Chris Burry presentation on StartSmart event Models4Business 16.02.2012. Tallinn, Estonia
The Voice of the Customer: Lessons from the FieldChris Burry, SVP StrategyUS Market Access Center
The Voice of the Customer: Where does it fit?Leveraging the Business Model Canvas• Value Proposition What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment? Which customer needs are we satisfying?• Customer Segments / Channels It seems so obvious… but it is HARD to do right
A quick introduction: Who is Chris Burry?Serial Entrepreneur 1st Company founded when I was 13 years old. Sold when I was 18 for $1,000 USD (which seemed like a lot…) 2nd Company founded in 1982 – Application development for the Apple IIe and IBM PC. Sold in 1984 3rd Company co-founded in 1991 – Early CRM company. Sold in 1993 to EDS 4th Company co-founded in 1999 – Today has 10,000+ people; $1B+ in annual revenue 5th Company co-founded in 2010 – Stay tuned….
A quick introduction: Who is Chris Burry?A Consultant 10 years in national politics working for Al Gore and others (political campaigns are the ultimate startup) 5 years at EDS 4 years at Andersen Consulting (now Accenture) 9 years at Avanade (1st on the ground in multiple countries) 2 years with the US Market Access CenterGlobal Citizen Lived in the US, UK, France and Finland Projects in more than 20 countries
A quick introduction: What is the USMAC?The US Market Access Center Founded in 1995 by San Jose State University Non-profit that helps non-US companies expand globally with a focus on Silicon Valley 800+ companies helped in the last 17 years 60+ current resident entrepreneurs 40+ non-resident clients 90+ mentors in ICT/Web/Cleantech Active programs in Asia, Europe and Latin America
The Voice of the Customer: Why?A long time ago in a galaxy far, far way….• When I was “the new kid” with Andersen Consulting, I was assigned to a customer with Vic Riden, one of the most successful partners in the firm. He became my coach, my teacher, my mentor, my sensei.• I learned an amazing amount of things from Vic. Lesson # 1 – If you don’t already have a mentor, get one right now
A side note on Mentors: They really matterIn 2011, researchers at Stanford andUC Berkeley released the StartupGenome Report• Data from 650+ startups was analyzed, including 160 funded companies• Fundraising across the four stages of development in their model was examined• The role of mentors was one factor examined and the message is clear… No mentors = no money raised when needed to scale
The Voice of the Customer: Why?Learning from the master• I worked with Vic as he convinced a major bank that they needed to undertake a $100m project (which we won). At a dinner, I asked Vic to share with me the secret of his success.• Vic’s response surprised me with its total simplicity. Lesson # 2 – Just remember, they have lots of money and we want it… Entrepreneurs need to be about making money!
The Voice of the Customer: Why?Vic went on to add… Lesson #3: … but just because we want it doesn’t mean they have to give it to us. Lesson # 4: Our job is to make them want to give it to us… Lesson #5: … and be really happy they did… Lesson # 6: … because we let them define value, not us.
The Voice of the Customer: Reality Check• Entrepreneurs have a unique ability to create their own reality• I like to call this a “Reality Distortion Field” (RDF)• There is a real risk that your personal RDF makes you believe that your customers value what you are selling more than they do
The Voice of the Customer: Reality Check• We have all seen the Reality Distortion Field in Action We are going to be bigger than Google in 2 years The size of the market is HUGE… we will only capture .05% of the market and make $1B And my all time favorite…. We are losing $.02 on every transaction but we will make it up on volume Lesson #7: Your Business Model, won’t work if it is not grounded in reality
The Voice of the Customer: Beating the RDF• Russ Fraden, CEO of Social Shield ($2m seed round and $10m ‘A’ round) says “You don’t have a business unless” There are real people With real money Who have a real problem (need, or want) And they are willing to pay you to make their problem go away Lesson # 8: The Customer, not you decides if you have a business
The Voice of the Customer: Beating the RDF• How do YOU know? For your product or service? Are there are real people? With real money? Who have a real problem (need, or want)? Are they are willing to pay you to make their problem go away? Lesson # 9: If customers won’t pay to make their problem go away, you don’t have a business
The Voice of the Customer: Beating the RDF• But wait! What about advertising supported applications, websites and the like? You CUSTOMER is not the end-user, your customers are buying the advertising. You are finding ways to get people to watch the advertising If you have a “freemium” model, then you have two customers, the advertisers and the end-users Lesson #10: Be clear on who is your customer and Lesson #11: how they define value (not you)
The Voice of the Customer: Going Lean• Applying the principles of the Lean Startup, you can bring the voice of the customer into the process• The “Measure” and “Learn” phases of the cycle create natural points for inclusion of input from the customer But be careful you don’t bring in your own RDF
The Voice of the Customer: A Great Example• Mobile Gaming Company Business Model Attract very larger number of users Relatively low Average Revenue per User and lower lifetime value of user Requires them to capture and hold the user’s attention to keep them in the app• What was needed Needed to find a way to limit investment in games that won’t hold attention Focus resources on the ones that will
The Voice of the Customer: A Great Example• Finding a new way of thinking about mobile gaming Pattern analysis shows that games go viral in the first 14 days, or they don’t go viral at all “Fast to Die” – if a game doesn’t show signs that it is going viral during the beta… pull the plug. Don’t waste any more time on the product. The customer is telling you that they don’t like it• Does it work? $5m+ raised 50m+ downloads since in less than 3 years
The Voice of the Customer: Our Results• In 2011 we piloted a new program that creates opportunity for direct feedback from customers and partners in Silicon Valley 54 startups from Singapore, Korea, Spain & Russia participated went through education and qualification Total of 16 moved on go through a structured process of aligning to customer defined value The 13 startups are doing business with, or have terms sheets with:
The Voice of the Customer: Our Results• Questions?• Comments?• Care to share your own experiences? (Good and bad)• Happy to talk one-on-one with anyone
San Francisco Palo AltoLet’s Connect San Jose Our Headquarters US Market Access Center facebook.com/usmarketaccess 10 South Third Street, 3rd Floor San Jose, CA 95113 @usmarketaccess Contact for the Nordic Region Adiba Cremonini linkedin.com Vice President International Relations Groups – US Market Access Center Phone +1 (917) 767 0077 www.usmarketaccess.com Email firstname.lastname@example.org