Translating Customer Needs Into MVPs

Translating Customer Needs Into MVPs
@NYUEntrepreneur Translating Customer Needs into MVPs Frank Rimalovski Executive Director, NYU Entrepreneurial Institute Managing Director, NYU Innovation Venture Fund Instructor, NSF Innovation Corps (I-Corps) November 14, 2015
@NYUEntrepreneur What makes for a successful startup?
@NYUEntrepreneur Commercialization Myth Basic & Applied Research Scientific Discovery/ Invention/ IP Creation Venture Formation & Growth
@NYUEntrepreneurThe “valley of death” Basic & Applied Research Scientific Discovery/ Invention/ IP Creation Customer Discovery & Prototype Dev Business Model & Team Formation Venture Formation & Growth • Customer/market discovery • Engineering/prototypes • Mentors & advisors • Collaborative spaces • Business leadership • Legal counsel • Capital Commercialization Reality
@NYUEntrepreneur (At least) Three Parts to Building a Successful Startups 1. Advancing the product/technology 2. Beginning to build a team 3. Finding a repeatable business model u Most focus on #1 and/or #2 u Successful efforts require all three 5
@NYUEntrepreneur It’s Bigger Than the Revenue Model u Testing hypotheses makes substantive changes to biz model before you do science/design o Define clinical utility o Who core & tertiary users/buyers/payers are o Sales & marketing process required for initial revenues and downstream commercialization o Data required for future partnerships/collaborations o Intellectual property risks o Regulatory pathways o Reimbursement strategies u Affects your biological & clinical hypotheses 6
@NYUEntrepreneur Need to do this before finishing the science or building/designing the product
@NYUEntrepreneur Evidence-based Entrepreneurship (aka the Lean Startup) 8
@NYUEntrepreneur The Business Model Canvas Revenue Streams Channels Customer SegmentsValue PropositionsKey ActivitiesKey Partners Key Resources Cost Structure Customer Relationships Designed by: Date: Version:Designed for: This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit: http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? is your business more Cost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing) Value Driven (focused on value creation, premium value proposition) sample characteristics Fixed Costs (salaries, rents, utilities) Variable costs Economies of scale Economies of scope Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with customer routines? channel phases 1. Awareness How do we raise awareness about our company’s products and services? 2. Evaluation How do we help customers evaluate our organization’s Value Proposition? 3. Purchase How do we allow customers to purchase specific products and services? 4. Delivery How do we deliver a Value Proposition to customers? 5. After sales How do we provide post-purchase customer support? For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? For whom are we creating value? Who are our most important customers? Mass Market Niche Market Segmented Diversified Multi-sided Platform What type of relationship does each of our Customer Segments expect us to establish and maintain with them? Which ones have we established? How are they integrated with the rest of our business model? How costly are they? examples Personal assistance Dedicated Personal Assistance Self-Service Automated Services Communities Co-creation What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? categories Production Problem Solving Platform/Network What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? types of resources Physical Intellectual (brand patents, copyrights, data) Human Financial Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? motivations for partnerships Optimization and economy Reduction of risk and uncertainty Acquisition of particular resources and activities 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? characteristics Newness Performance Customization “Getting the Job Done” Design Brand/Status Price Cost Reduction Risk Reduction Accessibility Convenience/Usability types Asset sale Usage fee Subscription Fees Lending/Renting/Leasing Licensing Brokerage fees Advertising fixed pricing List Price Product feature dependent Customer segment dependent Volume dependent dynamic pricing Negotiation (bargaining) Yield Management Real-time-Market The Business Model Canvas Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis
@NYUEntrepreneur More than half of your assumptions are wrong! 10
@NYUEntrepreneur Customer Development Test assumptions about customer needs/problem & develop MVPs Seek validation that people are interested in your product/ solution Begins to build demand & improve efficiency of customer acquisition Drive growth aggressively & execute business model
@NYUEntrepreneur Customer Discovery u Apply the scientific method to business model development Modify hypothesis Observe phenomena Formulate hypothesis Test hypothesis via rigorous experiments Establish theory based on repeated validation of results PIVOT! You are here
@NYUEntrepreneur First test the problem, then test the solution Customer Development 13
@NYUEntrepreneur Value Proposition What Problem Are You Solving?
@NYUEntrepreneur Value Proposition describes the benefits customers can expect from a bundle of products and services
@NYUEntrepreneur Key Questions for Value Prop u Problem Statement: What is the problem? u Technology / Market Insight: Why is the problem so hard to solve? u Product: How do you solve it today? u Competition: Who is delivering that solution? u Clinical utility: What level of improvement in efficacy/safety/cost/etc. is needed? u Market Size: How big is this problem?
@NYUEntrepreneur Customer Segment Who Cares?
@NYUEntrepreneur Customer Profile u Who are they and why would they buy?
@NYUEntrepreneur Define Customer Archetype u Who are they? o Position / title / age / sex / role u How/where do they buy? o Discretionary budget (name of budget and amount) u What matters to them? o What motivates them? u Who influences them? o What do they read/who do they listen to?
@NYUEntrepreneur Problem-Solution Fit Fit
@NYUEntrepreneur So where does my technology come in?
@NYUEntrepreneur It’s not about your technology! 22 bit.ly/1MFD3YJ
@NYUEntrepreneur So where does my technology come in? Customers don’t care about technology They are trying to solve a problem Customer discovery is about identifying that problem & exploring how you could solve it
@NYUEntrepreneur put yourself in the customers’ shoes
@NYUEntrepreneur But how? 25
@NYUEntrepreneur Customer Interviews (aka Talking to Humans) Customer Development 26
@NYUEntrepreneur “You can’t just ask customers what they want and then try to give that to them.”
@NYUEntrepreneur “New ideas come from watching something, talk(ing) to people, experimenting, asking questions and getting out of the office!”
@NYUEntrepreneur Talk to Humans! u GOTB: The #1 lesson of this talk u In person is best u You must gain insight into your customer & market u You are doing pattern recognition… Must have sufficient data points to see 2B. Story
@NYUEntrepreneur Meet People You Don’t Know u People you know will be nice and tell you what you want to hear u Those interviews are possibly harmful u Let other teams use people you know u People you don’t know have no relationship to protect…Only they will tell you the truth
@NYUEntrepreneur
@NYUEntrepreneur Secret: This is why we brought all the mentors in! 32
@NYUEntrepreneur What do you want to learn? 33 The Business Model Canvas Revenue Streams Channels Customer SegmentsValue PropositionsKey ActivitiesKey Partners Key Resources Cost Structure Customer Relationships Designed by: Date: Version:Designed for: designed by: Strategyzer AG The makers of Business Model Generation and Strategyzer This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit: http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. strategyzer.com What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? is your business more Cost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing) Value Driven (focused on value creation, premium value proposition) sample characteristics Fixed Costs (salaries, rents, utilities) Variable costs Economies of scale Economies of scope Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with customer routines? channel phases 1. Awareness How do we raise awareness about our company’s products and services? 2. Evaluation How do we help customers evaluate our organization’s Value Proposition? 3. Purchase How do we allow customers to purchase specific products and services? 4. Delivery How do we deliver a Value Proposition to customers? 5. After sales How do we provide post-purchase customer support? For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? For whom are we creating value? Who are our most important customers? Mass Market Niche Market Segmented Diversified Multi-sided Platform What type of relationship does each of our Customer Segments expect us to establish and maintain with them? Which ones have we established? How are they integrated with the rest of our business model? How costly are they? examples Personal assistance Dedicated Personal Assistance Self-Service Automated Services Communities Co-creation What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? categories Production Problem Solving Platform/Network What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? types of resources Physical Intellectual (brand patents, copyrights, data) Human Financial Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? motivations for partnerships Optimization and economy Reduction of risk and uncertainty Acquisition of particular resources and activities 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? characteristics Newness Performance Customization “Getting the Job Done” Design Brand/Status Price Cost Reduction Risk Reduction Accessibility Convenience/Usability types Asset sale Usage fee Subscription Fees Lending/Renting/Leasing Licensing Brokerage fees Advertising fixed pricing List Price Product feature dependent Customer segment dependent Volume dependent dynamic pricing Negotiation (bargaining) Yield Management Real-time-Market
@NYUEntrepreneur Don’t Assume You Understand the Problem!
@NYUEntrepreneur What do you want to learn? u Do not sell! No demos! No presos! u You are there to learn! u Get stories, not speculation u Ask open-ended questions o Learn about their problems and how they solve them today u Ask why? Then why? They why again! u Create a guide (not a script) 35
@NYUEntrepreneur Ensuring an Effective Interview u Beware of confirmation bias u Get subjects to tell a story u Look for solution hacks u Understand their priorities u Follow your nose & drill down u Listen and STFU! u Have someone take notes 36
@NYUEntrepreneur Gaining Insight u Facts are interesting…Insights are your goal u Don’t just scratch the surface, dive deep u Find the hidden motivations u Ask why? And why? Then why again? u Depth of understanding always leads to insight
@NYUEntrepreneur38 “It's grueling listening to customer feedback. And if it isn't, you're probably doing it wrong."
@NYUEntrepreneur The Minimum Viable Product Customer Development 39
@NYUEntrepreneur Help start the process of learning as quickly & cheaply as possible The Minimum Viable Product 40
@NYUEntrepreneur What is this? 41
@NYUEntrepreneur What is this?
@NYUEntrepreneur Why create an MVP? u Answer questions & generate new ones u Validate your assumptions u Compare alternatives u Fail early & cheaply u Visualize your ideas & share with others o Team o Customers o Investors 45
@NYUEntrepreneur Why use this approach?
@NYUEntrepreneur 1. Find go-to-market strategy… 47
@NYUEntrepreneur …and do it more quickly 48
@NYUEntrepreneur 2. Design an MVP 49 Start the process of learning as quickly & cheaply as possible Minimum Viable Product
@NYUEntrepreneur Questions? entrepreneur@nyu.edu @nyuentrepreneur entrepreneur.nyu.edu 16 Washington Place 50
@NYUEntrepreneur Helping startups start up

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