Bill Aulet devised to provide guided thinking in creating a successful startup. Through the workshops at MEMSI, we were provided a high-level overview of this methodology toward startups which could be broadly grouped in the steps listed below with the exception of hypothesis testing being ‘How to design and build your product.’
The step that wasn’t covered in the formal workshops but emphasized throughout the initial days of MEMSI is finding a problem. Not a technology or innovation, but a problem.
Who is your customer?-
Different markets have different norms and needs that will necessitate a different solution.
After defining a problem that you and your team want to find a solution for, the first step is to redefine your target customer, whether that would be narrowing or broadening your scope. Often times, the problems that we choose to tackle are ones that we have a personal connection to, however it is necessary to ensure that the population that you can actually solve it for and makes economic sense for you to do so.
To illustrate this point, we did a case study on the startup, Perch, a company that enables velocity-based training for any athlete. Under this guided example, we went through the six steps of market segmentation, determining the beachhead market, creating a user profile, calculating the total addressable market (TAM), defining a persona, and finding the next customers
What can you do for your customer?-
Satisfy your customer’s needs and wants.
With a problem statement and customer in mind, now’s when you start to think of solutions and how to create something that is valuable to them. This is the part of the journey that, as an engineer, is the most exciting and the time to geek out but now is as important as ever to be remember who your customer is as to continue to be able to engage them and show them the value that you are able to bring to them.
In this workshop, we walked through these exercises as Spyce, a company that is elevating culinary excellence with technology. In their shoes, we defined a customer journey map, created a high level product specification, quantified their value proposition, defined their solution’s competitive 2×2, and defined their core
I believe [target market] will [do this action/use this solution] for [this reason].
Up to this point, what you have as a startup is a hypothesis about the market, the customer, and the problem-solution fit. In the fast paced and highly time-sensitive situation that startups face, it is important to be able to fail fast and learn from the market by testing those hypotheses. However, with so many things to validate and questions to answer, it’s important to KISS (Keep It Simple S****d), and write a hypothesis that is testable and actionable immediately. If it doesn’t meet that criteria, dial back and ask for something simpler.
The information you can gather at this stage is as valuable as real money and it’s important to not lose sight of that there are many forms of ‘currency’ besides the $$$. Among these include: a yes to scheduling a meeting, actually scheduling a meeting, actually meeting, getting an email of someone else you should meet, being introduced to someone else you should meet, getting email addresses, and getting credit card information for pre-orders.
How does your customer acquire your product?-
There are many decision makers who are involved in a decision to buy a product with the end buyer being just one amongst a crowd.
After identifying who your target customer is, the next important is to understand the entire journey they take to get to buying your solution. Working with Marcus Leung-Shea, the COO of Orii, a startup that offers a voice activated smart ring, we learned about his company’s approach to successfully bring their product to market. Among the many steps required was defining the decision making unit, discussing how to generate awareness, and going through Orii’s sales funnel that helped them narrow everyone from leads to suspects, prospects, and finally customers. Lastly, we analyzed different go-to-market strategies and their economic implications.
How do you make money off your product?-
KISS and figure out how much value you’re bringing to your customer.
In this aspect of the business model, there are three ways about it: transactional (one-off), subscription, or ad-based. To help guide your decision, it’s important to look for comparable products in the market and realize that your customers will likely exhibit similar spending tendencies when it comes to your product. Along with this starting point, some common wisdom that we were taught was to aim for subscription-based to lower the costs associated with acquiring new customers, have high lift time value from those customers, and to price based on your value.
Scaling, financials, and raising money-
All you need is a good team, some money, and some luck.
With everything figured out, the next step for a startup is to become a business. In a workshop with Gordon Yen, co-founder and managing director of Radiant Venture Capital, we heard his analysis of what makes and breaks startups from his experiences as an investor. We learned about the difficult conversations that need to be made around how to determine equity and ensuring a healthy continued relationship among the co-founding team as well as what venture capitalists are looking for when hearing pitches from various startup teams.
Intro to Making
In addition to the Disciplined Entrepreneurship workshops, we were also taught various maker skills to enable us to understand and tackle various aspects of a prototype through foamcore, breadboarding, arduino programming, and soldering. While they were introductory workshops meant to teach just the basics, I got to appreciate and get a glimpse into the potential new projects I am comfortable tackling!