Henrik Berglund, Venture Cup, feb 2013
Upcoming SlideShare
Loading in...5
×

Like this? Share it with your network

Share

Henrik Berglund, Venture Cup, feb 2013

  • 709 views
Uploaded on

Henrik Berglund, Presentation at Venture Cup, feb 2013. ...

Henrik Berglund, Presentation at Venture Cup, feb 2013.

This presentation is based on the Customer Development theory developed by Steve Blank and Bob Dorf (http://www.steveblank.com), and is based on slides developed by Steve Blank and Bob Dorf (http://www.slideshare.net/sblank/).

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
709
On Slideshare
708
From Embeds
1
Number of Embeds
1

Actions

Shares
Downloads
20
Comments
0
Likes
0

Embeds 1

https://twitter.com 1

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide
  • November 16 2011 – CSE.
  • November 16 2011 – CSE.
  • November 16 2011 – CSE.
  • Dynamic
  • The one Process of a Startups
  • Segment examples:Mass marketNiche marketSegmented marketMulti-sided markets
  • P 22
  • P 22
  • Most Value Propositions compete with others for the same Customer Segment. I like thinking of this as an “open slot” that will be filled by the company with the best fit.
  • P 26
  • Acquire, retain, upsellPersonal, intimate, automatic, co-creating (Facebook)
  • Asset sale, service, subscription, licensing, advertising
  • Physical, intellectual, human etc
  • Production, sales, customer insighting, user-interface design, network development,
  • Alliances, partners,
  • Fixed, variable, how do they change with scale etc.
  • The one Process of a Startups
  • Youare not Apple 2012.Youare Apple 1978.
  • Preparethis in advance!
  • Preparethis in advance!
  • Preparethis in advance!
  • Metodkurs. Kvalitativt, tolkande, socially desirable answers, påverkainte.
  • The user problem you’retryingtosolve. How the userencountersyour solution.Howyour solution willwork (from the user’sperspective). How the userwill benefit.
  • Quite similar to Customer Validation in web.
  • http://dl.dropbox.com/u/27532820/original_screencast.html
  • Repeatable
  • thepoint, a now largely inactive site primarily for activists and philanthropists who wanted to encourage like-minded people to invest and support their causes. http://www.thepoint.com/
  • Now 16,4 million
  • November 16 2011 – CSE.
  • November 16 2011 – CSE.

Transcript

  • 1. Business Models/Customer Development Henrik Berglund Chalmers University of Technology Center for Business Innovation henber@chalmers.se www.henrikberglund.com @khberglund2013-02-15 1
  • 2. Presentation based on by Steve Blank and Bob Dorf More info: www.steveblank.comBuy the book: http://www.amazon.com/gp/product/0984999302/
  • 3. Using slides fromdeveloped by Steve Blank and Bob Dorf http://www.slideshare.net/sblank/
  • 4. Agenda1. Startups2. Business Models (briefly)3. Customer Development
  • 5. Part 1 Startups(What We Used to Believe What We Now Know)
  • 6. What We Used to Believe
  • 7. Startups are a Smaller Version of a Large Company
  • 8. What We Now Know
  • 9. Startups ≠ Small companies
  • 10. Startups SearchCompanies Execute
  • 11. What We Used to Believe Strategy
  • 12. Start by developing a Business Plan…
  • 13. …make the financial forecasts…
  • 14. …then Execute
  • 15. What We Now Know Strategy
  • 16. 5-Year Plans
  • 17. Develop and Execute the Business Plan
  • 18. Why?
  • 19. No Business Plan survivesfirst contact with customers
  • 20. “Everybody has a plan until they get punched in the face”Mike Tyson
  • 21. Searching for a Business Model comes before Executing a business plan
  • 22. Business Models Key activities Value proposition Customer relationshipsKey partners Customer segments Cost Key Channels Revenue structure resources streamshttp://www.businessmodelalchemist.com/
  • 23. Search Execution Business Model Operating Plan +Strategy Hypotheses Financial Model
  • 24. What We Used to Believe Process
  • 25. We Built Startups byManaging Processes Product Management + Waterfall Engineering
  • 26. Traditional Development Process Concept Product Dev. Alpha/Beta Launch/ Test 1st Ship
  • 27. Traditional Development Process Has Two Implicit AssumptionsCustomer Problem: known Concept Product Dev. Alpha/Beta Launch/ Test 1st ShipProduct Features: known Works well for incremental development projects targeting existing customers.
  • 28. Tradition – Hire Marketing Concept Product Dev. Alpha/Beta Launch/ Test 1st Ship - Create Marcom - Hire PR Agency - Create DemandMarketing Materials - Early Buzz - Launch Event - Create Positioning - “Branding”
  • 29. Tradition – Hire Sales Concept Product Dev. Alpha/Beta Launch/ Test 1st Ship - Create Marcom - Hire PR Agency - Create DemandMarketing Materials - Early Buzz - Launch Event - Create Positioning - “Branding” - Hire Sales VP - Build SalesSales - Hire 1st Sales Staff Organization
  • 30. Tradition – Hire Business Development Concept Product Dev. Alpha/Beta Launch/ Test 1st Ship - Create Marcom - Hire PR Agency - Create DemandMarketing Materials - Early Buzz - Launch Event - Create Positioning - “Branding” - Hire Sales VP - Build SalesSales - Hire 1st Sales Staff OrganizationBusiness - Hire First Bus Dev - Do deals for FCSDevelopment
  • 31. Examples - Recognize these?
  • 32. What’s wrong with this picture? Concept Product Dev. Alpha/Beta Launch/ Test 1st Ship • Both Customer Problems and Product Features are hypotheses • Emphasis on execution rather than learning and discovery • No relevant milestones for marketing and sales • Often leads to premature scaling and a heavy spending hit if product launch fails You do not know if you are wrong until you are out of money/business
  • 33. Concept Product Dev. Alpha/Beta Launch/ Test 1st Ship - Create Marcom - Hire PR Agency - Create DemandMarketing Materials - Early Buzz - Launch Event - Create Positioning - “Branding” - Hire Sales VP - Build SalesSales - Hire 1st Sales Staff OrganizationBusiness - Hire First Bus Dev - Do deals for FCSDevelopment
  • 34. What We Now Know Process
  • 35. Product and Customer Development Product Development Concept Product Dev. Alpha/Beta Launch/ Test 1st Ship + Customer Development Customer Customer Customer Company Discovery Validation Creation Building
  • 36. Product and Customer Development Problem: unknown Solution: unknown
  • 37. Search ExecutionStrategy Business Model Operating Plan + Hypotheses Financial ModelProcess Customer & Product Management & Waterfall Development Agile Development
  • 38. What We Used to BelieveOrganization
  • 39. Hire and Build aFunctional Organization
  • 40. What We Now KnowOrganization
  • 41. Founders run a Customer Development TeamNo sales, marketing and business development
  • 42. Search Execution Strategy Business Model Operating Plan + Hypotheses Financial Model Customer Development, Product Management Process Agile Development Agile or Waterfall Development Customer Functional OrganizationOrganization Development Team, by Department Founder-driven
  • 43. Part 2Business Models
  • 44. Business Model Key activities Value proposition Customer relationshipsKey partners Customer segments Cost Key Channels Revenue structure resources streamshttp://www.businessmodelalchemist.com/
  • 45. Business Model Key activities Value proposition Customer relationshipsKey partners Customer segments Cost Key Channels Revenue structure resources streams A framework for making your assumptions explicit
  • 46. Customer Segments Who are the customers? Why would they buy?
  • 47. Customer SegmentsWho is the customer?Multi-sided market?Different from user?http://www.businessmodelalchemist.com/2012/08/achieve-product-market-fit-with-our-brand-new-value-proposition-designer.html
  • 48. Customer Segments - jobs to be doneWhat functional jobs is your customertrying get done? (e.g. perform orcomplete a specific task, solve a specificproblem…)What social jobs is your customer tryingto get done? (e.g. trying to look good,gain power or status…)What emotional jobs is your customer “What jobs are the customers you aretrying get done? (e.g. esthetics, feel good, targeting trying to get done”security…)
  • 49. Customer Segments - customer painsWhat does your customer find too costly?(e.g. takes a lot of time, costs, effort)What makes your customer feel bad?(e.g. frustrations, annoyances)How are current solutions under-performing for your customer?(e.g. lack of features, performance,malfunction) “What are the costs, negative emotions, bad situations etc. that your customer risksWhat negative social consequences does experiencing before, during, and after gettingyour customer encounter or fear? the job done.”(e.g. loss of face, power, trust, or status)
  • 50. Customer Segments - customer gainsWhich savings would make your customerhappy? (e.g. in terms of time, money andeffort)What would make your customer’s job orlife easier? (e.g. flatter learning curve,more services, lower cost of ownership)What positive social consequences doesyour customer desire? (e.g. makes themlook good, increase in power, status) “What are the benefits your customer expects, desires or would be surprised by.”What are customers looking for? (e.g.good design, guarantees, features)What do customers dream about? (e.g.big achievements, big reliefs)
  • 51. Value PropositionsWhat are you building?For whom?
  • 52. Value PropositionsWhat are your products andservices?How do they create value forthe customer segments?
  • 53. Value PropositionsCan your product/service:• Produce savings?• Make your customers feel better?• Put an end to difficulties?• Wipe out negative social consequences?
  • 54. Value PropositionsCan your product/service:• Outperform current solutions?• Produce outcomes that go beyond their expectations?• Make your customer’s job or life easier?• Create positive social consequences?
  • 55. Product Market FitGetting this right is essential!
  • 56. Product Market FitGetting this right is essential!
  • 57. ChannelsHow does your product get to customers?
  • 58. How Do You Want Your Product to Get to Your Customer?  Yourself  Through someone else  Retail  Wholesale  Bundled with other goods or services 60
  • 59. Web Channels 61
  • 60. Physical Channels 62
  • 61. How Does Your Customer Want to Buy Your Product from your Channel?  • Same day  • Delivered and installed • Downloaded  • Bundled with other  products  • As a service • …  63
  • 62. Customer RelationshipsHow do you get/keep/grow customers?
  • 63. Customer Relationships
  • 64. Revenue StreamsHow do you make money?
  • 65. Key ResourcesWhat are your most important assets?
  • 66. Key ActivitiesWhat activities are most important for the business?
  • 67. Key PartnershipsWho are your key partners and suppliers?
  • 68. Cost StructureWhat are the costs of operating the business model?
  • 69. Key activities Value proposition Customer relationshipsKey partners Customer Visualization of the segments business model framwork Cost Key Channels Revenue structure resources streams
  • 70. What’s a Company?
  • 71. What’s a Company? A business organization, which sells aproduct or service in exchange for revenue and profit
  • 72. How are Companies organized?
  • 73. How are Companies organized? Companies are organized around Business Models
  • 74. How are Companies organized?Companies are organized around Business Models
  • 75. What’s a Startup?
  • 76. What’s a Startup? A temporary organization designed to searchfor a repeatable and scalable business model
  • 77. What’s a Startup? A temporary organization designed to searchfor a repeatable and scalable business model
  • 78. What’s a Startup? A temporary organization designed to searchfor a repeatable and scalable business model
  • 79. GuessGuess Guess Guess Guess Guess Guess Guess Guess
  • 80. The goal is not to remain a startup Large Startup Transition CompanyThe goal of a startup is to become a large company! Failure = failure to transition.
  • 81. Part 3Customer Development
  • 82. To repeat
  • 83. To repeat More startups fail from a lack of customers than from afailure of product development…
  • 84. … because they think startups = small companies…
  • 85. …they focus on executing the plan… Concept Product Dev. Alpha/Beta Launch/ Test 1st Ship • Both Customer Problems and Product Features are hypotheses • Emphasis on execution rather than learning and discovery • No relevant milestones for marketing and sales • Often leads to premature scaling and a heavy spending hit if product launch fails You do not know if you are wrong until you are out of money/business
  • 86. … so they scale on untested assumptions…
  • 87. … and end up going bust.“We have been too visionary. Wewanted everything to be perfect, andwe have not had control of costs"Ernst Malmsten(BBC News, May 18 2000)
  • 88. So what to do?
  • 89. Customer Development: Key Ideas• Parallel process to Product Development (agile)• Measurable checkpoints not tied to FCS but to customer insights• Emphasis on iterative learning and discovery before execution• Must be done by small team including CEO/project leader
  • 90. Customer Development Heuristics• There are no facts inside, so get out of the building!• Earlyvangelists make your company, and are smarter than you!• Develop a minimum viable product to maximize fast learning.
  • 91. Customer Development: Four Stages search execution • Customer Discovery Articulate and Test your Business Model Hypotheses • Customer Validation Sell your MVP and Validate your MB & Sales Roadmap • Customer Creation Scale via relentless execution and fill the sales pipeline • Company Building (Re)build company’s organization & management
  • 92. Customer Discovery• Articulate and test your BM hypotheses (value prop/customers key)• No selling, just listening• Must be done by founder
  • 93. But,Realize it’s just Hypotheses!
  • 94. GuessGuess Guess Guess Guess Guess Guess Guess Guess
  • 95. Test Customer Problem Hypotheses”Do you have thisproblem?”1.2.3.
  • 96. Test Customer Problem Hypotheses”Do you have this ”Tell me about it, howproblem?” do you solve it today?”1. 1.2. 2.3. 3.
  • 97. Test Customer Problem Hypotheses”Do you have this ”Tell me about it, how ”Does something like thisproblem?” do you solve it today?” solve your problem?”1. 1. 1.2. 2. 2.3. 3. 3.Listen carefully to what they say at each step!Focus on learning - Don’t try to sell them on your idea!In the process you find out about other BM parts as well:workflow, benefits (to users & others), preferred channels, criticalinfluencers, respected peers etc…You want to become a domain expert!
  • 98. Finding peopleIntroductions (ask everyone you know)• Provide the exact text that they can copy and paste into a tweet or email (They’re doing you a favor! Make it as easy as possible for them)• Tell them exactly how you are going to communicate with their contacts (They’re risking a bit of social capital for you. Be very clear that you won’t spam or annoy people)• Tell them your goals (What do you think you’ll get/learn if they make this intro for you? People want to know that they’re contributing to a bigger picture!)
  • 99. Finding people AdWords, Facebook Ads, Promoted Tweets Summarize your idea and get it in front of people who have expressed an interest in it by having searched for your keywords and clicked your ad – get conversations (and/or test hypotheses using landing pages).http://www.cindyalvarez.com/best-practices/customer-development-interviews-how-to-finding-people
  • 100. Finding peopleTwitter SearchLook for people who have already discussed a similarproduct, problem, or solution and address a tweet directlyto them: “@username Would love yr feedback on [product/problem/solution] – shd only take 2mins [URL] thanks!”
  • 101. Finding peopleGoogle AlertsSet up Google Alerts for your product/problem/solution –when it finds relevant blog posts or comments, email andask for feedback: “I read your [post/comment] about [product/problem/solution]. I’m currently working on a related idea and I think your opinion would be very valuable to me – could you take 2 minutes and check out [URL]? Thank you – I’d be happy to return the favor any time.”
  • 102. Interview tipshttp://www.giffconstable.com/2011/07/12-tips-for-customer-development-interviews-revised/
  • 103. WebMuch faster to build =>get quantitative feedback sooner.Use a low-fi landing page as substitute for –and introduction to – conversations.Key to drive traffic throughAdWords/Facebook Ads/Promoted Tweetsetc.Build (design test), measure (run test) andanalyze (evaluate test)!
  • 104. Landing page designhttp://blog.kissmetrics.com/landing-page-blueprint/
  • 105. Reality check!CustDev and ProdDev teams meet and discussthe lessons learned from the field. ”Here is what we thought about customers and their problems, here is what we found out”BM hypotheses, product specs or both are jointlyrevised.
  • 106. Test Solution Hypothesis1) ”We believe you have this important problem” – listen (check).2) Demo how your product solves the problem. Focusingon a few key features.Include workflow story: ”life before our product” and”life after our product” – listen!3) ”What would this solution need to have for you topurchase it?” Listen, ask follow up questions.
  • 107. Dropbox• 1st solution test: a three minute video made in the founder’s apartment before a complete code was written. – Generated valuable feedback from visionary customers.• 2nd solution test: another video of the product that was posted on a social network. – Waiting list jumped from 5 000 to 75 000.• Dropbox’s original intent was to build and ship their product in eight weeks.• Instead, they gathered feedback and launched a public version 18 months later.
  • 108. Test Product HypothesesAfter demoing, ask about other things: Positioning – how do they describe the product? Product category (new, existing, resegmented) Competitors Features needed for first version Preferred revenue model Pricing Additional service needs Marketing – how do they find this type of product? Purchasing process Who has a budget? etc.
  • 109. WebBuild out a high-fidelity web page with “functioning”back-end, based on lessons learned.“Mechanical Turk”-solution.Ask for money: first “pre-order” then charging.Continue to test, measure and analyze!
  • 110. Reality check!CustDev and ProdDev teams meet and discussthe lessons learned. ”Here is what we thought about product features and here is what we found out”BM hypotheses, product specs or both are againjointly revised.
  • 111. Customer Discovery: Exit Criteria What are your customers top problems? How much will they pay to solve them? Does your product concept solve them? Do customers agree? How much will they pay for it? Can you draw a day-in-the-life of a customer? Before & after your product Can you draw the org charts of users, buyers and channels?
  • 112. Customer Validation• Develop and sell MVP to passionate earlyvangelists• Validate a repeatable sales roadmap• Verify the business model
  • 113. Minimal Viable ProductBased on your insights from Customer Discovery, sellthe smallest feature set customers are willing to payfor! • Purpose 1: Reduce wasted engineering hours (and wasted code) • Purpose 2: Get something into the hands of earlyvangelists as soon as possible => maximize learning!
  • 114. The Apple I, Apple’s first product, was sold as an assembled circuit boardand lacked basic features such as a keyboard, monitor and case.
  • 115. The owner of this unit added a keyboard and a wooden case.http://en.wikipedia.org/wiki/Apple_Inc.
  • 116. Minimal Viable ProductThe MVP is not the goal = Requires commitmentto iteration! • “A complex system that works is invariably found to have evolved from a simple system that worked.” • “A complex system designed from scratch never works and cannot be made to work. You have to start over, beginning with a working simple system.”
  • 117. Types of earlyvangelists Not1. Has a problem helpful2. Understands he or she has a problem3. Actively searching for a solution4. Cobbled together an interim solution5. Committed and can quickly fund Jackpot! a solution
  • 118. Customer Validation: Exit Criteria Do you have a proven sales roadmap? Organization chart? Influence map? No staffing until roadmap is proven! Do you have a set of orders ($’s) of the product validating the roadmap? Is the business model scalable? LTV > CAC, Cash
  • 119. If yes – Start executing
  • 120. If no – Pivot! • The heart of Customer Development • Change without crisis (and without firing executives)“The idea that successful startups change directions butstay grounded in what theyve learned”
  • 121. Pivot Adapt the Business Model until you can prove it works
  • 122. search execution
  • 123. Customer Creation• Grow customers from few to many• Comes after proof of sales• Inject $’s for scale• This is where you “cross the chasm”• “Growth Hacking”
  • 124. Company Building• (Re)build company’s organization & management• Dev.-centric Mission-centric Process-centric
  • 125. Summary – Customer Development • Customer Discovery Articulate and Test your Business Model Hypotheses • Customer Validation Sell your MVP and Validate your BM & Sales Roadmap • Customer Creation Scale via relentless execution and fill the sales pipeline • Company Building (Re)build company’s organization & management
  • 126. Don’t do a Boo!Concept Product Dev. Alpha/Beta Launch/ Test 1st Ship “We have been too visionary. We wanted everything to be perfect, and we have not had control of costs" Ernst Malmsten (BBC News, May 18 2000)
  • 127. Tack! Henrik Berglund Chalmers University of Technology Center for Business Innovation henber@chalmers.se www.henrikberglund.com @khberglund2013-02-15 143
  • 128. Presentation based on by Steve Blank and Bob Dorf More info: www.steveblank.comBuy the book: http://www.amazon.com/gp/product/0984999302/
  • 129. Using slides fromdeveloped by Steve Blank and Bob Dorf http://www.slideshare.net/sblank/