Berkeley-Columbia Executive MBA Program (Steve Blank)

Customer Development
Sean Ellis
Berkeley-Columbia Executive MBA Program (Steve Blank)
October 16, 2009

Startup Risk & Upside = Customers
Traction is tough
Acquiring at scale even tougher
Where do you start?
Hundreds of things you “could do”
Most early marketing effort wasted
2
startup-marketing.com

Road to IPOs: What Really Mattered?
Apply engineering to marketing
Focus on right metrics & optimize
Understand users and use cases
Early execution is most critical
3

My Key Focus Now Critical Zone
Critical
Zone
IPOs
Growth Stage
Then light advising in growth stage
4

Customer Development Sequence
5

Growth Starts with Right Product
6

What is Product/Market Fit?
People want/need your product
And they represent large enough market
Differentiated from alternatives
Users will pay for your product
Or you are advertising supported
7

“Life of any startup can be divided into two parts -before P/M fit and after P/M fit”
Marc Andreessen
Founder Netscape, Opsware, Ning
8

PayPal’s Quest for P/M Fit
$200K seed funding - cryptography
“No one really needed it” Max Levchin
$4.5M VC funding - PDA payments
People preferred web demo (100X users)
$1.5B sale to eBay – web payments
9

Survey Your Product/Market Fit
Free template at Survey.io
10

Key Product/Market Fit Question
“How would you feel if you could no longer use Product?”
11

Transition to Growth
12

Transition to Growth
Track/report right metrics
Positioning (based on perceived value)
Start recruiting head of marketing
Viable economics (business model)
Scalable growth strategy
13

Hiring/Managing VP Marketing
Hire marketer with founder DNA
CEO & VP Marketing form partnership
CEO shouldn’t abdicate startup’s fate
Goal = Scalable, profitable channels
Insist on perfect execution
14

Optimize Before Growing
Landing pages
Funnel (acquisition through transaction)
12%
13%
8%
…
15

Scalable Growth Now Possible
17

Test from Free to Paid Channels
18

Driving/Managing Growth
Budget to maximize positive ROI spend
19

Improve Lifetime Value
Customer retention is critical
Cross/up sell additional products
This expands profitable channels
20

Complete Startup Pyramid
Growth
Optimize
Economics
Positioning
Product/Market Fit
Twitter: @seanellis
Blog: startup-marketing.com