hello this is dr. Adam Jay back we're going to continue our conversation about what makes entrepreneurial opportunities attractive before we get too far into that it's worth making an important point I like to quote one of my friends Jose astable who launched multiple billion-dollar semiconductor technology products and is now helping to launch a variety of different kinds of small business ventures in the tech space as well as accelerators and nonprofits and Jose likes to say make what you can sell don't just try to sell what you can make this is one of those rare lessons that's so obvious in hindsight but until you've heard it said you may never have thought of it if you've come up with something and you think it's amazing and you just try to sell that you're in for a real challenge a better approach is to figure out what people will buy and then make lots of those so I hope you'll consider taking this suggestion to heart as you think about what makes entrepreneurial opportunities attractive so you might be asking then what do you actually do you've got this idea you've looked at this problem and you want to figure out whether it really has commercial potential or not you want to understand whether it's attractive so the two key questions you have to ask here are is their customer demand and if the answer is yes can you generate profits from that there are then two main approaches that we can use to try to answer these questions one is predictive or forecasting so what we're trying to do is evaluate use research to evaluate the context in the situation in order to make a pretty good prediction about whether or not we think this is going to work the other approach which is really a more recent approach in our understanding of how entrepreneurship works is a learning-based approach approach or experimentation where you conduct various tests and use the results to try to figure out and adjust to generate a better outcome so we can combine these these two key questions customer demand and long term profits and our two frameworks predictive versus learning to generate a variety of different options and well it's not that any one of these is definitively better than any of the others we do want to recommend that as you do some of these you think about how to use the alternative so yes it's good to do market research but it's also useful to make sure you're using a Lean Startup approach and testing assumptions if at all possible so I'm going to we're going to walk through some of these to try to explain them you have other additional readings that'll help you understand some of these elements as well and Lean Startup in particular is the subject of one of the later modules in the course so we're gonna touch on it now but you'll address it in more detail later on as well so we'll begin with thinking a little bit about market research if you've taken marketing courses or you're familiar with the concept of marketing research that's fantastic but a very simple way to do market research is just to look at something like Google Trends so that's what we're going to do and if you've never used Google Trends before then I strongly encourage you to take a look at it because it's a very quick way of finding out what kinds of things are people asking Google about and since Google is the dominant search system if you can learn what things are more popular in terms of how they're being searched you have some indication of whether an idea is interesting to the general population or not so let's come up with a very simple example we've decided what we want to do is start an Asian noodle restaurant I don't know where we came up with this idea from but it's it's genius clearly but we have a question to answer should we focus on ramen noodles soba noodles or pho noodles so the assumption here is we could make any of these at very high quality but for whatever reason we have to specialize on one and we'll be fine because there's no competition so we're making all sorts of terrible assumptions here but it it's a starting point and we can address these all of those other things later on so a quick way to do that is to go to Google Trends and I've provided the link here to you which you can either click on or you can track down Google Trends yourself and enter them all in and you're going to now begin working on a canvas activity as well so this is a good time to pause the presentation pull up canvas and the activity so that you can take a look at this and and figure out and answer the questions so pull up Google Trends by clicking on the link it's also available in the canvas activity if that's easier to access and based on Google search results which of these three pho ramen or soba appears to be the most attractive opportunity for launching an Asian noodle restaurant in the United States so go ahead and take a look at that pause this here and then when you're ready bring this up again and we'll be ready to go assuming you've done that you might want to be a little more specific after all your restaurant isn't just in the United States it's got to be somewhere more specific what about Texas what would happen if we wanted to take a look at this specifically in Texas well the good news is that Google provides a way to take a look at that here is the link to explore the same question but across specific States and this is also this link is also provided in the canvas activity and you can click on Texas I think you just hover over Texas in the map just below the main search result and you can quickly see are the results the same in Texas and in fact they're not quite the same in Texas so take a moment to do this and to complete the canvas activity and then come back here when you're ready and we'll move on an alternate approach to this is to use a Lean Startup framework and the Lean Startup framework is based on the idea that rather than do a lot of market research in detail what we want to do is create a simple example of whatever it is that we want to offer and get that in front of customers as quickly as possible it's predicated on this idea of build measure learn and again we'll talk about this more later on in the course but the idea is that you build some example of your product or service a prototype or something a simpler version of your idea and then you get it in front of customers as quickly as possible who then tell you yes we could use this no we don't like this here are the pieces we do or don't like and then you quickly either keep going if it seems to be successful you persevere or you pivot to a newer idea that actually better addresses customer needs so this is the framework right this is what we call the learning framework it's predicated on the idea that you're at you recognize and accept that your idea may or may not be correct if you can't function with that if you can't accept the possibility that your idea might not be right you you may be getting yourself into trouble right from the beginning but you put your idea into a theory a set of hypotheses or assumptions and then you test it by creating an experiment try to make the experiment inexpensive but as real as possible you want this to be quick and cheap to do something that gets your idea in front of potential customers so they can give you feedback on it then you make you measure what happens and make changes as necessary so here's one visualization that I kind of like your initial vision is everything right we want all these beautiful kinds of donuts every possible color and flavor and topping and so on and so forth but in fact what we're going to start with is what we call the Minimum Viable Product that is it is the simplest version of whatever it is that our idea is about that customers might actually pay for and in this case it's pretty basic right instead of all these great colors and flavors and and toppings it's just a glazed doughnut right but it's probably simple and cheap to make and we could put it in front of customers pretty quickly and get their feedback does it taste good does it have the right texture and so on and then we can collect feedback well what would make this doughnut better and perhaps enough people say to us what we'd really like on this doughnut is chocolate frosting and colored sprinkles and then we can iterate to get to that outcome which is what customers really want it's important to recognize that part of the Lean Startup framework is that some amount of failure is normal it's quite usual to discover that the attractive customer segment is smaller or slightly different than what you expected or that the product needs to be altered to meet specific customer needs perhaps because what the customer cares about is actually different than what you thought this kind of learning allows your company to pivot and it has to be done repeatedly over and over and over again to get to products and services that customers are really thrilled about and just classic quotes from great innovators failures just a resting-place it's an opportunity to begin again and Edison's comment I haven't failed I've just found 10,000 ways that won't work all of which hopefully lead you towards something that actually will work so with that in mind imagine again that we have decided now to open a full restaurant and we're going toward this is our dream is to open a full restaurant specifically say at the University of Texas in Austin so I want you to go to canvas and I want you to try to come up with experiments or tests that you could run in order to see if customer demand really exists opening a restaurant is very expensive it could cost as much as a quarter or a half a million dollars that's a lot to invest if you're not really sure whether people will actually buy pho noodles so what kinds of things could you do in order to put product in front of customers we're not talking about doing an online survey right that's not a prototype well we're talking about is coming up with a cheap quick way to get some of your product in front of customers and to find out whether they're interested or not so please pause the presentation now take a crack at that in canvas and then come back when you're ready a great example of a company that's figured out fascinating ways to sort of prototype at a fairly advanced stage is Tesla Tesla effectively launches its products before they're ready they have these events where you can and then they have a online setup where you can pre-order the car and put a downpayment down in order to reserve your vehicle sometimes these processes result in slightly unexpected results such as the launch of the cyber truck where they ended up breaking one of the trucks windows and they learned an important lesson you if you smash the side of the door first that makes the window more fragile and then it was damaged when they threw the softball at it I think but you'll notice that they didn't take that as a failure they just that was a learning experience hey we just learned something new we should have done it this way and Tesla has really built an entire business around this process of putting custom putting product ideas in front of customers even before the product is ready so I hope that this has given you some information about thinking about opera attractive opportunities in the context of customer demand in the final presentation we're going to talk about it in the context of understanding what makes opportunities profitable or not