Every so often on the blog we explore the case study of a recent startup and highlight the use of some of the advanced tools we discuss as part of the startup’s background.
Here, we consider a startup we’ll call Very Awesome Homes (VAH). VAH is a startup focused on rentals in the Greater Orlando, Florida area home rental market. This startup team used multiple lean startup techniques in order to create the new venture. First, there was an intentional focus on the team and its skills.
The team of three involved with VAH knew each other from previous business ventures. They are NOT related, and have complimentary skills required to make a go of a business in this manner. The skill set represented includes one team member with a focus on sales and services, another with an MBA (and startup) background and a third who is focused on logistics and infrastructure. This team of three, prior to founding and the other steps of a startup, first made sure that it was compatible, experienced, and that particular skills in the team were complimentary to achieve this particular endeavor.
Next, the team focused on a lean business model canvas. The value proposition was refined and focused on creating great experiences away from home at VAH’s rental properties.
Exactly what constituted a great experience? These and other important questions had to be answered as the team focused on a sustainable source of competitive advantage. It is a challenge to create sustainable competitive advantage in service and similar industries. In general, almost anything that can be done can be imitated and is not easily protected by intellectual property constructs like patents, etc.
Here, the team briefly scanned the rental market and realized that important factors included proximity to the local theme parks, ease of access for potential guests to arrive at the locations from the airport, and, importantly, a focus on those things necessary to enjoy oneself while on vacation. It was this latter portion that included how to enjoy oneself on vacation, that constituted some of the focus on the creation of competitive advantage by the VAH team. The team decided its minimum viable product would include positioning with some unusual features for rental properties: the team decided to include a 24 hour concierge service that was accessible for all guests at any of its properties so that people new to the area would be able to learn about some of the local features which can be very challenging to access otherwise. The concierge could make reservations for the guests for things like meals and events. The team also created an insider’s guide to the theme park area which focused on things that only locals typically know. This was to be included as part of the minimum viable product and, as discussed before, the team focused on a luxury / premium model with premium pricing. The team believed adding value with the concierge justified premium positioning, premium price, and differentiated their properties from others in the area.
The business model canvas also revealed other important features for the business, including channels through which the potential customer could access the rental property. The team decided to use one web outlet on which they had done previous research regarding positioning, site views, and rentability of similar homes. The team then signed up for this venue and worked on creating a posting. The team also focused on obtaining professional photos to give their first rental property a premium feel and focus. In addition to these elements of the business model canvas, the team immediately established an investment arm so that the revenue from the rentals could start to generate passive income for the company when the company reached that stage. This was done at the onset of the company so as to strengthen it from a financial position. These interesting choices were based on findings from the business model canvas.
Another important focus of the team was scalability. The team takes to heart the common definition of as startup as an experiment in finding sustainable, scalable revenue streams. The team really did look upon this as an experiment from which they could learn and establish important metrics based on their business model canvas. Next, the team completed all the important legal aspects including the relevant contracts, insurance, etc and went on to found Very Awesome Homes, LLC.
The lessons from this startup are clear, and, incidentally, VAH has gone on to success. The highlights include the fact that VAH has already found a positive outcome from this experiment in finding a sustainable revenue stream. The infrastructure of VAH is highly scaleable to more rentals whether they be properties owned by the company, the company founders, or other home owners in the area. Lessons learned include the importance of a focus on scalable tools early on, premium positioning, and business model canvas in addition to other elements from the lean toolset. The VAH team realizes the rental market may fluctuate with the economy and other issues, and so far their experiment has produced that scalable, reproducible revenue stream for which all startup / experiments hunt.
Questions or comments? We are always interested to hear more about your lean startup ideas and stories of business models in which you have participated.