This session is about creating a prototype in the case where you're offering a service. With services, you usually don't face deep technical challenges in the prototyping of the service, nor do you require a lot of capital intensity for production of the service, as with hardware. You also usually have to do it yourself. It's mostly the case that restaurant companies operate their own restaurants. Airlines own and operate their own planes. Insurance companies own and operate their own services. You usually don't work with partners to deliver the core offering the way hardware companies will often work with manufacturers in order to create their products. But the challenge is, still, how do you test and validate your concept without necessarily making the entire required investment to build out the full production version of the service? I want to talk about one good trick that's quite effective in the design and development of services. And it's what's come to be called the Wizard of Oz approach, which refers to the idea of the Wizard of Oz in the musical The Wizard of Oz, the book, the musical, the movie, The Wizard of Oz, is the wizard is shown up on the screen. And the imperative to the audience and to the viewers is to pay no attention to the man behind the curtain, that is to just sort of look at the screen and forget that there's little man back there pulling the levers. And you can do the same thing with the prototype being of your service concept, let me just give you an example. Jason Wang co-founded the food delivery service Caviar. And the story's really interesting. He was working on another start-up in the city of San Francisco, and he and his team would always face this problem of getting lunch. And there was actually a particular restaurant in San Francisco that they loved lunch from, and that restaurant had a product called a kimchi burrito. So they really loved the kimchi burrito. And one day they said, wow, you know, maybe we should forget about this start up we're working on, and just figure out how to get kimchi burritos more efficiently? And so they thought, hey, this is a pretty interesting idea. Could we figure out a way to do much more efficient food delivery? For urban dwellers, residents of cities. And they said, how can we make that experience much better? And so what they did to test their concept, which was a app-based food delivery service of curated offerings. That is, high quality offerings that were preselected that could be delivered with an app. They said, well, let's just build the front end of the app, and if we get any orders, we'll just get on the bicycle, ride down to the burrito place, pick up the burrito, and deliver it. And so, that's what they did. Literally, Jason himself, the founder of Caviar, would get on his bicycle, ride down to the kimchi burrito place, pick up kimchi burritos, and deliver them to his customers who were ordering through a very nice front end. So, you can see why it's called the Wizard of Oz approach, because the consumer doesn't know what's behind the curtain. The consumer is just ordering food through the front end experience, and they're scrambling on the back end. To just any which way they can to deliver that service. Now, what's beautiful about that, in the case of services is in order to validate the service concept, you don't have to build the whole delivery network. You don't even have to go source from get a bunch of restaurants to join the platform. They could literally go into any restaurant, hand them their Visa card, buy the food and go deliver it to their customer and give the customer the eventual full Caviar experience. Caviar went on to become a highly successful food delivery business which they sold just in their second year of operation for $100 million to the very successful company, Square.com. So in sum, if you're building a service, think carefully about how much you actually have to build in order to actually test the concept with your customers. And it may be the case that you can take the Wizard of Oz approach, which is to give your customer the front end experience while you scramble behind the curtain to actually deliver the functionality of the service.
