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    TULI PROGRAM                        PROJECT PROPOSAL TEMPLATE

                                                

                        

Please use this form to submit information about the project to be funded by the TULI program.

Please present all the necessary background information, the action plan and the proposed budget.

Some paragraphs lists subtopics to be covered – those already known, and also those to be further examined in the proposed project.

The applicant/owner of the idea must complete sections 1-7 in coordination with the representative of innovation services (i.e. the Tuli contact person) or provide adequate information for their completion. The Tuli contact person will then present the proposed project to the Tuli project group, who will decide on the funding.

Project working title: Kassi

Project no:

TULI contact person: Teemu Seppälä

Date (project group meeting): 22.10.2010        

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Applicant(s) (organisation)/Owner(s) of the idea, and their background:

Aalto University: Department of Computer Science and Engineering

OtaSizzle research project

Researchers:

Antti Virolainen

M.Sc. (Tech.) Aalto University/TKK/Information Networks

Developing software for OtaSizzle research project (2008-present)

Various part-time (and summer) jobs in software development, mainly for web applications.

Juho Makkonen

M.Sc. (Tech.) Aalto University/TKK/Information Networks

Researcher and software developer for OtaSizzle research project (2008-present)

Various summer and part-time jobs in areas of software development, design, and journalism.

Contact details:

Antti Virolainen

050 5311793

antti.virolainen@tkk.fi

Juho Makkonen

041 5022683

juho.makkonen@tkk.fi

Preliminary goals of applicants/owners of the idea:

Business activities, licensing?

What are the goals over a timespan of 1-5 years? Has a team already been planned or assembled?

We have developed a software named Kassi. It is a web service for local resource sharing and is currently used by Aalto University students and staff at http://aalto.kassi.eu. Kassi is published under MIT-license, which enables us to start a business based on it. Our goal is to make it an affordable and easy to use sharing platform for various kinds of local communities. We plan to sell it as SaaS (Software as a Service) to some bigger communities (like universities in Finland) in 2011, and also get many smaller groups to use the free version and spread it forward. Multilingual support is already built in and we plan to extend to European markets as soon as the business model is proven in Finland.

Our vision is that in 5 years we have become a globally recognized household name for local resource sharing, a little bit like what WordPress is today for blogging. And as Kassi is open source, we hope to have gathered a developer community around it that will keep doing improvements and customizations and spread the word even further, just like has happened with WordPress.

Currently our team of two is sufficient to develop the idea further, but more people will probably be added to the team in later stages.

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1. Research work/brainwork behind the project

Any previous funding, or connections to funded projects (e.g. Tekes, EU, contract research), other financing used, circumstances leading to the launch of the project.

Current stage of development of the project/idea: a) idea, b) theory or verified research result,

c) manufacturable prototype, d) prototype or product ready, e) existing customer contacts.

Kassi software is developed in OtaSizzle research project that is funded by the MIDE program (http://mide.tkk.fi/MIDE).

d) Current stage of development is that we have a working service that has been in use for nearly two years among Aalto University’s (and former TKK’s) students. There are over 2500 registered users and about 100 daily visits on average. However, current software supports only a single community at a time. We’re currently working on support for multiple communities that enables us to start selling the service to potential customers.

2. Steps taken prior to project proposal to support commercialisation

Research and Innovation services (date of contact), other preparatory work, studies, other persons/organisations/potential customers contacted, feedback received.

We have been discussing with Helka ry (Association for the city parts of Helsinki) and they liked the idea and said that some of their member associations would be perfect pilot user communities and possibly customers in the future. We’ve also opened a site to advertise the upcoming possibility to open new Kassi communities (http://kassi.eu) and have received some contacts from interested people via that site.

We have also opened a blog about our company plans at www.avoinyritys.fi. We are planning to make our enterprise as open and transparent as possible, and so far we’ve got very positive feedback about the ideas we’ve presented at the blog. Some benefits of the openness is that it will produce useful example material to other Finnish starting entrepreneurs and the blog will also work as marketing material for our actual product as useful information will draw attention.

We have also talked with OtaSizzle project lead about the plans to start a company with Kassi and got very supportive response. The source code is free to use, but we need to negotiate how the current user data is transferred from the project to the founded company. We’ve already started the preparations for that.

There are also numerous companies and other organizations that work on somewhat similar field, with whom we have talked about co-operation possibilities, e.g. Stadin Aikapankki, NetCycler, Kuinoma, NextDoor and Jobita.

3. Description of the idea/invention of the project

Please give a brief description of the research results/technology/product/idea. Why is it inventive, or what is unique or special about it?

If necessary, please append the invention discloser or other more extensive background material – e.g. a project plan for implementing the project.

Kassi is a web service that offers a local community members a forum to share their resources when it’s easy for them and to get help and resources from nearby members when needed. In Kassi people can lend/borrow/sell/buy/rent items, request/offer/exchange favors, organize ridesharing and even manage accommodations. Kassi for Aalto University can be found at http://aalto.kassi.eu and it works as a good example of the activities in the service.

Sharing economy is rising, especially in USA. This is due to the increased concern on environment-related issues, worries about the aging population and the new communication means provided by social media, cloud computing and smartphones. There is a huge growth potential in the market and yet currently not many big established actors.

Europe is a more challenging market area than USA because of bigger language and culture differences. Our service offers a unique solution to these challenges by offering an easy-to-customize platform for existing hyperlocal communities and then networking these communities together. A new community can be set up from a web page in a minute, which makes the model extremely scalable. Open source code enables anyone to start using the service and promotes the interest of users to make local modifications and even translated versions.

The research made to Kassi users in OtaSizzle project has shown that people think it is important to have some common factor in the group that you are sharing to. For example people have certain trust to other students of the same school even if they don’t know them personally. That’s why we believe that our community oriented approach is the optimal solution to get leverage from the existing groups. It makes the threshold of sharing lower than in many “share to all” services, but also the probability of finding the needed resource much bigger than in “share only to existing friends” services. Kassi will support those sharing styles too, but the default is the community scope, and that’s one thing that makes us different from most of the similar services.

Some links that report the rise of the sharing economy:

http://www.huffingtonpost.com/micki-krimmel/has-the-business-of-shari_b_767216.html

http://shareable.net/blog/Study-Reveals-Big-Opportunities-Sharing-Economy

4. Business potential

Please supply brief information about the following subtopics. If the information is not yet available, please specify in section ‘6.1 Goals’ the steps proposed for implementation with TULI financing.

- Market problem or market need relating to the project idea.

- Prevailing practice/existing solutions. “State of the Art” in research, technology, solutions.

- What kind of solution/what change (including competitive edge) will the project idea bring to market?

- Probable business model, value chain and earnings logic for the invention/idea of the project. How/where will value be added or created in the value chain?

There are currently lots of services doing at least partially the same thing: enabling people to share their resources with each other: In Finland there are services like Netcycler, Kuinoma, Nextdoor and Jobita, foreign services (from USA) include NeighborGoods, BrightNeighbor and LocalShare. However, none of them has yet gotten very big or globally known even though there is enormous potential and the market is rising due to downturn, environmental challenges and the rise of social media. We believe that we are currently in the beginning of a huge movement, and the one who has the best execution will win.

Most of the existing services are concentrating on single type of resource exchange (e.g. only swapping items, or only organizing ridesharing) and our approach differs in that we want to concentrate on the existing community of users that already have some common factor and have interest to share resources with each other. Our service will act as a hub of the community’s resource sharing: it will have different types of sharing offers and requests in Kassi’s own directory plus it will combine search results from other (more single-tasked services) that may be used at that area. This network / hub approach is, we believe, the key ingredient that has currently been missing from other services and also our most important competitive advantage. It has multiple advantages: it is the most effective way to share by being scalable and yet hyperlocal; it helps the service to gather the critical mass of offerings; it brings trust among community members and thus enables the successful exchanges; it gives us a competitive advantage since we are in control of the network of communities that is formed; and finally, it gives us a self-evident business model that most of the other services are currently missing.

Added value for the users of the service are obvious: by sharing resources they can save time, money and environment at the same time, and have some fun and meet new people in the process. What Kassi adds to this compared to existing services, is that it combines different types of resource sharing (also from external sources) to a single platform that the community can easily customize to its own needs.

Our paying customers are the communities - associations, congregations, small cities and municipalities, universities etc. - that want to enable this service to their members. There are several good reasons for them to pay for the service: 1) It makes the communities more ecological 2) It makes communities more “communal” 3) It increases openness in the community (people know about each others’ resources and skills) 4) They are able to easily communicate the previous three values - environment-friendliness, communality, openness - to their stakeholders 5) They are able to follow what happens in their community and who is doing what 6) They can offer a great service package for their members (things mentioned in the previous paragraph) and can thus possibly even charge more of their membership and 7) They can easily make use of their members’ resources (have bees) and also organize common resources and events more effectively (rent goods and spaces, use car pooling as a transport to community-organized events)

We make our money by charging a monthly or annual fee from the communities and in turn offer them the hosting of the service, customization options (they can use their own logo and domain and select the components of the service they want to use), analytics (if they want to know what’s happening in their community), and extensive customer support. We also offer extended customization and charge per hour when the communities require more changes, like integrating the service to their existing user accounts like we have done in Aalto University.

Possible additional income sources in the future include local targeted ads, SMS-based additional services like identity confirmation and keyword alerts, and also charging users from certain transactions (when they are selling or renting something via the service, a commission could be taken).

- Size of market, e.g. sales and business model of the key players.

- If creating a new market, what timespan is envisaged and what challenges are anticipated?

- What steps/activities would market launch require – e.g. pilot project and/or prototype project, productisation, ramp-up of manufacturing/supply chain, clarifying protection issues, etc.

As most of the players in the field target individual users, there is currently no similar service offering targeting existing communities, so in that sense we are creating a new market. The biggest challenge is that widespread usage of the service requires some sort of cultural change. However, as we stated in section 3, according to multiple signs the change is already happening fast, especially in USA at the moment. We have a good chance to be one of the Europe’s first players in a huge emerging market. We estimate that in five years the service business around collaborative consumption is worth more than a billion euros.

The authors of the book “What's Mine Is Yours: The Rise of Collaborative Consumption” have made nice videos that visualize the change in consumption that is taking place:

 - http://vimeo.com/14408878

 - http://vimeo.com/11924774

And also the survey “The New Sharing Economy” by Latitude explains the ongoing change in the culture of sharing:

 - http://latdsurvey.net/pdf/Sharing.pdf

For the launch of the Finnish market we already have a good start as we have the lively Kassi community up and running in Aalto. That will be a good reference when marketing the service directly to other universities or student unions. And some of the current users, who have already found the service useful in the student community, will probably open new Kassi communities for other groups that they are related to, when this option becomes available. This kind of network effect would be extremely useful with the visiting exchange students that are leaving Aalto after this year and returning to their home universities. This behaviour could probably be boosted by offering also some monetary incentive for new community starters who bring new paying customers to us.

- Is the idea/invention patentable, can protection of pattern and design or other copyright protection be obtained for it? Why would no-one else utilise the idea commercially? Prospects for freedom of operation: is it known or must it be clarified?

- Risk scenario

The service is open source, so everyone is free to install it and use it for free. Actually we think that using the self installed free version only promotes the spreading of Kassi and increases the possibility of gathering a community of developers to do local modifications to Kassi. Offering the free option will be a competitive advantage compared to closed services that rely more on their own marketing. Some people could actually start companies to sell Kassi as a service as we do, but even that could just work to expand the market share of the platform. And as the founding developers we would probably easily maintain the biggest credibility in offering the service and support for communities that require extra maintenance work.

This type of business model is relatively new, but we believe it is the future. Being open and collaborating instead of competing is the new marketing, especially in the type of the service industry we represent, and especially when the goal is to become a hub for multiple different services. For the previous Finnish success stories, Linux and MySql, being open source and attracting the developer community has been hugely important for gaining the widespread status that they have today. And even though there are many companies doing business with Linux, Linus himself ain’t doing so bad either.

Naturally there is always the risk that somebody copies the idea and starts doing exactly what we do using our code. However, in the Internet world this kind of news spread fast. Our service is about doing good: helping people to help each other and protect the environment. In that business nobody wants to buy from a copycat. And even if somebody would, there’s still plenty of market for us. By being very open from the start on who we are and what we do we also ensure that we can always prove that we were the first.

- Potential customers: are there already existing contacts? Named references. As regards customers: Who are they? Who will manage them? When? How?

Since the service is already up and running in Aalto University, it is obviously our most potential first customer. Furthermore, as mentioned before, we have had some talks with people in HELKA (Union of Helsinki city part associations) and also received some contact requests via our landing page at www.kassi.eu.

We plan to contact all existing contacts as soon as the software supports them to start their own Kassi community. Right after that we start contacting new potential customers in Finland in various different niches. We will start with the bigger communities universities, municipalities, congregations and also test some smaller ones like sport teams, hobby associations, scout groups etc. in order to find the most prominent niche for our service. There is a good change to get viral spreading of the service going on with satisfied users who will recommend our service to be used also in other associations that they are involved in.

We will do the customer relationship management ourselves, but reduce the potential workload caused by questions about the service by guiding the users always contact their own community’s administration and the administrators then contact us if needed.

5. Immaterial rights

Ownership of IPR, applicants’ ties/liabilities. Has right of use been transferred?

The owner of the Kassi software is officially OtaSizzle project, but the code has been released with MIT open source license, so there is no obstacles in using it commercially and developing it further. OtaSizzle project also owns the user data of currently registered users, but we have already started the negotiations about how we can ensure that the data would also be usable by the planned company. We have gotten a promise from the project lead that we will always have an access to all the data and it can not be taken away from us. No rights have been transferred from us to the university.

6. PROPOSAL FOR TULI PROJECT

6.1. Main project

- goals (including what concrete results will be in place after the project)

- actions (e.g. what to do with regard to section 4, including any proposals for who should implement the actions)

Main goals of the TULI project for us are:

 - Get the first customers that are ready to start paying from the day the company is founded

 - Develop a clear business plan on how to proceed with the company after the TULI project: who are we selling to, what kind of communities are our first targets, and what is our most beneficial pricing policy

- Adjust our software so that it responds exactly to the needs of these customers

Main actions are:

- Doing market research by actually selling the service to potential customer communities (this is more effective than just asking whether certain potential customers might be interested in buying)

 - Develop the service administration features so that the each community’s administrators can take care of most of the issues that rise inside the community.

 - Develop the service so that opening new community accounts is very easy and tempting

 - Develop the service’s billing system so that it is easy to open a payed account and it is easy for us to bill the customers.

We propose that we will do the market research, sales and development work ourselves. Our team has all the necessary skills for that and we already have good contacts and know what should be done next. We estimate that hiring more people or getting more partners will be topical when we found the actual company.

6.2. Project schedule

- Final report, follow-on activities will be presented at the project group meeting in 08/2011

End of year 2010: (before the actual start of TULI-funding)

 - Developing support for multiple user communities, which enables us to offer Kassi as a service to new groups. Funding 100% from the OtaSizzle research project.

Step 1: Spring 2011 (Jan-May)

 - 2 days a week per person for selling and marketing. The goal is to get evidence of the viability of the business model and gain some paying customers. For this part we need funding from TULI.

 - We get funding from the OtaSizzle research project worth 3 days a week per person. This time can be used for improving the Kassi service, so practically we are working for Kassi full-time.

Jun-Aug 2011

 - Summer is not the best time of the year for marketing and sales, so we plan to use it to develop the features that are needed to start billing the customers at the beginning of September 2011. This includes the billing account handling in the service and also the features that the test users have requested during the spring in order to become paying customers. If there is specific tailoring made for a single customer, that work will be billed separately. Currently it seems that we are not able to use funding from OtaSizzle project in the summer so we need 100% funding from TULI for this period.

6.3. TULI project budget / Cost estimate by cost type

Salaries: 2500€/person/month * 1,27 side charges

Step 1: spring 2011:

Jan: 2 x 40% = 2000€ * 1,27 = 2540€

Feb: 2 x 40% = 2000€ * 1,27 = 2540€

Mar: 2 x 40% = 2000€ * 1,27 = 2540€

Apr: 2 x 40% = 2000€ * 1,27 = 2540€

May: 2 x 40% = 2000€ * 1,27 = 2540€

Step 2: summer 2011

Jun: 2 x 100% = 5000€ * 1,27 = 6350€

Jul: 2 x 100% = 5000€ * 1,27 = 6350€

Aug: 2 x 100% = 5000€ * 1,27 = 6350€

Total budget: 31750€

7 Tekes classification of sectors

Telecommunications and Electronics, Tietoliikenne ja elektroniikka, TIEL                _

Software and Digital Media Industries, Ohjelmistot ja digitaalinen media, OHME                X

Forest and Chemicals, Metsä ja kemia, MEKI                                                _

Machinery, Materials and Production, Metalli ja kappaletavaratuotanto, MEKA                _

Real Estate and Construction, Kiinteistöt ja rakentaminen, KIRA                                _

Energy and Environment, Energia ja ympäristö, ENYM                                        x

Services, Health and Wellbeing, Palvelut ja hyvinvointi, HYPA                                x

Life Sciences (Bio, Medicine, Foodstuff), Bio-, lääke- ja elintarviketuotanto, BILE        _

Others, Muu                                                                                         _

8. Evaluation of the project by project proposer and/or “innovation services team”:

Commitment and enthusiasm of applicants?

Expertise and opportunities for contributing to further pursuing the idea; from the viewpoint of the results of the TULI project, from the viewpoint of the targeted results/follow-on steps, preliminary opinion on resource needs.