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Customer Discovery: Validating New Product Opportunities

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Product teams and startups can use customer discovery to validate new product opportunities. This presentation was conducted by Jim Semick from www.productdiscovery.com at University of California Santa Barbara at the Bren School in the New Venture Opportunity Analysis course (ESM 256B, Winter 2013).
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Customer Discovery: Validating New Product Opportunities

  1. 1. Customer Discovery:Validating New Product Opportunities Jim Semick UCSB ESM 256B New Venture Opportunity Analysis, Winter 2013
  2. 2. Typical way to identify and launch new products
  3. 3. Success is the exception, not the rule The average company succeeds only 25% of the time in launching new initiatives. Harvard Business Review – Chris Zook and James Allen
  4. 4. Customer Discovery:EVIDENCE from potential customers• Is the market problem worth solving?• What’s the real value of your product?• Is your business model viable?• Can you actually sell it?
  5. 5. How Customer Discovery could have saved $10M and months of effort
  6. 6. Great idea.Free Beta.Few buyers.
  7. 7. Major Pivot
  8. 8. GoToMyPC This time we’ll useCustomer Discovery
  9. 9. Lessons LearnedTest critical business model assumptionsFocus on customer problem not product Understand actual buyer behavior Nail business before scaling
  10. 10. Case Study
  11. 11. What do we Build?Which Vertical MarketOpportunity is Best?
  12. 12. Use Customer Development to know:• What are our false assumptions?• Can we solve problems in an innovative way?• What is the real value of our product?• Do we have buyers?• How much will they pay?• How do we reach them?
  13. 13. Fast growingSaaS businessIndustry leader Lots ofcustomer love
  14. 14. Customer Discovery Best Practices
  15. 15. Zen of Customer Discovery My assumptions may be wrong. “There are no facts inside the building.”My opinion, though interesting, is irrelevant.
  16. 16. Write Your Product or Business Model Hypothesis
  17. 17. Get Out
  18. 18. Test assumptions that matter. Fail early.
  19. 19. • Go to where your target is (online or in person) Getting • Think how to reach LOTS of yourInterviews market at the same time • Always ask for referrals • Find the key industry influencers
  20. 20. Focus on finding problems in your first interviews. Don’t start with the product.
  21. 21. Seek deep customer understanding Find real pain and motivation. Ask open-ended questions. Shut up. Ask why. Use the Five Whys.
  22. 22. Do you Have the REALMinimum Viable Product?
  23. 23. Market Segment & Acquisition• Find a narrow market segment• Discover how you will reach them.• Will it cost less than their lifetime value?• How much will they pay?
  24. 24. Ideal Later-stage Interview Format1. Tell them their problems.2. Explain the solution.3. Explain what it will NOT do for them.4. Ask if they will buy.
  25. 25. • Aim for 20+ interviewsInterview • Plan 30+ minutes if you can • Talk less than 50% of the time Tips • Take notes • Recap key learning with team
  26. 26. The first interview is hard. The second is easier.
  27. 27. People Want to Help (especially if they are in pain)
  28. 28. Thank You!www.productdiscovery.comjim@productdiscovery.com

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