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Bob dorf about Customer Development


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  • 1. Business Models and Customer Development: How to FAIL Less(hint: it’s not just a method for startups!) Bob Dorf allegedly retired serial entrepreneur, educator Partner, K&S Ranch Inc.
  • 2. ME: 7 startups, >20 investments, 3 vests… 2
  • 3. 7 IPOs, 6 disasters, Columbia B-School Prof. 3
  • 4. 608 pages….500+ startup misteaks 4
  • 5. Most startups fail to scale. 5
  • 6. More startups fail froma lack of customers than from afailure of product development 6
  • 7. …and passionate customers are damn hard to find! 7
  • 8. Why Most Startups Fail…Assume Customer Problem: known Concept/ Product Alpha/Beta Launch/Seed Round Dev. Test 1st Ship Assume Product Features: known 8
  • 9. Startup Enemy #1: 9
  • 10. Wait a minute Bob… We are hardly a Startup! 10
  • 11. I don’t care!You should always be Innovating!Constantly seek customer feedbackAlways challenge your business modelUse the same approach, just not everyday 11
  • 12. No Business Plansurvives first contactwith customers! …ask Webvan! 12
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  • 20. When you’re done…9 best GUESSES …ask Webvan! 20
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  • 24. TRANSLATE: Not a Startup??…a 4-5 day customer vacation!! 24
  • 25. Where Discovery Begins: Minimum Viable Product• Google without ads (two years+)• Zappos without any shoes• without diapers…Fewest possible features to make the point!…When did a powerpoint last get YOU excited?…YOU can use this process to test new ideas 25
  • 26. Customer Discovery Customer Customer Customer Company Discovery Validation Creation Building• Stop selling, start listening• Test your hypotheses• Continuous Discovery• …execute while running your current business• …isolate the “startup” within your business 26
  • 27. The Pivot Search Customer Customer Discovery Validation Pivot• The heart of Customer Development• Iteration without crisis• Fast, agile and opportunistic 27
  • 28. Just a few(of many) Historic Pivots• Steve Blank: “Page 6”• Perimeter: “there are 9000 of us”• Groupon: the $12billion pivot• Ning• …and thousands more! 28
  • 29. Pivot Cycle Time Matters Search Execution Customer Customer Customer Company Discovery Validation Creation Building Pivot• MVP speeds up cycle time•Speed of cycle minimizes cash needs• Customer feedback drives the product! 29
  • 30. How do you know when Discovery is “done?”Key Partners Key Activities Value Proposition Customer Relationships Customer SegmentsWho are our key partners/ suppliers Which key activities does the biz model What type of relationship does each For whom are we creating value require What value do we deliver to the customer segment require of usComplete regional overview  Populate life cycle data for performance  key distinctive product features &  product positioning/elevator pitch for each  identify key market segments benefits for the target customer segment (geography/application) and customer guarantees  Prospect roadmap: how to get face-to-face with segments (e.g. operator versus owner) segment right person at prospects in each segment  how many customers in each segment  Educate market on metric: $/kWh-day  total cost of ownership for segment  key competitors in each segment and their and estimated potential volume for market share each customer delivered over life of asset versus alternatives  key competitors characteristics & dynamics  why will segment buy Durathon versus  how do customers make money … key  What outbound marketing/ advertising/ customer pain/gain points in each  Establish strong partnerships with alternatives (i.e. value proposition) promotion activities are needed segment  support tools required by segment (white channel partners  minimum feature set (i.e. our launch papers, TCO calc., tradeshow)  how are buying decisions made in 0 configuration) and ultimate feature set  pipeline of leads each segment - id process, hurdles,  opportunities to claim IP or trademark / decision makers  what does an Earlyvangelist look like in Key Resources is there freedom to practice 25 each segment Which key resources does the biz model  what regulatory/ certification/  who influences purchases in each require transportation/ customs requirements Channels segment (trade groups, key resellers, trend watchers)  Integrated power system engineering – should be met or could be differentiator Through which channel does each segment want to be reached compatibility for retrofit and optimized system solutions  which segments can only or best be reached through a channel partner  Financing options for Power services  which channel partners are important to optimize operators sales in each segment  what are channel partners requirements and cost to become a proactive sales channel  initial channel partner response to value proposition & customer segments 12 25 4 50Cost Structure Revenue StreamsWhat are our cost drivers How much is each segment willing to pay and how would they like to pay us this amount Launch reliability  What are price /performance characteristics of competing technology  What is the 2013 price target for 1 MM cells  What is the 2015 price target for 10 MM cells  what is optimum sales method for each segment (asset sale, lease, pay for performance, etc.) 3 X = number of in depth customer data points / data sources used to validate hypothesis x x red = low hypothesis confidence yellow = medium hypothesis confidence 30 x green = high hypothesis confidence
  • 31. Customer Validation Search Customer Customer Customer Company Discovery Validation Creation Building Pivot Execution• Repeatable and scalable business model?• Passionate earlyvangelists?• Pivot back to Discovery if no customers 31
  • 32. Why Startups Aren’t Run By Accountants Scalable Large Transition Startup Company Alfred P. Sloan 32
  • 33. Founder of General MotorsScalable Large TransitionStartup Company Billy Durant 33
  • 34. FIRED by General Motors BoardScalable Large TransitionStartup Company Billy Durant 34
  • 35. Durant Versus Sloan • Dies, rich, honored and famous 35
  • 36. Durant Versus Sloan• Dies managing a bowling alley • Dies, rich, honored and famous 36
  • 37. Durant Versus Sloan Accountant• Dies managing a bowling alley • Dies, rich, honored and famous 37
  • 38. Innovators look out! WE are hereScalable Large TransitionStartup Company 38
  • 39. “Get Out of the Building!!!” ON SALE HERE…also in ebook 39