There are many frameworks that help early-stage startup founders identify, develop and deliver new value propositions to customers – examples include Lean Startup, Business Model Canvas, Bullseye Framework, Hook Model, Startup Pyramid and Design Thinking among many others. What Los Angeles-based startup Xtensio provides is a technology platform for nascent entrepreneurs or experienced entrepreneurs looking to build new, cutting-edge technology or a disruptive business model, to define and develop this value proposition from scratch. The platform offers six templates – User Persona, Startup One Pager, Lean Canvas, Fundraising Summary, SWOT Analysis, Blank Slate – all designed to help entrepreneurs map out and refine their business model and create plans of action.
Xtensio is a free product created by Fake Crow, a self-proclaimed “lean design” agency “working in the trenches with startups” and helping “guide entrepreneurs build the right product for the right crowd”. Asli Sonceley and Alper Cakir, founders of Fake Crow, told Startup Daily that Xtensio was born out of necessity. The creative agency was regularly creating one pagers, user personas and lean canvases for its clients, and recognised the need for easy-to-use tools to help founders plan, strategise and develop their business.
Sonceley and Cakir explained, “First we turned some of our processes into templates and shared them with the community. Then with the feedback we got, we built a minimum viable product (MVP) to test our assumptions. Our users quickly validated the need for these tools.”
Currently in public beta, Xtensio’s aim is to make it easier for startups operating on small budgets to utilise the knowledge, exercises, and tools that larger agencies provide when onboarding clients.
If we go by Steve Blank’s definition of startup, “a temporary organisation designed to search for a repeatable and scalable business model”, then Xtensio can certainly be used as a tool for brainstorming hypotheses until the startup has found a business model that is ‘repeatable and scalable’. While the templates have been inspired by existing frameworks, what makes Xtensio unique is the very fact that it’s a platform that digitises and houses a number of popular frameworks.
“We bring commonly used startup exercises into a visual, flexible and easy-to-use platform. Xtensio replaces traditional planning documentation that startups use to research and brainstorm internally,” Sonceley and Cakir said.
Founders who are familiar with Ash Maurya’s Lean Canvas, would typically print out a blank version of the Lean Canvas and fill out the blanks or construct it from scratch on a giant whiteboard, followed by snapping a photo of it and filing it away. Xtensio’s templates on the other hand are customisable – they even have drag-and-drop functionality – and can be downloaded as .PDF or .PNG files and shared via email and social media.
Those who are unfamiliar with the Lean Canvas, it’s essentially a framework that is used to define a business model or, in Steve Blank’s words, define how a company “creates, delivers and captures value” (Blank, 2012). The Lean Canvas is typically used to plan a go-to-market strategy; it forces founders to think about the problems consumers face, their solution, competitors in the ecosystem, their unique value proposition, customer segments (target customers), channels (path to customers), key metrics (measurable activities), cost structure, revenue streams, and other factors.
A well-defined value proposition is most critical when using the Lean Canvas, followed by understanding customer segments and the business’ cost structure. The latter helps determine burn rate and capital requirements. The beauty of the Lean Canvas is that it can be used in many different ways. For instance, startups can identify new revenue streams in an existing business model; they can construct hypotheses and break down individual experiments; they can use it to identify a workable MVP, and plenty more.
The ‘User Persona’ template allows startups to hypothesise who their users will be: their motivations, goals, frustrations, personality type and other products users are likely to use. This information can then be used to inform UX design, branding and marketing decisions. It can also be used to help identify the best way to test the market.
Using the ‘SWOT Analysis’ template, founders can uncover opportunities they are well-positioned to exploit. By considering the company’s strengths and weaknesses, as well as market opportunities and threats, founders can determine where they stand in the marketplace and craft a strategy to help them distinguish themselves as they move forward.
The ‘Startup One Pager’ is fairly simple and can be used to summarise the company’s mission and record milestones; and the ‘Fundraising Summary’ template is a light-weight version of an investor pitch wherein founders can outline their monetary goals, financial needs and budget allocations. These two templates can be used for outward facing documents to share with investors and colleagues.
Those who don’t want to conform to any of the existing frameworks can create their own using Xtensio’s ‘Blank Slate’.
Though the platform targets small and growing enterprises, Sonceley and Cakir said it’s been adopted by businesses of all sizes. In fact, in its first month, Xtensio attracted over 5,000 users from all kinds of backgrounds – entrepreneurs, product managers, market researchers, students, and designers.
“We have users in 150 countries across the world and the number continues to grow steadily,” said Sonceley and Cakir.
“[T]here are employees from giants like Google, startups like Uber, agencies like R/GA and even students from Stanford and Berkeley. This diverse set of users tells us that these tools have a much farther reach than startups alone.”
As powerful as Xtensio (and the frameworks it borrows) can be for early-stage startups looking to map out their ideas and create well-thought-out plans of action, it offers no formal way for founders to test their hypotheses.
Nathan Kinch, Innovation Lead at edgelabs, said most of Xtensio’s value resides in the persona development and ‘blank slate’ capabilities.
“What this really means is that Xtensio may be a great tool to enable to a team to progress towards ‘idea fit.’ Product-market fit requires a lot more granularity, and the obvious capability that’s missing is something that assists with financial modelling, or anything that can help map numbers back to various iterations of a business model canvas,” he said.
“As an example use case, the team might start by defining their personas, then map these to a value proposition canvas to dive a little deeper into their personas’ pains and gains. They might then transfer this to a business model canvas, or in Xtensio’s case, a Lean Startup Canvas, to understand, at a very, very high-level, how they might begin to gain insight into the key drivers of a first-cut hypothesised business model.
“They might then proceed to test some of these hypotheses with prospective customers using the startup one page builder, or they may opt for something like Quick MVP. To tie it all together, they might create an interactive dashboard using the blank slate capability that displays the data they are capturing from their early tests, analyse it against key metrics, and then optimise their value position, messaging or design to effect the results. This can then, of course, be shared with the team or other key stakeholders.”
It may take a bit of creativity to experience the full benefits of Xtensio, but as the brand name suggests, the platform was designed to be “an extension of an idea or a business” and is useful during research, brainstorming, planning and strategy phases of a young company. The very process of filling out these templates can help budding founders recognise holes in their ideas and consider factors they might have ordinarily overlooked.
“At the very least, [Xtensio] will help provide a foundation for a team to better understand the fit between their personas’ pains and gains, and those that actually exist in the market,” said Kinch.
“It isn’t, at least not yet, a platform that helps drive an idea or high-value problem worth solving through the iteration cycles required to develop a product, take that product to market, and then optimise the business model (nirvana for any startup). But it does have some very solid, specific use cases that idea-stage Australian startups could and should be taking advantage of.”
Kinch added that, ultimately, the entrepreneur’s most important task is finding a high-value problem worth solving, followed by building an MVP and finding customers to pay for that solution.
“[T]he process of validating your Problem Worth Solving, attaining product-market fit, and eventually sustaining product-market fit, becomes the only thing that matters for your startup or new venture,” Kinch wrote in a previous article for Startup Daily.
In his article How To Analyze Your Startup Like A VC In 15 Minutes Or Less, San Francisco-based venture capitalist Tomasz Tunguz said there are three crucial frameworks he uses to assess the value of a startup: Alexander Osterwalder’s Business Model Canvas, Porter’s Five Forces, and Value Chain Analysis.
The Business Model Canvas is similar to the aforementioned Lean Canvas, and the latter two have been combined to create the Grand Unifying Framework (GUF). According to Tunguz, there are three things to be achieved by filling out the GUF: 1) enumeration of the value chain; 2) better understanding of the motivations of each player with the ecosystem; and 3) greater visibility into which players in the ecosystem have the most power and control the money. The GUF would be a worthy addition to Xtensio’s suite of templates, as it would help startups determine whether they’re investor-ready.
“The column that has lowest supplier power, lowest customer power, no substitutes and highest barrier to entry is the most powerful player in the ecosystem and the one that will dictate the way most other players do business,” Tunguz writes.
Since its launch in 2012, LaunchPad Central’s platform, which was built on Steve Blank’s lean methods for rapid iteration and growth, has supported various commercialisation efforts globally, and has become a proven method for measuring the progression of a business model towards product-market fit, as well as the Investment Readiness Level of a startup.
As Kinch pointed out, Xtensio is quite a different proposition to LaunchPad Central as it incorporates a number of frameworks that help startups explore a very early-stage concept or market opportunity. However, Xtensio’s current iteration runs the risk of only having value for short periods of time (perhaps, four to 12 weeks) or the user-product relationship could be transactional – as in, Xtensio is only used when startups are looking to pivot or explore new opportunities.
Given the platform is still in its public beta phase, it wouldn’t be surprising to see new frameworks being included. Perhaps, a template incorporating Steve Blank’s customer development methodologies or a template that can be used to record customer-centric tests would extend the value of the platform beyond ideation.
Australians may be reluctant to admit it, but there are plenty of low-value ideas being pursued by local founders. The problem may be global, but certainly in Australia, no-one is willing to tell founders the truth: ‘the reason why you’re not acquiring customers might be because your idea has little to no value to customers, not because you need to more media traction or a bigger marketing budget’.
In a previous article, I stated that Australians are more focused on solving day-to-day inconveniences and are not as ambitious as they could be. At the Rackspace Small Teams Big Impact competition in 2013, I asked Robert Scoble what advice he has for Australian startups. For years, he has travelled back and forth from Australia and San Francisco and has likely immersed himself in both startup cultures enough to know what the key differences are. His advice for Australian startups was “dream bigger and aim higher”.
“The culture in Silicon Valley is like ‘you’ve got to transform the world’, not just make something cute,” Scoble said at the time, implying that Australians are more focused on creating things that are new and fun.
That’s not to say that Australians aren’t innovative. The cochlear implant, electronic pacemaker, and the ultrasound are just a few examples of transformative medical innovations born in Australia. But a majority of startups here are building businesses that aren’t sustainable – that is, there aren’t enough customers wanting to pay for solutions offered by these businesses. Interestingly, a portion of the failed businesses graduated from accelerator programmes or took part in the other startup-focused programmes.
Preliminary results from Startup Daily’s research suggest more than 80 percent of Australian businesses that have been featured in our publication in the last three years is either inactive or has shut down. While this is less than the most commonly cited number – 90 percent – it is still a significant failure rate and not something we need to accept as the norm. There are many ways to reduce the failure rate, but it starts with finding high-value, underserved problems.
A quick glance through US-based tech publications will give you an idea of all the high-value problems American tech entrepreneurs are finding solutions to: Diabetes management, mental illness, global warming, piracy, and many more.
If we look back a little, who would have thought Napster would completely change the future of the music industry? Although it was shut down by the American government a year after its inception, it also led to strong piracy movements, which in turn forced entrepreneurs to create solutions like Spotify and Pandora (and subsequently Tidal and Apple Music), which have become so entrenched in the lives of Gen-Yers that we’ve forgotten about the iPod, which isn’t all that old itself.
Today, we just use our multi-purpose smartphones to listen to music. Spotify’s business model (despite scepticism and outright disapproval from artists like Taylor Swift) has been constructed in a way that rewards artists. Every time a song is played, the artist is paid, however small the amount is. At a time when music can be downloaded for free (albeit illegally) or converted to .mp3 files from YouTube, and at a time when young people don’t think twice about violating intellectual property laws, the fact that Spotify, Pandora, and its spin-offs have changed our music consumption habits deserves merit. Although technology played a part in what was believed to be a major crisis in the music industry, by reimagining the future, inventors have used technology to steer us towards a solution.
But the solutions wouldn’t have had value if customers weren’t willing to pay for it – whether that’s by committing to a paid subscription or by consuming advertisements. Ultimately, the value of an idea is in the eye of the target customer.
Testing the market is therefore more important than brainstorming. The big question for startups is: ‘Can I sell [product name] to lots of people for more than it costs me to produce it?’ There are two things, usually one or the other, that founders need to validate when testing the market: first, they need to validate they are solving a problem people care enough about to pay for a solution; and second, they need validate they can change customer behaviour by adding new functionality to existing technology. This means going out, interviewing potential customers and getting as much feedback as possible before going into execution mode.
Once product-market fit has been established, startups need to identify how much customers would be willing to pay for a particular solution. Depending on the context, this could mean finding out how much a problem is costing the average customer and presenting a cheaper solution, or measuring the value of what could be gained by using a particular product, such as time.
Eric Ries’ lean startup methodology, which has gone completely mainstream over the past few years, favours experimentation over elaborate planning, user or customer feedback over intuition, and iterative design over a fully-developed product upfront. In fact, this is the same philosophy on which Xtensio was built.
“Initially, we built as little as possible. We believe in designing and building ‘well’, not building ‘more’. We research, test and measure everything we do. We were accepted to Microsoft’s Bizspark early on. This gave us all the tools needed at the early stages. We tried to build the most flexible platform possible and we’ve been steering it with small changes towards a product-market fit,” said Sonceley and Cakir.
So far the response to Xtensio has been “extremely positive”, according to Sonceley and Cakir.
“We receive comments from our users every day. If they’re not suggesting new features, they’re sending us praise for Xtensio’s easy-to-use platform or clean interface. Numerous users have become brand advocates sharing Xtensio with their colleagues or presenting at conferences. Dozens of users have even written about Xtensio on their personal blogs. They’re an extremely active and vocal bunch which has been infinitely beneficial to Xtensio’s growth. Just Google it,” the co-founders said.
Xtensio, as it exists today, will always be free, according to the co-founders. However, behind the scenes they’ve been working out what premium features to add for advanced users and teams. The co-founders also said there are white labeling opportunities for larger clients.
Xtensio is currently discussing strategic partnerships with incubators, accelerators, hackathons, schools VCs and Angel groups to help grow its user base. Coincidentally, GetViable, a very similar platform to Xtensio founded in Melbourne, was acquired by Hong Kong-based crowdfunding platform and venture capital firm Bigcolors last year. This means the same people that Xtensio sees as growth partners are also plausible acquirers of the technology, especially as they seek to get a leg up on their competition by incorporating a proprietary platform into their offering.