Lecture 8 - Technology, Innovation and Great Power Competition - Cyber
House Treat Columbia 2015
1. Yuri Berkovich
Roddy Conner
Neeraj Kulkarni
William Watts
housetreat.com
Online marketplace for
homemade treats
Team 7
Interviews today: 21
Total interviews: 89
2. Provide homemade,
healthy food to
customers and allow
home-based cooks to
sell online
Products and Services
Diners: Web portal to
view today’s dishes,
pay and pick-up food
Cooks: Web portal to
add dishes, receive
pmt, prep for delivery
Delivered food
Web app dev
Processing pmt
Validating customers’
identities
Rating system for cooks
Cust service / feedback
Delivery network
Web hosting
Online pmt
processing
Lawyers
Customer service
reps
App developers
Customer service reps
Delivery network
personnel
Hosting
Development / Management
Advertising
Customer service Diners: Working
phone line & email households in
large urban areas
Cooks: Home-
based cooks who
generally prepare
dishes just for
their families;
culinary students
who want to
market their skills
20% commission per
transaction
Advertising conversions
Web app: Allow cooks
to post dishes, allow
diners to buy dishes,
process payments
Day 1
3. Buyers Sellers Total
Young
Professional
Native
Food Lover
Modern
Housewife
Culinary
Art Student
Day 1 4 4 5 4 17
Day 2 6 4 3 2 15
Day 3 5 4 6 4 19
Day 4 5 5 4 3 17
Day 5 4 3 5 9 21
Total 24 20 23 22
CUSTOMER INTERVIEW SUMMARY
89
4. DAY 1 ASSUMPTIONS ACTIONS FINDINGS DAY 2 UNDERSTANDING
Value: Buyers would buy
homemade food rather
than from restaurants Face-to-face
interviews with
various prospective
buyers
1) Trust concerns
with cooks
2) Buyers prefer
customization
Value: Buyers require
more validation on
seller’s kitchen, provide
seller profiles
Customer Segments:
Prospective buyers are
working households or
holiday shoppers
Higher demand from
young professionals
and native food
lovers
Customer Segments:
Prospective buyers are
young professionals and
native food lovers
Channels: We can sell
any kind of food online
Researched
regulatory
environment
1) Restricted by
jurisdiction
2) Less strict laws
only for baked
goods
Value: Start with
allowing baked goods
sales online
DAY 1DAY 2 = PIVOT!
5. US Urban Households = 90.0M
Total
Available
Market
$4.3B
Target
Market
$112M
Served
Available
Market
$744M
1
2
3
Households in Top 20 Urban
Areas with Income >$80K = 15.5M
Capture 15% of Served Available
Market = 2.3M
Total Estimated Annual Revenue = $112.0M
(=$240/year/household x 2.3M households x 20% commission)
MARKET SIZE
6. • Crowded and highly
fragmented food tech space
• HouseTreat is uniquely
positioned versus competition
COMPETITIVE LANDSCAPE
Meal Delivery
Mobile/Online
Ordering & Delivery
Restaurant
Reviews & Search Recipes &
Communities
7. Provide homemade,
healthy food to customers
and allow home-based
cooks to sell online
Products and Services
Diners: Web portal to
view today’s dishes, pay
and pick-up food
Cooks: Web portal to add
dishes, receive pmt, prep
for delivery
Delivered food
Web app dev
Processing pmt
Validating customers’
identities
Rating system for cooks
Cust service / feedback
Delivery network
Cooks
App developers
Customer service reps
Delivery network
personnel
Hosting
Development / Management
Advertising
Customer service Diners: Working
phone line & email households in
large urban areas
Cooks: Home-
based cooks who
generally prepare
dishes just for
their families;
culinary students
who want to
market their skills
Web app: Allow cooks
to post dishes, allow
diners to buy dishes,
process payments
Day 2 Pivot
Web hosting
Online pmt
processing
Lawyers
Customer service
reps
20% commission per
transaction
Advertising conversions
Provide homemade
baked goods online
8. PROFILE: Yuppie Foodie
Roberto, Age 45
Native Food Lover
PROFILE: Aspiring Chefs/
Hobbyist
PROFILE: Ethnic/Niche Food
LoverIncome:
- High disposable income
Buying Rationale:
- Looking for unique
desserts to enjoy or bring
to special events to
impress friends
- Seeking a foodie
experience as he
considers himself a
connoisseur and
gourmand
Income:
- Varied (working class
and professionals)
Buying Rationale:
- Craves non-mainstream
food from ancestral
homeland that is hard to
find
- Member of niche group
with its own subculture
/tastes (e.g. church,
military housewives)
Income:
- Limited income as a
culinary art student
Selling Rationale:
- No platform to practice
craft of cooking
- Seek recognition and
confirmation
- Want others to try what
they have created
CUSTOMER SEGMENTS
PROFILE: Extra Money Maker
Income:
- Limited income as a stay-
at-home, freelancer,
retiree, unemployed
Selling Rationale:
- Individuals who have
spare time and want to
sell to make some extra
money
- Consider themselves
good cooks but don’t
want to work in
restaurants/bakeries
Tiffany, Age 20
Culinary Student
Mary, Age 35
Modern Housewife
BUYERS SELLERS
Mike, Age 30
Young Professional
9. CUSTOMER FEEDBACK
Stay-at-home mom and baker...
“I am a stay-at-home mom who has a few savory pies and a few fruit pies that I can make available
en masse. I have a blog that I have not been able to tend to as much as I work away from home
now part time and am a mommy. I can get that time back if I can work from home. Tell me more
about your plans.”
Tarril
Vegan baker with a focus on health and customization…
“Would love to get involved. I love to bake and I am also a vegetarian so I have been practicing
baking dairy free, gluten free, peanut free goodies without losing the yum factor. It is important to
accommodate the many dietary needs, offering fresh products customized to people with specific
restrictions.”
Rosie
Customized cake buyer...
“I'm a modern mom and busy professional. My five year old son's birthday is next weekend and I
wish I could buy him a customized T-Rex cake for his party. Unfortunately I can't find this anywhere
in grocery stores or bakeries.”
Lisa
Seller
Seller
Buyer
10. BUYER PRODUCT/MARKET FIT
Purchase
homemade baked
goods online
Food as culture
Customer does not have
time or expertise to make
the treat himself
Customer can not find these
treats elsewhere (e.g. local
restaurants, delis).
Need to find cooks with
similar tastes / culture
Ethnic/Niche Buyer
Craves non-mainstream food
from his ancestral homeland
Part of niche group with its
own subculture/tastes (e.g.
church, military housewives)
Food as experience
Customer does not have
time or expertise to make
the treat himself
Needs to impress others with
original creations
Wants to be trendy, likes to
taste/critique food
An affluent, busy
professional / food lover
Looking for unique desserts
to enjoy or bring to special
events to impress friends
Considers himself a
connoisseur and gourmand
Value Proposition Product/Market Fit Customer Segment
11. SELLER PRODUCT/MARKET FIT
Provide homemade
baked goods online
Cooking as a job
Need to earn money while
staying at home
Enjoy cooking for themselves
and others
Want to take advantage of
their free time
Freelancers / Stay-at-home
/ Unemployed / Retired
Individuals who have spare
time and want to sell to
make some extra money
Consider themselves good
cooks but don’t want to work
in restaurants/bakeries
Cooking as an art
Need to improve their
cooking skills to break into
good restaurants and/or
open their own
Crave recognition and
confirmation
Want others to try what they
have created
Aspiring chefs / Hobbyists
Culinary students without a
platform to practice
Devoted hobbyists who
perfected a particular
recipe(s) or created
something novel
Value Proposition Product/Market Fit Customer Segment
12. Hosting
Development / Management
Advertising
Web app: Allow cooks
to post dishes, allow
diners to buy dishes,
process payments
Day 3
Customer
Segmentation &
Product Fit
Web hosting
Online pmt
processing
Lawyers
Customer service
reps
Customer service phone
line & email
Web app dev
Processing pmt
Validating customers’
identities
Rating system for cooks
Cust service / feedback
Delivery network
Cooks
App developers
Customer service reps
Delivery network
personnel
20% commission per
transaction
Advertising conversions
Cooks
Culinary Student – Aspiring
Chefs
Culinary students without a
platform to practice
Devoted hobbyists who perfected
a particular recipe(s)
Extra Money Maker
Individuals who have spare time
and want to sell to make some
extra money
Consider themselves good cooks
Diners
Yuppie Foodie –
Young Professional
Looking for unique desserts to
enjoy or bring to special events to
impress friends
Ethnic/Niche Food Lover
Craves non-mainstream food
Provide homemade baked
goods online and delivered
Diners
Customer does not have time or
expertise to cook herself
Customer can not find these
treats elsewhere
Needs to impress others
Wants to be trendy, likes to taste
and critique food
Cooks
Cooking as a job:
Need to earn money while
staying at home
Enjoys cooking
Wants to take advantage of their
free time
Cooking as an art:
Need to improve their cooking
skills
Craves recognition
Want others to try their food
13. HouseTreat Customers
Buyers
Sellers
Flash Sales
(Groupon & Living
Social for Buyers)
Social Commerce
(Facebook & Twitter
for Buyers)
Dedicated E-Commerce
(housetreat.com)
Platform App Store
(Apple, Android)
Channels
CHANNELS – THE WEB
14. Adoption
Viral Marketing:
Cooks’ blogs, friends
Word of mouth
Friend Referral Promotions
Media:
TV / Radio
Billboards / Printed Ads
SEO:
Google AdWords/AdSense
Facebook Ads
Flash Sales:
Groupon
LivingSocial
Partners/Affiliates:
Celebrity Chefs
Cooking channels
Culinary Institutes
Year 1 Budget = ~$30/customer * 100k customers = $3.0M
GET STRATEGY
15. GET STRATEGY IN ACTION
Unsolicated Call From Food Network Executive Producer...
“I'm a producer for a production company that specializes in TV cooking
shows. We have created some of the nations best shows. We were
approached by a new network in food and they are looking for new shows.
I'm interested in speaking to you about doing a show on your type of
cuisine. Please give me a call. “
Donna
Executive Producer - Food Network
17. Hosting
Development / Management
Advertising (Geotargeting)
Web app: Allow cooks to post
dishes, allow diners to buy
dishes, process payments
Dedicated E-
Commerce Website
Platform App Store
Social Commerce
Flash Sales
Day 4
Customer Relationships,
Channels & Revenue
Streams
Web hosting
Online pmt
processing
Lawyers
Customer service
reps
Customer service phone line
& email
Food Bloggers
Printed Ads
Viral Marketing
Targeted SEO
Flash Sales
Partnerships/
Affiliation
Cooks
Culinary Student – Aspiring
Chefs
Culinary students without a
platform to practice
Devoted hobbyists who perfected
a particular recipe(s)
Extra Money Maker
Individuals who have spare time
and want to sell to make some
extra money
Consider themselves good cooks
Diners
Yuppie Foodie –
Young Professional
Looking for unique desserts to
enjoy or bring to special events to
impress friends
Ethnic/Niche Food Lover
Craves non-mainstream food
Provide homemade baked
goods online and delivered
Diners
Customer does not have time or
expertise to cook herself
Customer can not find these
treats elsewhere
Needs to impress others
Wants to be trendy, likes to taste
and critique food
Cooks
Cooking as a job:
Need to earn money while
staying at home
Enjoys cooking
Wants to take advantage of their
free time
Cooking as an art:
Need to improve their cooking
skills
Craves recognition
Want others to try their food
Web app dev
Processing pmt
Validating customers’
identities
Rating system for cooks
Cust service / feedback
Delivery network
Cooks
App developers
Customer service reps
Delivery network
personnel
20% commission per
transaction
Advertising conversions
18. DELIVERY – PARTNERSHIP OR IN-HOUSE?
Our approach: Outsource Delivery for MVP (incur costs initially), gradually
build delivery network
Partnership In-house network
Pros • Develop our MVP more
quickly
• Strategic Alliance:
Outsource delivery to
partners
• Better control cost of
delivery (approx. $3
per order)
Cons • Higher cost of delivery
per order ($5 - $12)
• MVP release timeline is
longer
• Operational overhead
19. Matching chefs and
general public online and
through apps
Food delivery
Ratings, reviews
Customer service
Marketing & PR
Insurance protection
Physical delivery
services (Postmates)
Promotional
partnerships :
• celebrity chefs
• culinary institutes,
• TV cooking
programs
• Bloggers
IT outsourcing
Insurance for chefs
Website, apps
In-house web
developers
Delivery personnel
SG&A staff
In-house counsel
Web Development
Customer Acquisition
Loyalty programs
SG&A
20% commission on online sales
Advertising conversions
Dedicated E-Commerce
Website
Platform App Store
Social Commerce (FB)
Flash Sales (Groupon)
Day 5
Cooks
Culinary Student – Aspiring
Chefs
Culinary students without a
platform to practice
Devoted hobbyists who perfected
a particular recipe(s)
Extra Money Maker
Individuals who have spare time
and want to sell to make some
extra money
Consider themselves good cooks
Diners
Yuppie Foodie –
Young Professional
Looking for unique desserts to
enjoy or bring to special events to
impress friends
Ethnic/Niche Food Lover
Craves non-mainstream food
Provide homemade baked
goods online and delivered
Diners
Customer does not have time or
expertise to cook herself
Customer can not find these
treats elsewhere
Needs to impress others
Wants to be trendy, likes to taste
and critique food
Cooks
Cooking as a job:
Need to earn money while
staying at home
Enjoys cooking
Wants to take advantage of their
free time
Cooking as an art:
Need to improve their cooking
skills
Craves recognition
Want others to try their food
Food Bloggers
Targeted SEO (FB, Google)
Printed Ads
Viral Marketing
Flash Sales (Groupon)
Celebrity Chefs
Culinary Institutes
FOCUS ON PARTNERS BIG IDEA – ALL ABOUT THE
CUSTOMER
20. MOCKUP: LISTINGS
Associating a dish with a chef
Having a time where a certain
numbers of buyers must be met.
Creating a Kickstarter feel with donations and
concept of inspiring home chefs to build their
craft.
Reviews | HouseTreat cert.
22. FLIGHT PATH AFTER LEAN LAUNCHPAD
• Continue growing HouseTreat into the next great
company
– Complete MVP (website and app)
– Establish necessary resources and partners: delivery,
insurance, packaging, regulatory compliance
– Get first customers into the “funnel”
– Raise funding
– Keep and grow customers
– Iterate product features on customer feedback
24. TYPE OF BUSINESS: STARTUP
Regulation: targeting jurisdictions that allow…
a. Online transactions for private sellers
under the Cottage Farm Law exemptions
in each state
b. In-person delivery via our third party
delivery system (Postmates)
Disruption
Geo-targeting
● Geotargeting select communities and
demographics via FB ads
● Providing starter “Kits” for help sellers meet
regs
Scaling through Seller Agents
● “Downline” Commission for mentors who bring
in sellers and serve as a mentor
Repeatable & Scalable
Minimum threshold of sellers & buyers met
Starter Kit built
1) FB Ads @ Community
2) Mentor Programs w/
commission
Move from closed to open community
Shipping model for established
sellers
25. FIRST YEAR REVENUE MODEL
25
• Customer Acquisition Cost
$3.0M
– $30/new customer
– 100k new customers
• Product development
$200k
– $100k avg. salary
– 2 full-time developers
• SG&A Personnel
$600k
– $120k avg. salary
– Five professionals
Profit
$1.60 per transaction $0.40 per transaction
Operating Expenses
• Target Market
– Select US urban markets
– 100k new customers
• Sales $4.8M
– $2 commission/transaction
(20% commission, $10 avg. sale)
– 24 transactions/customer/year
– $48/customer/year