Lean Canvas Intro – Uber example 🚘

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!

, , , , , , , , , , , , , , , , , , , , , , , ,

Post navigation

19 thoughts on “Lean Canvas Intro – Uber example 🚘

  1. I love this so much… Thank you for this, we can have a partnership. your organisation and mine. Kindly reach out so we can talk more.

  2. The background music is louder than it should be. Just a suggestion otherwise the video and the content is good.

  3. number one unfair advantage: the ability to use other peoples money to fund a below market price product while driving the competition out of business.

  4. What is the best business model canvas for a start up business that wishes to provide a service? And can an entrepreneure use more than 1 bussiness model canvas? If yes, what are the best for a business that will offer a service?

  5. Is driver a customer or partner? I've seen someone explain uber in business model canvas and put driver in key partner. Obviously lean partner doesn't have key partner, but how to justify that the driver is a customer not partner?

  6. What do you get out of, for example, writing "cheaper rides" as a solution for "expensive taxi service"? I mean isn't that sort of obvious? Shouldn't you specify the solution that actually enables the rides to be cheaper?

Leave a Reply

Your email address will not be published. Required fields are marked *