Startup Customer Development (Seedcamp, London)

Startup Customer Development
Sean Ellis
Seedcamp 2009 (London)
Sept 22, 2009

#1 Startup Risk = Customers
Huge challenge to acquire & convert
Little useful guidance available
Hard to know where to start (hundreds of things you “could do”)
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startup-marketing.com

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

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

Customer Development Framework
5

Growth Starts with the 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
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Key Product/Market Fit Question
“How would you feel if you could no longer use Product?”
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Transition to Growth
12

Transition to Growth
Track/report right metrics
Positioning (based on perceived value)
Viable economics (business model)
13

Optimize Before Growing
Landing pages
Funnel (acquisition through transaction)
12%
13%
8%
…
14

Scalable Growth Now Possible
15

Test from Free to Paid Channels
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Driving/Managing Growth
Budget to maximize positive ROI spend
17

Improve Lifetime Value
Customer retention is critical
Cross/up sell additional products
This expands profitable channels
18

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