Coursera Notes: Stanford 'Start-up Engineering' (Lectures 5-8)

These are just some of my notes from Coursera's 'Start-up Engineering' course, taught by Balaji Srinivasan from Stanford.

This is a continuation of my existing series of notes.

Market Research, Wire-framing and Design

• Idea  Mock-up
  Mock-up  Prototype
  Prototype  Program
  Program  Product
  Product  Business
  Business  Profit
• Execution! It is not the idea, but the execution that matters. Sales rather than technology is what builds a business.
• Market! Market will draw a product from a team, whether or not it is quality or the team is good.
• An idea exists within a maze. A simple sentence is not enough to describe an idea; an idea is defined by the regulations, markets, and competition.
• Execution mindset. This is essentially writing a to-do list and regularly checking off items. Rinse and repeat.
• Market Research:
1. News coverage and research papers. Google Books, SEC filings and Wikipedia.
2. Back-of-envelope estimate of market size. Look for relevant statistics.
3. Validate. Google keyword planner and Facebook advertiser tools help determine if there is actually a market need.
4. Do a basic launch page with basic SEO. Use wireframes.
5. Ad-word to discover the market. The launch page will then gauge market interest.
• MVP or Minimum Viable Product.
• Remember, a start-up aims to be very ambitious and scale rapidly.
• Two features of successful start-ups:
1. Exhibit economies of scale. Cost of production per unit decreases as more units are built (but revenue stays the same). We can then determine a break-even point and therefore the minimal capital required.
2. Attack/Pursue large markets. Different pricing will attract different markets, but low price points require automation and industrial efficiency to make profits (because customer service is expensive). It may be better to charge higher initially to counter risks. Market sizing calculations should be done early and often.
• Once a market and broad perspective has been set, versions and features need to be prioritized. Remember, it is execution and sales that matter!
• Rough guide to prioritizing versions and features:
• How much are they willing to pay for certain features or versions?
• Which features are required in each version? What features make sense to bundle together?
• Estimate the time and cost to build each feature. Is it feasible to implement the feature now, or wait for more funding?
• Find the most popular features.
• Calculate the market size for each feature.
• Wireframing tools: omnigraffle, lucid chart, jet strap and popapp.
• Copy-writing:
• Home-page message must allow a customer to immediately figure out what the product is. This is a priority if this is going to be a major source of potential customers.
• Work backwards from the press release (write the release then build the product). This allows you to figure out which features are making the news and which are not.
• Find your competitors and explain why they are terrible options. Use this insight when explaining the benefits of your product.
• Simple, factual and concise statements.
• Call to action. Allow the customer to do something once they visit your website.
• Vector graphics are better to work with.
• In design remember Alignment, Repetition, Contrast and Proximity.
• Start with a font heavy design (it is easier to do and images can always come later)

Mobile

• Assumption behind the mobile phenomenon is that everything is going to be on the internet. The internet is going from a novelty to a utility.
• Build for HTML5 and then move to native apps. HTML5 ensure your application works on all devices (and Android will soon utilise HTML5 and Javascript instead of native applications).
• Internet of Things is the idea that every device will have it's own IP address. This offers a huge potential market.
• Quantified self is the measuring of human beings and our actions. This is the collection of metrics that may revolutionize diagnosis and medicine.
• One way to build mobile-aware applications is user-agent sniffing. This approach has the problems that a client can fake their own user-agent, and that the user-agent is inherently unreliable.
• CSS media queries and Responsive web design allows the application of conditional styles depending on screen size. This is much more reliable, but does not have ubiquitous support (yet).
• Some constraints with mobile include:
• Unreliable networks (the fallacies of distributed computing)
• Debugging requires logging (and bug reporting)
• Minimization of user input (difficult problem to solve; how to collect everything you need without overwhelming the user)
• Minimize the time to result (if you take too long the user will go elsewhere)

HTML / CSS / Javascript

• HTML is the skeleton of a web application. It provides the structure of a page and the semantics. It is a set of finite elements with attributes.
• CSS is the look and layout of a web application. It edits the element and attributes for styling and formatting.
• Javascript is the dynamics and behavior of a web application. It allows you to provide client-side validation, pulling in content, playing games and much more.
• Some useful tools include jsfiddle.net and Chrome Developer Tools.

Deployment, DNS and Custom Domains

• Your code production environments should be along the lines of Development -> Staging -> Production
• Separating environments bring the following benefits:
• Testing of features before they reach the customer
• Roll back of code in case of major bugs
• Restore code or data in case of catastrophic crashes of the server
• Incorporate contributions from multiple engineers
• Perform AB testing of features
• DNS (Domain Name System) converts IP address into human readable hostnames. The system first looks locally in a program, then the OS, then the ISP and then finally a trusted internet DNS server.

Coursera Notes: Stanford 'Start-up Engineering' (Lectures 1-4)

These are just some of my notes from Coursera's 'Start-up Engineering' course, taught by Balaji Srinivasan from Stanford.

Lecture 1:

• A start-up is typically a company designed to grow rapidly and scale to global markets. The idea is to take ownership of the market before competitors move in.
• The modern Start-up company is generally focused around the internet and other emerging technologies, but history is filled with start-up stories. The automobile, aviation, oil, and pharmaceutical industries all began with similar start-up journeys. Some of the biggest businesses we know had very humble beginnings.
• The modern start-up industry began in 1989-1992. This was due to a combination of factors such as the widespread adoption of the internet, the fall of the USSR and the repeal of the NSF AUP in the USA.
• The USSR (and other communist regimes) heavily regulated the use of technology, and you could be jailed for any unauthorized use. The fall of the USSR allowed the adoption of technology by the mainstream population, vastly increasing the amount of people interacting on-line. It also forced India to introduce policies that deregulated technology use and made China focus on market reforms. These factors helped to create the global free market.
• The National Science Federation (NSF) in the USA had banned e-commerce because of fears of malware, spam and pornography. Eventually the US congress repealed the Accepted Use Policy (AUP), and this allowed people to start trading goods and services on-line.
• The features of a modern start-up company include:

1. Operational Scalability: This refers to the ability to conduct transactions from anywhere in the world without requiring a physical presence. This means you can rapidly expand into global markets without increasing operational overhead.
2. Market size: The internet means a company now has access to a customer from anywhere in the world. This exponentially increases your market size (as long as border and geographical restrictions are solved).
3. Generality: Software is a flexible and malleable tool with almost limitless potential. Software skills are also portable.
4. Low capital barriers: Hardware costs are relative cheap, so sophisticated equipment can be bought with little capital overhead. Developers can also create their own software tools to suit the job at hand.
5. Low regulation barriers: It is currently very hard to regulate the internet, but this should not be taken for granted. The firewall in China and the USA's NSA spying program are examples of attempts by governments to control, regulate and restrict the internet.
6. Open source: The internet is built on open source technologies such as DNS, HTTP, HTML, IP, DHCP and other protocols and specifications. The free exchange of ideas and common technologies means the rapid emergence of new and useful tools for the entrepreneur.
7. The long trail: The global scale of the potential market means that a start-up can target extremely specific customers and market niches like never before.
8. Failure tolerance: Penalty for failure is lower than other industries (such as automobiles and aviation).
9. Able to build a hybrid business: Can supply an API to interact with third-parties or the physical world. Automation through device drivers and actuators.

• The current trend for start-ups is towards mobility and decentralization (or at least reducing the penalty for location and nationality).
• Start-up engineering is focused on shipping a workable product. Iterative development is key; ship an initial product with reduced functionality to bring in some early funding to fuel further improvements in the next version.
• Primary task of a start-up engineer is the integration of diverse technologies. They need to keep up with the latest developments, evaluate the usefulness of technology and quickly snap together the pieces.
• Engineers need versatility, especially with Design, Marketing and Sales.
• Mobile HTML5 and JS/JSON is the future of web applications. They allow for responsive mobile design (with a desktop UI as an aftereffect), which allows the use of the application on as many devices as possible.

Lecture 3 & 4:

• Virtual Machines allows us to take a single physical computer and make it seem like multiple independent computers. Virtualisation significantly reduces the infrastructure overhead.
• Linux has server-side license loophole. This allows a developer to modify open source code without distributing those changes to the public. This means you can modify code to create a service without releasing those code changes, as long as you are not distributing the changes for profit.
• The Cloud Computer is a computer whose precise physical location is immaterial to the application. There are three approaches:

1. IAAS: (Infrastructure As A Service) Direct access to hardware
2. PAAS: (Platform As A Service) API access to the hardware.
3. SAAS: (Software As A Service) API and GUI to the application, but no control over the hardware.

• $PATH is the order of directories that Linux will use to search for a command. The first matching command found is assumed to be the desired command.
• 'which' is a useful command to determine which command Linux will find first. This can help when you have multiple versions of a command installed
• bash is a command-line shell implementation
• A shell script begins with a sha-bang (#!) followed by the path to the command that the shell will use to interpret/execute the script.
• ssh allows you to securely connect to a remote machine and run commands
• scp allows you to connect and copy files to a remote machine
• You can configure SSH so that you don't have to write out the connection details every time. Add the following to the file ~/.ssh/config and invoke with ssh <name>
• Host <name>
• HostName <hostname>
• User <username>
• Identityfile <the path to the file>
• STDIN is the input stream, STDOUT is the output stream, and STDERROR is the error stream
• Some useful linux commands:
• cd - change directory
• alias - set a command alias to save typing
• rm - remove a file
• mv - move a file
• mkdir - create a directory
• pwd - print the current working directory
• env - list all environment variables
• ls - list files in current directory
• ln - create symbolic links
• rsync - synchronise a local file with a remote file
• wget - download a file (unlike rsync this is only for publicly available files)
• curl - Only for single URLs, and can support more protocols than wget
• ping - test network availability
• less - used to view large files by paging it. CTRL+N down, CTRL+P up, Q quit
• cat - File viewer, but does not have pagination features of less
• head - view first few lines of a file
• tail - view last few lines of a file
• cut - Pull out columns from a file
• paste - paste data into columns
• nl - print our the line number
• sort - sort lines in a file
• uniq - determine unique elements in a file
• wc - line, word and character count
• split - split large files
• man - single page manual files for commands
• info - for some applications this will provide more detail than what man provides
• uname - lists system information
• hostname - name of machine
• whoami - name of current user
• ps - list current running processes
• kill - kill a process
• top - list processes based on criteria
• sudo - act as root user for one or more commands
• su - become root user
• tar - archival utility
• gzip - compression utility
• find - non-indexed file search
• locate - indexed file search. Requires updatedb command to be operational
• df - determine disk space
• du - determine file's disk usage
• grep is a text and file parser that uses regular expressions. Very powerful.
• sed is a string substitution command. Used to do a find and replace.
• awk is a useful scripting language for tab-delimited text.
• A list of useful bash shortcuts:
• CTRL+K : Kill everything from cursor up
• CTRL+C : Abort command
• CTRL+L : Clear the screen
• CTRL+D : Exit the command prompt
• Backticks ` allows you to use results from commands as part of a new command
• Ampersand & allows you to run a command in the background
• xargs allows you to build command line arguments, and can spawn parallel processes.
• tee allows you output to both a file and the display
• time is useful for bench-marking commands
• screen is a manager for remote tabs. This allows you to save a context that allows you to resume your work if you lose connection temporarily.

Subject notes for 48270: Engineering Enterprise

These are my subject notes for the UTS subject 'Engineering Enterprise', which used to be a core subject for the Bachelor Engineering degree. Hopefully someone else can get use out of them.

The Business Plan

• A written business plan shows stakeholders where the business is going and how to get there. It also analyses the internal and external environments to determine the competitive edge.
• Opportunity based entrepreneurship are driven by the founder's personal interests. They are usually found in the high technological and business services sectors.
• Necessity based entrepreneurship are driven because no other avenues for work can be found. They are usually found in the consumer driven (restaurants) and social services (security) sectors.
• There are three avenues of product development:
1. Creator develops a new transformational science or technology that is brought to market.
2. Integrator acquires core products and combine them to develop value-added products and services.
3. Adopter acquires products and tailors them to local needs.

Strategic Analysis

• The competitive analysis of a business involves:
1. Suppliers: Are there enough suppliers to meet current and future demand? Are all the products roughly the same? Are they easy to substitute?
2. Substitute: Is it easy to switch to a substitute product? Is the substitute market growing? Does the substitute have an advantage over our product?
3. Entrants: Is it easy to enter in our market? Are there economies of scale or huge start-up capital required? Are there knowledge or regulatory requirements?
4. Customers: Are the customers close by? Do they need the product? Have they already got a similar product, and if so will they be willing to switch?
5. Competitors:How much market share do the competitors already have? Can the market support another business? How competitive is the pricing? 
• Pareto's 80/20 rule states that 20% of your customers will provide 80% of the revenue. It is vital that the business identifies these ideal customers and concentrate on meeting their needs.
• Demographics are customer characteristics that are measurable and objective. They include demographic population size, composition (age, sex, race) and geographic location.
• Pyschographics are more important as it aims to determine the personal values and attitudes of the market. It classifies customers according to social class, personality type and lifestyle.
• The environmental analysis involves:
1. Political influences includes government and industry regulations, restrictions and standards that must be followed.
2. Economic influences involve determining whether economic indicators such as inflation, interest rates, unemployment, GDP growth, and market seasonality are favourable. 
3. Societal influences includes population, cultural values, geographical density, and concerns of the populace.
4. Technological influences involve determining whether the pace of innovation and technological convergence is favourable.
• The internal value chain is:
  Purchase -> Inbound logistics -> Operations -> Distribution logistics -> Sales -> Services
• The external value chain is:
  Suppliers -> Business -> Customers
• Vertical integration is where one business acquires another in the same market. It increases the risk because the business is now heavily invested in the same industry.
• Horizontal integration is where the business purchases a supplier or customer business.
• The SWOT analysis takes into account:
1. Strengths: What are the major competencies of the business compared to competitors?
2. Weaknesses: What are the weaknesses of the business compared to competitors?
3. Opportunities: What existing products can be extended to new markets? What new products do the existing market need? Is there an opportunity to bring a new product to a new market?
4. Threats: Are the prices for supplier products increasing? Are there new regulations or technologies that threaten the existing business? Is the customer base shrinking?
• It is important that a business excels in one or more major competencies. They can be:
• Features: Range and distinctiveness
• Innovation: Development of new products
• Quality: Regularly and reliably meets customer needs
• Intellectual capital: Patents and IP
• Financial resources: Lots of money to spend
• Distribution: Reach customers where ever they are
• Service: Customer issues are dealt with efficiently and effectively
• Efficiency: Operation is efficient compared to competitors
• Brand: High brand recognition
• Price: Competitive price compared to competitors
• Types of market opportunities are:
• Market penetration (Existing Market, Existing Product). Easiest to get into.
• Market development (New Market, Existing Product)
• Product development (Existing Market, New Product)
• Diversification (New Market, New Product). The riskiest opportunity.

Direction

• The mission statement is the summary of the business as it stands now. It is generally derive from information in the business plan. The mission statement answers the following questions:
• Who are our customers?
• What are the customers' needs?
• How do we solve the need?
• The vision statement aims to predict the future position of the business. It is where the business wants to be. It answers the following questions:
• Who will the customers be?
• What will their needs be?
• How will we solve those needs?
• Objectives are developed by converting the mission and vision statements into specific performance targets and results. They are the destination. Objectives should be SMART (Specific, Measurable, Assignable, Realistic and Time-related).
• Strategy determines how the organisation will achieve the objectives. The strategy should be outlined in the business plan.
• The Strategic management process can be defined as follows:
• Analyse the internal and external environments
• Develop the mission and vision statements
• Set the objectives
• Formulate the strategy and plans
• Implement the plan through projects and business operations

Pricing

• The pricing structure of a product can be:
• Controlled: External entity (such as government) will offer regulated pricing or guidelines.
• Demand: Prices reflect the value of the product to the customer. If is solves an expensive problem then the product can demand a high price.
• Competitive: Similar products are used as a price benchmark.
• Cost-plus: Products are priced according to how much it costs to develop plus a profit margin. Ensures that money is made but not necessarily that they will sell.
• Premium: Products are priced higher than competitors because of perceived benefits.
• Direct or Variable costs are those which are directly related to the amount of product produced. These are typically material and labour.
• Indirect or fixed costs are those which are incurred regardless of how much product is produced. These include administration, utilities, R&D, and Factory costs.

Marketing and Sales

• Key Performance Indicators (KPI) are important to measure marketing and sales. Small increases in sales conversion and repeat purchases can lead to large increases in profit.
• A sales pipeline is used to identify individual sale opportunities for a specific product. It helps the seller sort and track the progress of 'sales opportunities', not 'accounts'.
• A sales opportunity should be measurable ($ amount of the sale) and dated (expected date of closure). It will then undergo the following stages:
• Suspect evaluation: A potential customer has been found and they have contacted us or we need to contact them.
• Prospect evaluation: The prospect is evaluated in terms of demographics and psychographics.
• Needs evaluation: Determine collaboratively what the customer needs
• Opportunity evaluation: Determine what opportunities exist with the customer. Can we sell our product to them to solve their need?
• Commitment: Get a solid commitment from the customer.
• To elicit the needs of the customer, we use a combination of the following question types:
• Background questions uncover facts about the organisation and their environment
• Problem questions identifies problems, difficulties or dissatisfaction about the current environment
• Implication questions help build the seriousness of the problem so that it becomes large enough to take action
• Solution questions focus the buyer on the solution and help them develop part of it. It also reduces objections as the buyer is explaining how the solution can help them, convincing them of the value of the solution.
• Attitude questions uncover the individual needs and serves the buyers own self-interest. These questions uncover motivations.
• Commitment questions determine where the seller is in regards to the sale. Good questions are answerable with a yes or a no. You can determine whether the customer is ready to commit when they go from 'whether' to implement the solution to 'how' to implement it.
• The objective of negotiation is to develop a Win-Win situation. A solution should ideally be reached through objective standards and reasoning, not threats or pressure.
• A list of tradables should be written up, prioritised and understood in terms of flexibility. These are effectively the bargaining chips of the negotiation. Alternative solutions should be established to ensure there is no pressure to commit to an agreement.

Operations

• The five C's of credit are:
• Character (credit history)
• Capacity (ability to meet credit obligations through operating cash flow)
• Collateral (pledged assets in case of default)
• Capital (financial reserves)
• Conditions (general economic conditions of industry)
• The three types of business entities are Service, Retail/Wholesale and Manufacture.
• Types of organisational structures:
• Simple: The founder is no longer the sole employee. Founder does managerial and critical tasks while employees perform other duties.
• Functional: Employees do specialised roles and are partitioned into functional groups. Delegation of authority is given to functional managers.
• Matrix: The organisation is split into line managers (for projects, products or demographic) and functional managers. Each employee has two managers to report to, with line managers handling most of the daily management tasks.
• Divisional: Each division has it's own self-contained functional units. Each division competes for funds. Economies of scope can be created by sharing resources between divisions.

Calculations

Industry margins

Gross income = Sell Price - Cost of Goods Sold (COGS)

Gross Margin = (Sell Price - COGS) / Sell Price

Break even analysis

Revenue = Sell Price * Sell Volume

Gross Margin = (Revenue - COGS) / Revenue

Contribution Margin = (Revenue - Variable Costs) / Revenue

Break even point = 0 = Revenue - (Variable Costs + Fixed Costs)

Liquidity ratios

Working Capital = Current Assets - Current Liabilities

Current Ratio = Current Assets / Current Liabilities