Cleantech Open 071611

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  • 1. Customer Development and the Business Model
    July 16, 2011
  • 2. Welcome to Customer Development
    Steve Blank
    Stanford - School of Engineering
    U.C. Berkeley - Haas School Of Business
    www.steveblank.com
    Twitter: sgblank
  • 3. I Write a Blog
    www.steveblank.com
  • 4. This Talk is Based On
    Business Model Generation
    Four Steps to the Epiphany
    Lean Startup
  • 5. First -What’s A Startup?
    Five Types of Startups
  • 6. Small Business
    Startup
    Small Business Startups
    • Serve known customer with known product
    • 7. Feed the family
  • Small Business
    Startup
    Exit Criteria
    • Business Model found
    - Profitable business
    • Existing team
    < $1M in revenue
    Small Business Startups
    • known customer known product
    • 8. Feed the family
  • Small Business
    Startup
    - Business Model found
    - Profitable business
    • Existing team
    < $10M in revenue
    Small Business Startups
    • 5.7 million small businesses in the U.S. <500 employees
    • 9. 99.7% of all companies
    • 10. ~ 50% of total U.S. workers
    http://www.sba.gov/advo/stats/sbfaq.pdf
  • 11. Large Non-Profit
    Social Startup
    Social Entrepreneurship Startups
    • Solve pressing social problems
    • 12. Social Enterprise: Profitable
    • 13. Social Innovation: New Stratagies
  • Large Company Sustaining Innovation
    Sustaining Innovation
    Transition
    Scalable
    Startup
    Large Company
    • Existing Market / Known customer
    • 14. Known product feature needs
  • Large Company Disruptive Innovation
    New Division
    Transition
    Large Company
    Disruptive Innovation
    • New Market
    • 15. New tech, customers, channels
  • Large Company Disruptive Innovation
    New Division
    Transition
    Large Company
    Disruptive Innovation
    - IP- Talent
    - Product
    - Customers
    - Business
  • 17. Scalable
    Startup
    Large Company
    Scalable Startup
    Search
    Goal is to solve for:
    unknown customer and unknown features
  • 18. Execute
    Search
    Scalable
    Startup
    Large Company
    Exit Criteria
    • Business model found
    • 19. Total Available Market > $500m -$1B
    • 20. Can grow to $100m/year
    Scalable Startup
  • 21. Scalable
    Startup
    Large Company
    • Total Available Market > $500m
    • 22. Company can grow to $100m/year
    • 23. Business model found
    • 24. Focused on execution and process
    • 25. Typically requires “risk capital”
    Scalable Startup
    Execute
    Search
    • In contrast a scalable startup is designed to grow big
    • 26. Typically needs risk capital
    • 27. What Silicon Valley means when they say “Startup”
  • Scalable
    Startup
    Large Company
    Exit Criteria
    • Business model found
    • 28. Total Available Market > $500m -$1B
    • 29. Can grow to $100m/year
    Scalable Startup
    Execute
    Search
    • VC-backed scalable startups:
    • 30. 13% of all public companies
    • 31. 4% of total sales of all U.S. public companies ~$1 trillion
    Source: Josh Lerner, Harvard: VC and Innovation in Energey
  • 32. Very Different Startup Goals
    Small Business
    Startup
    - Business Model found
    - Profitable business
    • Existing team
    < $10M
    Scalable
    Startup
    Large Company
    • Total Available Market > $500m
    • 33. Company can grow to $100m/year
    • 34. Business model found
    • 35. Focused on execution and process
    • 36. Typically requires “risk capital”
  • Venture Firms Invest in Scalable Startups
    Small Business
    Startup
    Scalable
    Startup
    Large Company
  • 37. Buyable Startup
    Search
    Sell
    Scalable
    Startup
    $5 to 50M Acquisition
    Goal is to solve for:
    Internet and Mobile Apps
  • 38. Buyable Startup
    Search
    Sell
    Scalable
    Startup
    $5 to 50M Acquisition
    Goal is to solve for:
    Internet and Mobile Apps
    Sell to larger company
  • 39. Scalable
    Startup
    Large Company
    • Business Model found
    • 40. i.e. Product/Market fit
    - Repeatable sales model
    - Managers hired
    What’s A Startup?
    Search
    Execute
    A Startup is a temporary organization used to search for a repeatable and scalable business model
  • 41. Next,What’s A Founder?
  • 42. What You and I Saw
  • 43. What Michelangelo Saw
  • 44. What You and I Saw
  • 45. What Van Gogh Saw
  • 46. Founders See Things Others Don’t
  • 47. Founders See Things Others Don’t
    Founders are Artists.
    Actually They are Composers.
    They Create Something From Nothing
  • 48. Founders See Things Others Don’t
    They Build a Company By Convincing Others To See What They Do
  • 49. Founders See Things Others Don’t
    The Early Employees Who Join Them
    Are the Performers
  • 50. I Have a Vision
  • 51. I Know What Needs to Be Done
  • 52. Lets Launch a New Product!
  • 53. Five Ways Founders Fail
  • 54. #1I Know Who The Customer Is
  • 55. #2I Know Exactly the Product They Need
  • 56. #3I Know the Problem They Have
  • 57. #4We Can Fix It After We Ship It All
  • 58. #5
    All I Need to Do is Execute the Plan
  • 59. Product Introduction Model
    Concept/Seed Round
    Product Dev.
    Alpha/Beta Test
    Launch/
    1st Ship
  • 60. Product Introduction Model
    The Leading Cause of Startup Death
    Concept/Seed Round
    Product Dev.
    Alpha/Beta Test
    Launch/
    1st Ship
  • 61. Product Introduction Model:Two Implicit Assumptions
    Customer Problem: known
    Concept/Seed Round
    Product Dev.
    Alpha/Beta Test
    Launch/
    1st Ship
    Product Features: known
  • 62. Tradition – Hire Marketing
    Concept/Seed Round
    Product Dev.
    Alpha/Beta Test
    Launch/
    1st Ship
    - Create Demand
    - Launch Event
    - “Branding”
    - Hire PR Agency
    - Early Buzz
    • Create Marcom
    Materials
    - Create Positioning
    Marketing
  • 63. Tradition – Hire Sales
    Concept/Seed Round
    Product Dev.
    Alpha/Beta Test
    Launch/
    1st Ship
    - Create Demand
    - Launch Event
    - “Branding”
    - Hire PR Agency
    - Early Buzz
    • Create Marcom
    Materials
    - Create Positioning
    Marketing
    • Build Sales Organization
    • 64. Hire Sales VP
    • 65. Hire 1st Sales Staff
    Sales
  • 66. Tradition – Hire Bus Development
    Concept
    Product Dev.
    Alpha/Beta Test
    Launch/
    1st Ship
    - Create Demand
    - Launch Event
    - “Branding”
    - Hire PR Agency
    - Early Buzz
    • Create Marcom
    Materials
    - Create Positioning
    Marketing
    • Build Sales Channel / Distribution
    • 67. Hire Sales VP
    • 68. Pick distribution Channel
    Sales
    Business
    Development
    • Hire First Bus Dev
    • 69. Do deals for FCS
  • Tradition – Hire Engineering
    Concept
    Product Dev.
    Alpha/Beta Test
    Launch/
    1st Ship
    - Create Demand
    - Launch Event
    - “Branding”
    - Hire PR Agency
    - Early Buzz
    • Create Marcom
    Materials
    - Create Positioning
    Marketing
    • Build Sales Channel / Distribution
    • 70. Hire Sales VP
    • 71. Pick distribution Channel
    Sales
    Business
    Development
    • Hire First Bus Dev
    • 72. Do deals for FCS
    Engineering
  • No Business Plan survives first contact with customers
  • 76. Startups Are Not Smaller Versions of Large Companies
  • 77. Startups Are Not Smaller Versions of Large Companies
    Large Companies Execute Known Business Models
  • 78. Startups Are Not Smaller Versions of Large Companies
    Startups Search for Unknown Business Models
  • 79. So Search for a Business Model
  • 80. The Business Model:
    Any company can be described in 9 building blocks
  • 81. CUSTOMER SEGMENTS
    which customers and users are you serving?
    which jobs do they really want to get done?
  • 82. VALUE PROPOSITIONS
    what are you offering them? what is that
    getting done for them? do they care?
  • 83. CHANNELS
    how does each customer segment want to be reached? through which interaction points?
  • 84. CUSTOMER RELATIONSHIPS
    what relationships are you establishing with each segment? personal? automated? acquisitive? retentive?
  • 85. REVENUE STREAMS
    what are customers really willing to pay for? how?
    are you generating transactional or recurring revenues?
  • 86. KEY RESOURCES
    which resources underpin your business model? which assets are essential?
  • 87. KEY ACTIVITIES
    which activities do you need to perform well in your business model? what is crucial?
    59
  • 88. KEY PARTNERS
    which partners and suppliers leverage your model?
    who do you need to rely on?
  • 89. COST STRUCTURE
    what is the resulting cost structure?
    which key elements drive your costs?
  • 90. value proposition
    customer relationships
    key activities
    customer segments
    key partners
    cost structure
    revenue streams
    key
    resources
    channels
    62
    images by JAM
  • 91. sketch out your business model
  • 92. But,Realize They’re Hypotheses
  • 93. 9 Guesses
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
  • 94. How Do Startups Search For A Business Model?
    • The Search isCustomer Development
    • 95. The Implementation isAgile Development
    • 96. The Sum is the Lean Startup
  • Customer Development
    The founders
    ^
    Get Out of the Building
  • 97. Customer DevelopmentThe Search For the Business Model
    Company
    Building
    CustomerDiscovery
    CustomerValidation
    Customer Creation
    Pivot
  • 98. Customer Discovery
    CustomerDiscovery
    CustomerValidation
    Company
    Building
    CustomerCreation
    Stop selling, start listening
    Test your hypotheses
    Continuous Discovery
    Done by founders
  • 99. Test Hypotheses:
    Turning Hypotheses to Facts
  • 102. Test Hypotheses:
  • Test Hypotheses:
    • Channel
  • Test Hypotheses:
    • Demand Creation
    Test Hypotheses:
    Test Hypotheses:
    Test Hypotheses:
    Test Hypotheses:
    • Channel
    Test Hypotheses:
    • Pricing Model / Pricing
    Test Hypotheses:
    • Size of Opportunity/Market
    • 113. Validate Business Model
  • Test Hypotheses:
    • Demand Creation
    Test Hypotheses:
    Agile Development
    Test Hypotheses:
    Test Hypotheses:
    Customer Development Team
    Test Hypotheses:
    • Channel
    Test Hypotheses:
    • Pricing Model / Pricing
    Test Hypotheses:
    • Size of Opportunity/Market
    • 121. Validate Business Model
  • 122. The Minimum Viable Product (MVP)
    • Smallest feature set that gets you the most …orders, learning, feedback, failure…
    • 123. MVP + Customer are the first two you need to nail
  • Testing the MVP
    Smoke testing with landing pages using AdWords
    In-product split-testing
    Prototypes (particularly for hardware)
    Removing features
    Continued customer discovery and validation
    Surveys
    Interviews
  • 124. Testing the MVP (Web Example)
    Can you get customers to pay for a product that doesn’t yet exist (or barely does)?
    Interview customers to make sure they have a matching core problem
    Set up web site landing page to test for conversion
    See what offers are required to get customers to use the product (e.g. prizes, payment)
    Use problem definition as described by customers to identify key word list – plug into Google search traffic estimator - high traffic means there is problem awareness
    Drive traffic to site using Google search and see how deep into a registration process customers are willing to go through
  • 125. Testing the MVP (Non-Web)
    Can you get customers to pay for a product that doesn’t yet exist (or barely does)?
    Interview customers to make sure they have a matching core problem
    Set up web site landing page to test for conversion
    Set up a Lighthouse Customer Program where potential customers pay to get early access to product prototypes
  • 126. The Pivot
    • The heart of Customer Development
    • 127. Iteration without crisis
    • 128. Fast, agile and opportunistic
  • How Does This Really Work?Stanford Lean LaunchPad Class
  • 129. How Does This Really Work?Stanford Lean LaunchPad Class
    8 Weeks From an Idea to a Business
  • 130. Pivot ExampleRobotic Weeding
    Talked 75 Customers in 8 Weeks
  • 131. Our initial plan
    Confidential
  • 132. 20 interviews, 6 site visits…We got OUR Boots dirty
    Weeding
    Visited two farms in Salinas Valley to better understand problem
    Interviewed:
    • Bolthouse Farms, Large Agri-Industry in Bakersfield
    • 133. White Farms, Large Peanut farmer in Georgia
    • 134. REFCO Farms, large grower in Salinas Valley
    • 135. Rincon Farms, large grower in Salinas Valley
    • 136. Small Organic Corn/Soy grower in Nebraska
    • 137. Heirloom Organics, small owner/operator, Santa Cruz Mts
    • 138. Two small organic farmers at farmers market
    • 139. Ag Services of Salinas, Fertilizer applicator
    Mowing
    Interviewed:
    • Golf: Stanford Golf course
    • 140. Parks: Stanford Grounds Supervisor, head of maintenance and lead operator (has crew of 6)
    • 141. Toro dealer (large mower manufacturer)
    • 142. User of back-yard mowing system
    • 143. Maintenance Services for City of Los Altos
    • 144. Colony Landscaping (Mowing service for stadiums)
    Confidential
  • 145. Business Plan Autonomous Vehicles for Mowing & Weeding
    Dealers sell, installs and supports customer
    Co. trains dealers, supports dealers
    - Innovation
    - Customer Education
    - Dealer training
    Mowing
    - Owners of public or commercially used green spaces (e.g. golf courses)
    - Landscaping service provider
    Weeding
    - Farmers with manual weeding operations
    We reduce operating cost
    - Labor reduction
    - Better utilization of assets (eg mow or weed at nights)
    - Improved performance (less rework, food safety)
    - Dealers (Mowing and Ag)
    - Vehicle OEMs (John Deere, Toro, Jacobsen, etc)
    - Research labs
    - Mowing Dealers
    - Ag Dealers
    Engineers on Autonomous vehicles, GPS, path-planning
    Dealer discount
    COGS seek a 50-60% Gross Margin
    Heavy R&D investment
    Asset sale
    Our revenue stream derives from selling the equipment
  • 146. Autonomous vehiclesWEEDING
    Dealers sell, installs and supports customer
    Co. trains dealers, supports dealers
    - Innovation
    - Customer Education
    - Dealer training
    - Low density vegetable growers
    - High density vegetable growers
    - Thinning operations
    - Conventional vegetables
    We reduce operating cost
    - Labor reduction (100 to 1)
    - Reduced risk of contamination
    - Mitigate labor availability concerns
    - Ag Dealers
    - Ag Service providers
    - Research labs
    - Ag Dealers
    - Ag Service providers
    Engineers on Machine Vision
    Two problems:
    - Identification
    - Elimination
    Dealer discount
    COGS seek a 50-60% Gross Margin
    Heavy R&D investment
    Asset sale
    Our revenue stream derives from selling the equipment
  • 147. 1 Week – 1 CarrotBot
    Confidential
  • 148. The Business Plan Canvas Updated
    Value-Driven
  • 174. The Business Plan Canvas Updated
    Value-Driven
  • 201. World Ag Expo interviews:the need is real and wide spread
    10+ interviews at show
    Everyone confirmed the need
    Robocrop, UK based, crude competitor sells for $171 K
    Revenue Stream
    Mid to small growers prefer a service
    Large growers prefer to buy, but OK with service until technology is proven
    Charging for labor cost saved is OK, as we provide other benefits (food safety, labor availability)
    Confidential
  • 202. The Business Plan Canvas Updated
    Value-Driven
  • Autonomous weeding - Final
    Direct
    - Provide high quality service at competitive price
    - Innovation
    - Customer Education
    - Dealer training
    - Low density vegetable growers
    - High density vegetable growers
    - Thinning operations
    - Conventional vegetables
    We reduce operating cost
    - Labor reduction (100 to 1)
    - Reduced risk of contamination
    - Mitigate labor availability concerns
    - Ag Service providers
    - Research Institutes (eg UC Davis, Laser Zentrum Hannover)
    - 3-4 key farms
    Direct
    - Alliance with service providers
    - Eventually sell through dealers
    Engineers on Machine Vision
    Two problems:
    - Identification
    - Elimination
    Costs for service provision
    COGS seek a 50-60% Gross Margin
    Heavy R&D investment
    Service provision
    - Charge by the acre with modifier according to weed density
    - Eventually move to asset sale
  • 232. Personal Libraries
  • 233. Insight: No more bookshelves
    eBooks+150% YoY ‘10
    Printed Books
    -20% YoY ‘10
  • 234. Version 1.0: Personal Libraries
  • 235. Original Idea: Personal Digital Libraries
    Import, organize and share thousands of digital papers
  • 236. something-something-something.com
    Original idea
    Invincible Business Model: Version 1.0
    SHORT TERMResearchers
    Lawyers
    Scientists
    LONG TERMAvid book readers
    Professionals
    FB/TW posts from users you know
    Company blog, FB, TW, support forums
    Import, organize and share thousands of papers
    Targeted marketing
    Product development
    Constant iteration & testing
    Libraries, Universities, Research Centers
    Bloggers and media targeting customer segment
    Academic Database providers
    Affiliate program
    SEO/SEM/SM
    IE/FF/Chrome App Stores
    Developers
    Marketers
    Affiliate program fees
    Licensing
    Subscription fees
    Ad revenue
    AWS Infrastructure
    SEM
    Eng & Marketing OpEx
  • 237. Here’s What We Did
    Version 1.0: Personal Libraries
  • 238. Got out of the building
  • 239. Got out of the building
    • 100+ Interviews
    Professors, Litigators, IP lawyers, Post-docs, PhD researchers, Engineering Students, Law Students…
  • 240. Got out of the building
    • 100+ Interviews
    • 241. Extensive Surveys
  • Got out of the building
  • Got out of the building
  • Got out of the building
  • Got out of the building
  • Got out of the building
  • Got out of the building
  • Got out of the building
  • Here’s What We Found
    Version 1.0: Personal Libraries
  • 277. Here's what we found: Version 1.0
    A great business if we had more users…
    GOOD
    • Subscriptions Rock
  • Here's what we found: Version 1.0
    Shorter pages raise conversions 80%
    GOOD
    • Subscriptions Rock
    • 278. Pipelines Optimize
  • Here's what we found: Version 1.0
    Sites will feature your service
    GOOD
    • Subscriptions Rock
    • 279. Pipelines Optimize
    • 280. The Web Listens
  • Here's what we found: Version 1.0
    GOOD
    • Subscriptions Rock
    • 281. Pipelines Optimize
    • 282. The Web Listens
    BAD
    • Academics = Cheap
    Teaching team saw pattern in our data
  • 283. Run away from this customer as fast as possible.
  • 284. Run away from this customer as fast as possible.
    They don’t want to spend money and will incur infinite support and infinite cost.
  • 285. Here's what we found: Version 1.0
    Working for peanuts, and hitting wild product success leads to economic failure
    GOOD
    • Subscriptions Rock
    • 286. Pipelines Optimize
    • 287. The Web Listens
    BAD
    • Academics = Cheap
    • 288. Negative Margins
  • Here's what we found: Version 1.0
    GOOD
    • Subscriptions Rock
    • 289. Pipelines Optimize
    • 290. The Web Listens
    BAD
    No adjacent pivots worked for the team
  • 293. Version 2.0: Trusted Advice
  • 294. something-something-something.com
    Original idea
    Invincible Business Model: Version 2.0
    Upwardly mobile young professionals making $2-10K of discretionary online purchases a year (excluding travel)
    FB/TW posts from users you know
    Company blog, FB, TW accounts
    Discover online goods recommended by friends at the lowest possible price from trusted vendors
    Developing trusted advice and advisors
    Web marketing
    Affiliate partnerships
    Constant iteration & testing
    Bloggers and Media targeting customer segment
    Retail marketing partners
    IE/FF/Chrome teams
    Affiliate Program Providers
    Affiliate program
    SEO/SEM/SM
    IE/FF/Chrome App Stores
    Developers
    Marketers
    Content Library
    Install base
    Readership base
    Affiliate program fees
    Licensing
    Subscription fees
    Ad revenue
    AWS Infrastructure
    SEM
    Eng & Marketing OpEx
  • 295. New Hypotheses
  • 296. Here’s What We Did
    Version 2.0: Trusted Advice
  • 297. Got out of the building, again
    • 40+ Interviews
  • Got out of the building, again
    • 40+ Interviews
    • 298. Extensive Surveys
  • Got out of the building, again
    • 40+ Interviews
    • 299. Extensive Surveys
    • 300. Landing Page Tests
    Landing pages tested on affluent, career aged professionals, approximately 70/30 male/female, N=800+
  • 301. Got out of the building, again
  • Got out of the building, again
  • Got out of the building, again
  • Got out of the building, again
    Insidely.com
    wantio.com
  • 320. Got out of the building, again
  • Customer Segment: Professional-class consumers shopping frequently online
    Pat the Professional
    Upwardly mobile professional (some Grad Students)
    Salary: $40,000 – 150,000/year
    Finance, Consulting, PR, Marketing
    Follows fashion/technology trends
    Spends $1-15K on discretionary items online
    Purchased online in last 30 days
    Demographics
    • Male/female, aged 18-35
    • 328. Minimum bachelors from expensive school
    Traits:
    • Ideas from blogs & shopping websites
    • 329. Values celebrity trends & friends’ opinions
    • 330. Wants high ticket items at lowest price
    • 331. Event-driven shopper—new release or sale
    Motivation
    • Craves new products
    • 332. Hates tedious work
    • 333. Identifies as influencer among friends
    • 334. Fears being cheated online
    Behavior
    • Spends 5 hour+ monthly hearing about products
    • 335. Shares online and in person about products he loves
    Budget
    • $2-10K+/year in discretionary online purchases
    “The XXX is awesome, I really want one. I know I just bought the YYY, but it’s probably time to upgrade.”
    ~5.9M “Pat the Professionals” in US
    Drawn from top 1/3 of 17.8M frequent online shoppers
    17.8M based on 40.2M Professionals (2008 Census) * 0.762 US Internet Penetration (Nielsen 2010Q1) * 0.58 consumers shopping online in last month (Nielsen 2010Q1)
    Online Recommendation Market Opportunity (conservative strawman #s)
    Assuming 10% share, 5% affiliate fees
    Top Shoppers (~$7B/year spend): ~ $35M/year
    Professional-class frequent shoppers (~$1.8B/year): ~ $9M/year
    Other Professional-class shoppers ($0.7B/year): ~3.5M/year
    Source: US Bureau of Labor Statistics
  • 336. Version 2.0: Trusted Advice
    Top ~6M US Influentials (~$9B/year)
  • 337. something-something-something.com
    Original idea
    Invincible Business Model: Version 2.0
    Upwardly mobile young professionals making $2-10K of discretionary online purchases a year (excluding travel)
    FB/TW posts from users you know
    Company blog, FB, TW accounts
    Discover online goods recommended by friends at the lowest possible price from trusted vendors
    Developing trusted advice and advisors
    Web marketing
    Affiliate partnerships
    Constant iteration & testing
    Bloggers and Media targeting customer segment
    Retail marketing partners
    IE/FF/Chrome teams
    Affiliate Program Providers
    Affiliate program
    SEO/SEM/SM
    IE/FF/Chrome App Stores
    Developers
    Marketers
    Content Library
    Install base
    Readership base
    Affiliate program fees
    Licensing
    Subscription fees
    Ad revenue
    AWS Infrastructure
    SEM
    Eng & Marketing OpEx
  • 338. Here’s What We Found
    Version 2: Trusted Advice
  • 339. Findings on "Trusted Advice"
    GOOD
    • Fast Interest
    Insidely.com
    Trusted advice site for
    Silicon Valley/Stanford MBAs
    Launched 2/15
    425 visitors by 2/28
  • 340. Findings on "Trusted Advice"
    Ranked #6 by Google for “Stanford Admissions Books”
    GOOD
    • Fast Interest
  • Findings on "Trusted Advice"
    GOOD
    • Fast Interest
    • 341. High Conversion
    43% clickthrough
    on Top Admissions Books for Stanford MBAs article
    Compare to 0.5% clickthrough on ads
    ~100x difference
  • 342. Findings on "Trusted Advice"
    Positive results on “Trusted Advice” Shopping Add-in testing
    GOOD
    See videos at http://factnote.com/c/e245
  • 345. Findings on "Trusted Advice"
    Positive results on “Trusted Advice” Shopping Add-in testing
    GOOD
    Super easy to install and use.
    I really did enjoy it! 
    Great idea! I will keep the extension installed because I do think this is practical!
    I could see myself using this regularly
  • 348. Findings on "Trusted Advice"
    Some negative results on “Trusted Advice” Shopping Add-in testing
    GOOD
    BAD
    • Missing Features
    See videos at http://factnote.com/c/e245
  • 351. Findings on "Trusted Advice"
    Some negative results on “Trusted Advice” Shopping Add-in testing
    GOOD
    BAD
    • Missing Features
    I was a little frustrated when it didn’t find the item I was looking for
    I can find more thorough price comparisons elsewhere…
    I usually don’t shop in Chrome, so that’s an inconvenience.
  • 354. Findings on "Trusted Advice"
    MBA Exchange spams us out of Google
    GOOD
    BAD
    • Missing Features
    • 357. SEO Battle
  • Here’s Where We Ended Up
    Version 2.1: Trusted Advice
  • 358. The adventure continuesTrusted Advice 2.0
    Protection against SEO-spammers
    Next Experiments:
    • Trusted Lead Gen
    • 359. Trusted Advice website powered by Shopping Add-in
  • something-something-something.com
    Original idea
    Invincible Business Model: Version 3.0
    PAT THE PROFESSIONALUpwardly mobile young professionals making $2-10K of discretionary online purchases a year (excluding travel)
    FB/TW posts from users you know
    Company blog, FB, TW accounts
    TRUSTED ADVICE Discover online goods recommended by friends at the lowest possible price from trusted vendors
    Foil advertorial spammers polluting the Interweb with toxic pseudo-content
    Developing trusted advice and advisors
    Web marketing
    Affiliate partnerships
    Constant iteration & testing
    Bloggers and Media targeting customer segment
    Retail marketing partners
    IE/FF/Chrome teams
    Affiliate Program Providers
    Affiliate program
    SEO/SEM/SM
    IE/FF/Chrome App Stores
    Developers
    Marketers
    Content Library
    Install base
    Readership base
    Affiliate program fees
    Licensing
    Subscription fees
    Ad revenue
    AWS Infrastructure
    SEM
    Eng & Marketing OpEx
  • 360. What We Learned
    • Potential for disruption abounds
  • What We Learned
    • Potential for disruption abounds
    • 361. Life is short, focus on big markets
  • What We Learned
    • Potential for disruption abounds
    • 362. Life is short, focus on big markets
    • 363. All we need is to be relentless
  • Blog Your Progress
  • 364. How?
    Customer Development
    The Process
    Narrative
    Interviews
    Surveys
    Videos
    Prototypes
    Business Model Canvas
    Scorekeeping
    Real-time Feedback
    Physical Reality Checks
    Skype
    Face-to-face
  • 365. We Made Students Blog Their Progress
    It Changed Everything
  • 366. Interview
  • 367. Photos
    Videos
  • 368. Surveys
  • 369. Interview
    & Photos
  • 370. Competitive Analysis
  • 371. Key Findings
  • 372. A/B Test Results
  • 373. Key Question
  • 374. Strategy
  • 375. Business Model Canvas as the Scorecard
  • 376.
  • 377. Business Canvas Change Progress
    1
  • 378. Business Canvas Change Progress
    2
  • 379. Business Canvas Change Progress
    3
  • 380. Business Canvas Change Progress
    4
  • 381. Business Canvas Change Progress
    5
  • 382. Business Canvas Change Progress
    6
  • 383. Business Canvas Change Progress
    7
  • 384. SidebarMarket Type
  • 385. Product Introduction Conundrum
    Product introductions aren’t predictable
    Why?
    Is it the people that are different?
    Is it the product that are different?
    Are there different “types” of startups?
  • 386. Three Markets Types
    Market Type changes everything
    Sales, marketing and business development differ radically by market type
  • 387. Market Type Changes Everything
    Customers
    Market
    Market Size
    Cost of Entry
    Launch Type
    Competitive Barriers
    Positioning
    Sales
    Sales Model
    Margins
    Sales Cycle
    Chasm Width
    Finance
    • Ongoing Capital
    • 389. Time to Profitability
  • Three Types of Markets
    Existing Market
    Faster/Better = High end
    Resegmented Market
    Niche = marketing/branding driven
    Cheaper = low end
    New Market
    Cheaper/good enough = creates a new class of product/customer
    Innovative/never existed before
  • 390. Carpe Diem
    www.steveblank.com
  • 391. REVENUE STREAMS
    what are customers really willing to pay for? how?
    are you generating transactional or recurring revenues?
  • 392. Market Size
  • 393. Market/Opportunity Analysis
    How Big is It?: Market/Opportunity Analysis
    Identify a Customer and Market Need
    Size the Market
    Competitors
    Growth Potential
  • 394. How Big is the Pie?Total Available Market
    Total Available Market
    • How manypeople would want/needthe product?
    • 395. How large is the market be (in $’s) if they all bought?
    • 396. How many units would that be?
    How Do I Find Out?
    • Industry Analysts – Gartner, Forrester
    • 397. Wall Street Analysts – Goldman, Morgan
  • How Big is My Slice?Served Available Market
    • How many people need/can use product?
    • 398. How many people have the money to buy the product
    • 399. How large would the market be (in $’s) if they all bought?
    • 400. How many units would that be?
    How Do I Find Out?
    • Talk to potential customers
    Served Available Market
    TotalAvailableMarket
  • 401. How Much Can I Eat?Target Market
    • Who am I going to sell to in year 1, 2 & 3?
    • 402. How many customers is that?
    • 403. How largeis the market be (in $’s) if they all bought?
    • 404. How many units would that be?
    How Do I Find Out?
    • Talk to potential customers
    • 405. Identify and talk to channel partners
    • 406. Identify and talk to competitors
    TotalAvailableMarket
    ServedAvailableMarket
    Target Market
  • 407. SegmentationIdentification of groups most likely to buy
    TotalAvailableMarket
    ServedAvailableMarket
    Target Market
    182
  • 413. Market Size: Summary
    Market Size Questions:
    How big can this market be?
    How much of it can we get?
    Market growth rate
    Market structure (Mature or in flux?)
    Most important: Talk to Customers and Sales Channel
    Next important: Market size by competitive approximation
    Wall Street analyst reports are great
    And : Market research firms Like Forester, Gartner
  • 414. CUSTOMER SEGMENTS
    which customers and users are you serving? which jobs do they really want to get done?
    images by JAM
  • 415. Customers
  • 416. Corporate? Consumer?
    Business to Business (B to B)
    Use or buy inside a company
    Business to Consumer (B to C)
    Use or buy for themselves
    Business to Business to Consumer (B to B to C)
    Sell a business to get to a consumer
    Other Multi-sided Markets with multiple customers
  • 417. Corporate Customers
    Business to Business (B to B)
  • 418. What do they want you to do?
    Increase revenue?
    Decrease costs?
    Get them new customers?
    Keep up with or pass competitors?
    How important is it?
  • 419. Market Type & Ignoring Customers
    Existing Market?
    Resegmenting an Existing Market?
    niche or low cost
    New Market?
    When do I ignore customer feedback?
  • 420. Who’s the Customer in a Company?
    User?
    Influencer?
    Recommender?
    Decision Maker?
    Economic Buyer?
    Saboteur?
    Archetypes for each?
  • 421. How Do They Interact to Buy?
    Organization Chart
    Influence Map
    Sales Road Map
  • 422. Pass/Fail Signals & Experiments
    How do you test interest?
    Where do you test interest?
    What kind of experiments can you run?
    How many do you test?
  • 423. How Do They Hear About You?
    Demand Creation
    Network effect
    Sales
  • 424. Consumer Customers
    Business to Consumer (B to C)
  • 425. What do they want you to do?
    Does it entertain them?
    Does it connect them with others?
    Does it make their lives easier?
    Does it satisfy a basic need?
    How important is it?
    Can they afford it?
  • 426. Market Type & Ignoring Customers
    Existing Market?
    Resegmenting an Existing Market?
    niche or low cost
    New Market?
    When do I ignore customer feedback?
  • 427. Consumer Customers
    Do they buy it by themselves?
    Do they need approval of others?
    Do they use it alone or with others?
  • 428. How Do They Decide to Buy?
    Demand Creation
    Viral?
    SEO/SEM
    Network effect?
    AARRR (Dave McClure)
  • 429. Pass/Fail Signals & Experiments
    How do you test interest?
    Where do you test interest?
    What kind of experiments can you run?
    How many do you test?
  • 430. The Consumer Sales Channel
    A product that’s bits can use the web
    But getting a physical consumer product into retail distribution is hard
    Is Wal-Mart a customer?
    More next week
  • 431. Multi-Sided Markets
    Business to Business to Consumer
    (B to B to C)
  • 432. Who’s The Customer?
    Consumer End Users, Corporate Customers Pay
    Multiple Consumers
    Etc.
  • 433. Multiple Customer Segments
    Each has its own Value Proposition
    Each has its own Revenue Stream
    One segment cannot exist without the other
    Which one do you start with?
  • 434. Customer Relationships
    Get – Keep - Grow
  • 435. CUSTOMER RELATIONSHIPS
    what relationships are you establishing with each segment? personal? automated? acquisitive? retentive?
  • 436. “Get Customers” Funnel
    $
    Acquire
    Activate
    Getting Customers – Virtual Channel
  • 437. Earned and
    Paid Media
    PR
    “Get Customers” Funnel
    Viral Mktg
    SEO
    $
    SEM/PPC
    Acquire
    Activate
    Blogs/Website
    Affiliate Mktg
    Advertising
    Tradeshows
    Getting Customers – Virtual Channel
  • 438. “Get Customers” Funnel
    Interest
    $
    Awareness
    Consideration
    Purchase
    Getting Customers – Physical Channel
  • 439. Getting Customers – Physical Channel
    Earned and
    Paid Media
    “Get Customers” Funnel
    PR
    Product Reviews
    $
    Awareness
    Tradeshows
    Interest
    Purchase
    Consideration
    Blogs/Website
    Advertising
  • 440. Earned and
    Paid Media
    Loyalty Programs
    Get Customers
    product updates
    Awareness
    Keep Customers
    Consideration
    Purchase
    Interest
    Customer check-in calls
    Customer satisfaction survey
    Keeping Customers
  • 441. Earned and
    Paid Media
    Grow Customers
    Get Customers
    product updates
    Loyalty Programs
    $
    Awareness
    Up-Sell
    Consideration
    $
    UnBundling
    Keep Customers
    Cross-sell
    Purchase
    Interest
    Referrals
    $
    Customer check-in calls
    customer satisfaction survey
    Growing Customers