Customer Development - Identifying and Testing Startup Hypotheses

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Presentation for VCs, angels and incubator coaches on how to help startups implement customer development, specifically how to identify and test startup hypotheses.

Draws heavily on ideas and content from Steve Blank, Cindy Alvarez and Jason Evanish.

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Customer Development - Identifying and Testing Startup Hypotheses

  1. 1.                 Henrik  Berglund   Chalmers  University  of  Technology   Center  for  Business  Innova8on   henber@chalmers.se   www.henrikberglund.com   @khberglund   #bogl2014       Customer  Development   2014-­‐08-­‐13   1  
  2. 2. 1) Why customer development? 2) Identifying central hypotheses 3) Testing hypotheses
  3. 3. 1) Why customer development? 2) Identifying central hBrief ypotheses 3) Testing hypotheses (interviews)
  4. 4. Strategy  
  5. 5.   Start by developing a Business Plan…
  6. 6.   …make the financial forecasts…
  7. 7.   …then Execute
  8. 8. “Everybody  has  a  plan  un?l  they  get  punched  in  the  face”      Mike  Tyson  
  9. 9. Searching for a Business Model comes before Executing a business plan
  10. 10. Process  
  11. 11. Tradi8onal  Development  Process   Concept   Product  Dev.   Alpha/Beta   Test   Launch/   1st  Ship  
  12. 12. Concept   Product  Dev.   Alpha/Beta   Test   Launch/   1st  Ship  
  13. 13. Organiza?on  
  14. 14. Hire and Build a Functional Organization
  15. 15. Founders run an agile Customer Development Team No sales, marketing and business development
  16. 16. Opera8ng  Plan  +   Financial  Model   Product  Management   Agile  or  Waterfall  Development   Func8onal  Organiza8on    by  Department   Business  Model     Hypotheses   Organiza?on   Customer     Development  Team,     Founder-­‐driven   Customer  Development,   Agile  Development   Search   Execu?on   Strategy   Process  
  17. 17. 1) Why customer development? 2) Identifying central hypotheses A) Surface all Assumptions B) Write down Problem Hypothesis C) Create Customer Persona  
  18. 18. A)  Surface  all  assump8ons   Exercise  with  founders!     1)  Brainstorm/iden8fy  hypotheses  individually  
  19. 19. Examples  of  hypothesis  to  get  started   www.cindyalvarez.com  
  20. 20. I  believe  that  my  customers  have  a  need  to  _____________.     This  need  can  be  solved  with_________________________.     My  ini8al  customers  will  be__________________________.     The  #1  value  a  client  wants  to  get  out  of  my  service  is  ____.     The  client  can  also  get  these  addi8onal  benefits  ___  and  ___.     I  will  acquire  most  users/customers  through  ____and  _____.     I  will  make  money  by  _______________________________.   Examples  of  hypothesis  to  get  started  
  21. 21. Cluster  around  themes   www.cindyalvarez.com   Group  exercise  with  founders!     1)  Brainstorm/iden8fy  hypotheses  individually   2)  Then  discuss  and  cluster  them  as  a  group  
  22. 22. hypothesis hypothesis hypothesis hypothesis hypothesis hypothesis hypothesis hypothesis hypothesis hypothesis hypothesis hypothesis Map  them  onto  the  canvas  in  LPC  
  23. 23. Map  them  onto  the  canvas  in  LPC  
  24. 24. B)  Write  down  problem  hypothesis     “I  believe  [type  of  person]   experience  [type  of  problem]   while  doing  [type  of  task]”     Or                 “I  believe  [type  of  person]     experience  [type  of  problem]     because  of  [limit  or  constraint]”     www.cindyalvarez.com  
  25. 25. Example     “I  believe  [tech  opera8ons  teams]   experience  [wasted  8me  and  budget]   while  [predic8ng  network  bandwidth  usage  for  their   growing  companies]”   www.cindyalvarez.com  
  26. 26. Example     “I  believe  [small  businesses]   experience  [inability  to  grow  their  businesses]   because  [tradi8onal  email  marke8ng  pla`orms  are  to   expensive  and  complicated]”   www.cindyalvarez.com  
  27. 27. Problem  Hypotheses     “I  believe  [type  of  person]   experience  [type  of  problem]   while  doing  [type  of  task]”     Or                 “I  believe  [type  of  person]     experience  [type  of  problem]     because  of  [limit  or  constraint]”     www.cindyalvarez.com   Specific  >>  General  
  28. 28. Name Persona type Age Technical comfort Job Title Back story Their ideal experience Feel free to doodle! Persona Template Quote “ _” Tell us a bit about their lives What concerns do they have? Why do they need this website/service? How have they found or heard about the website? What’s stopping them from choosing the service/website or annoying them? Their story including features and content which will help them have a great experience Sum up their experience with the C)  Create  a  Customer  Persona  
  29. 29. 1) Why customer development? 2) Identifying central hypotheses 3) Testing hypotheses
  30. 30. guess guess guess guess guess guess guess guess guess guess guess guess
  31. 31. If  customers  could  talk…  
  32. 32. If  customers  could  talk…   Here’s  why  it’s  a  problem!     Here’s  how  we  try  to  deal  with  it  now!     Here’s  who  is  involved!     Here  are  the  contexts  where  it’s  a  problem!     Here  are  our  constraints!     Here’s  what  we’re  willing  to  pay  to  solve  it!  
  33. 33. Suggested  Interview  Flow   1) Person   2) Problems   3) Solu8on      
  34. 34. 1.  Person   •  What  is  your  name  and  role  at  your   company?   •  How  do  you  fit  into  your  company’s   structure?   •  What  is  your  budget  like?     •  Who  has  to  approve  your  purchases?   •  How  do  you  discover  new  products  for  work?     •  Do  you  need  any  approval  to  try  them?   •  What  is  a  typical  day  like  on  your  job?   •  How  much  8me  do  you  spend  on  [Task]?     Learn  about  them  and  their  role  in  your  industry     www.jasonevanish.com  
  35. 35. 2.  Problems   •  What  are  the  top  3  challenges  you  face   related  to  [X]?     •  How  do  you  deal  with  them  today?   •  What  do  you  like  about  your  current   solu8on/process?   •  What  other  solu8ons  have  you  tried?  Were   they  beher  or  worse?   •  Who  is  involved  with  this  solu8on/process?     How  long  does  it  take?   •  If  you  could  wave  a  magic  wand…what   would  the  solu8on  be?   Learn  about  the  problems  they  priori4ze     www.jasonevanish.com  
  36. 36. 3.  Solu?on  Concept     •  Describe  you  product  concept.   •  Would  you  be  willing  to  pay  [X]  for  such  a   solu8on?     •  If  they're  willing  to  pay:  “Would  you  be  willing  to   start  right  away?”   •  “That’s  interes8ng”  =  Kiss  of  Death.   •  Read  body  language,  voice  inflec8on  and  energy   level  for  signals  of  interest.   See  if  they’re  interested  &  get  feedback     www.jasonevanish.com  
  37. 37. Interview  8ps  and  examples  
  38. 38. Be  prepared  to  go  off  script     If  users  get  worked  up  –  don’t  stay  on  script,     but  follow  their  lead  and  drill  down!       Emo?on  =  Importance!    
  39. 39. Don’t  talk   You  should  be  talking  as  8hle  as  possible!     Don’t  fear  ”uncomfortable  silence”     (let  them  break  it).     80/20  is  a  good  ra8o  to  aim  for.  
  40. 40. Ask  brief  follow-­‐ups   (remember,  they    should  be  takning)   That  sounds  expensive/inefficient/painful…     Tell  me  more!     When  was  the  last  4me  that  happened?     Can  you  give  an  example?     What  do  you  mean  by  that?     Can  you  explain  that  a  liHle  more?     What  else  do  you  do  when  that  happens?     How  do  you  feel  about  that?     Parrot  back  and  misrepresent  =>  More  elaborate  answer  
  41. 41. Get  psyched  to  hear  things  you             don’t  want  to  hear  
  42. 42. Give  permission  to  disagree     ”Other  people  say”     ”Others  have  told  me  the  opposite”    
  43. 43. Don’t  assume  things       Bad:  You  love  walking  your  dog!     Good:  How  do  you  feel  about  walking  your  dog?     Even  BeZer:  What  was  it  like  the  last  8me  you  walked  your  dog?  
  44. 44. Write  up  results  a.s.a.p.     Take  notes!     Write  upp  results  and     extract  key  insights     immediately  ater     the  interview!   Surprises,  Trends,     (In)validated  hypothesis  
  45. 45. Interview  8ps     hhp://www.cindyalvarez.com/communica8on/customer-­‐ development-­‐interviews-­‐how-­‐to-­‐what-­‐you-­‐should-­‐be-­‐ learning         hhp://giffconstable.com/2012/12/12-­‐8ps-­‐for-­‐early-­‐ customer-­‐development-­‐interviews-­‐revision-­‐3/           hhp://jasonevanish.com/2012/01/18/how-­‐to-­‐structure-­‐ and-­‐get-­‐the-­‐most-­‐out-­‐of-­‐customer-­‐development-­‐ interviews/        
  46. 46.     “nice  to   have”   Jackpot!   1.  Has  a  problem   2.  Understands  he  or  she  has  a  problem   3.  Ac8vely  searching  for  a  solu8on   4.  Cobbled  together  an  interim  solu8on   5.  Commihed  funds  for  a  solu8on   Useful  people  to  talk  to  
  47. 47. Much  faster  to  build  =>     get  quan8ta8ve  feedback  sooner     Web  
  48. 48. Tes8ng  Solu8on  Hypothesis  
  49. 49. www.pretotype.org  
  50. 50. www.pretotype.org  
  51. 51. www.pretotype.org  
  52. 52. Test Solution Hypotheses   Ater  demoing,  ask  about  other  things:     Posi8oning  –  how  do  they  describe  the  product?   Product  category  (new,  exis8ng,  resegmented)   Compe8tors   Features  needed  for  first  version   Preferred  revenue  model   Pricing   Addi8onal  service  needs   Marke8ng  –  how  do  they  find  this  type  of  product?   Purchasing  process   Who  has  a  budget?   etc.  

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