Startup MBA 2.3 - Customer development and early-stage sales
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  • 1. talking to customers http://startupmba.foundercentric.com
  • 2. hello@foundercentric.com foundercentric.com @foundercentric ! Mailing list: http://bit.ly/fc-list
  • 3. What is Customer development? Find early customers and confirm their intent to buy before building everything ! (without biasing them)
  • 4. Paul Graham Until you’ve launched, the only 2 things you should be doing are writing code and talking to customers
  • 5. ...
  • 6. Pets.com (and everyone) “I wish I’d known that sooner!”
  • 7. We can’t plan under uncertainty. We need a way to search.
  • 8. Talking to people is a great way to learn if our business will work
  • 9. But it’s hard to do right and easy to mess up
  • 10. When we do it wrong, we get bad data to convince us we’re right
  • 11. And when we believe those false positives, we get in big trouble
  • 12. Part 1. What does bad data look like?
  • 13. Types of bad data 1.Compliments 2.Fluff 3.Ideas 4.Trivia
  • 14. Compliments Most meetings end in a compliment. Is that a good sign?
  • 15. Mr. Compliment “Sounds great, I love it!”
  • 16. Compliments are bad because they are false positives
  • 17. Two types of compliments 1.Sincere 2.“Polite”
  • 18. Remember: Even VCs are wrong most of the time. If their opinion doesn’t matter, nobody’s does! What matters is whether customers are going to use & buy it.
  • 19. Mr. Compliment “Looks great! Keep me in the loop.”
  • 20. Ignore & deflect compliments. Then get back to gathering real data.
  • 21. Types of bad data 1.Compliments 2.Fluff 3.Ideas 4.Trivia
  • 22. 3 types of fluff 1.Generic claims 2.Future promises 3.Hypothetical maybes

  • 23. Anything generic is a lie. Get to the truth by asking for concrete examples.
  • 24. Mr. Generic Fluff “I usually...” “We always...” “I never...”
  • 25. You “Can you talk me through the last time that happened?”
  • 26. Mr. Future Fluff “I would...” “We will...”
  • 27. You “How did you make this decision last time?”
  • 28. Mr. Hypothetical Fluff “I might...” “We could...”
  • 29. You “Why can’t we just get started now?”
  • 30. Types of bad data 1.Compliments 2.Fluff 3.Ideas 4.Trivia
  • 31. Ideas Everyone will have an idea for your business ! But you’ve already got too many!
  • 32. Shawn Carolan Menlo Ventures Startups don’t starve; they drown.
  • 33. Don’t take ideas at face value. Dig beneath them to get to the motivations.
  • 34. Mr. Feature Request “You guys should definitely have feature X!”
  • 35. You “What would X let you do?”
  • 36. Mr. Feature Request “When are you going to let me do task Y?”
  • 37. You “How are you accomplishing task Y today?”
  • 38. Types of bad data 1.Compliments 2.Fluff 3.Ideas 4.Trivia
  • 39. It’s trivial data if... 1.You could have googled for it 2.You could have surveyed for it 3.It’s demographics or percents 4.You can put the results in a pie chart or graph
  • 40. Bad Founder, proudly reporting trivia “80% of people say they have this problem!”
  • 41. You, getting to the motivations “SO WHAT? Do they care enough to fix it? What else have they tried? Will they buy our product?”
  • 42. Trivia can’t give you the “why”. Just google for it and save interview time for questions that matter.
  • 43. Tip: Don’t choose customers who you aren’t able to talk to in person, or you’re guaranteed to get 100% trivia.
  • 44. Bad data in review
  • 45. Types of bad data 1.Compliments 2.Fluff 3.Ideas 4.Trivia
  • 46. Fixing bad data 1.Deflect compliments 2.Anchor fluff 3.Dig beneath ideas 4.Google for trivia
  • 47. Part 2. How conversations go wrong
  • 48. When we ask people about our idea...
  • 49. We feel like we’re being scientific
  • 50. But really, we’re just fishing for kind words
  • 51. Conversations go wrong by default. It’s your job to fix them.
  • 52. How conversations go wrong 1.Being too formal 2.Exposing the ego 3.Being pitchy
  • 53. Stuff you DON’T need 1.A formal meeting 2.Business cards 3.An interview script 4.To pay them 5.An hour or more
  • 54. What you DO need 1.To know what you want to learn 2.To ask about their life
 

  • 55. Tip: Pick customers you have easy access to. Then it’s simple to have quick, casual conversations without wasting time.
  • 56. You don’t need a formal meeting to learn from customers. Just chat to them.
  • 57. How conversations go wrong 1.Being too formal 2.Exposing the ego 3.Being pitchy
  • 58. Bad Founder, fishing for compliments “I had an awesome idea for an app... So do you like it?”
  • 59. Bad Founder, exposing his ego “So this is that secret project I’ve been working on... What do you think?”
  • 60. Why do they lie? 1.They don’t have a strong opinion about it 2.They don’t want to discourage you 3.They don’t want to see you cry

  • 61. = Mentioning your idea Exposing your ego
  • 62. If you mention your idea, they’ll lie to you about it. Talk about their life, not your idea.
  • 63. How conversations go wrong 1.Being too formal 2.Exposing the ego 3.Being pitchy
  • 64. Remember the stages of a startup? 1.Discovery 2.Validation 3.Customer creation 4.Company building
 
 
 

  • 65. Remember the stages of a startup? 1.Discovery ← You are here 2.Validation 3.Customer creation 4.Company building
 
 
 

  • 66. Remember the stages of a startup? 1.Discovery 2.Validation ← or maybe here 3.Customer creation 4.Company building
 
 
 

  • 67. Learning matters more than selling 1.Discovery ← Learning 2.Validation ← Learning 3.Customer creation 4.Company building
 
 
 

  • 68. Real sales start way later 1.Discovery ← Learning 2.Validation ← Learning 3.Customer creation ← Selling 4.Company building ← Managing
 
 
 

  • 69. Bad Founder, being pitchy “No no, I don’t think you GET it.”
  • 70. Convincing folks your idea is good = Forcing false positives
  • 71. Remember: Unless they are holding a checkbook, you have nothing to gain by convincing them your idea is great.
  • 72. Bad Founder, being pitchy “Yes, but it also does THIS!”
  • 73. You, recovering from starting to pitch “Oops, sorry, I just slipped into pitch mode. I get excited. You were saying...?”
  • 74. If you’re talking, you’re not learning. Talk less, ask more.
  • 75. Part 3. Let’s review
  • 76. People lie to us for a bunch of reasons
  • 77. People lie to us 1.We exposed our ego and they’re being nice 2.We’re being pitchy and they’re getting rid of us
  • 78. Bad data is dangerous and must be fixed
  • 79. Remember: Anyone will say your idea is great if you’re annoying enough about it.
  • 80. Fix bad data 1.Deflect compliments 2.Anchor fluff 3.Dig beneath ideas 4.Google for trivia
  • 81. Ask good questions which pass The Mom Test
  • 82. ❝ ❞ Us Do think it’s a good idea?
  • 83. ❝ ❞ Us Do think it’s a good idea?
  • 84. ❝ ❞ Us Would you buy a product which solved this problem?
  • 85. ❝ ❞ Us Would you buy a product which solved this problem?
  • 86. ❝ ❞ Us How do you currently deal with this problem?
  • 87. ❝ ❞ Us How do you currently deal with this problem?
  • 88. ❝ ❞ Us Talk me through the last time you had this problem
  • 89. ❝ ❞ Us Talk me through the last time you had this problem
  • 90. ❝ ❞ Us How much would you pay for this?
  • 91. ❝ ❞ Us How much would you pay for this?
  • 92. ❝ ❞ Us How much money does this problem cost you?
  • 93. ❝ ❞ Us How much money does this problem cost you?
  • 94. The Mom Test for good questions 1.Talk about their life instead of your idea 2.Ask about specifics in the past 3.Talk less, listen more
  • 95. Bonus. Strategic heartbeat
  • 96. Question What’s most likely to sink your business?
  • 97. Question What has to be true for the next big push to be a huge success?
  • 98. Question What can you do this week to resolve one of those questions?
  • 99. Customer development transitions naturally to sales/partners/funding. ! The same skills apply.
  • 100. Questions?