Henrik	
  Berglund	
  
Chalmers	
  University	
  of	
  Technology	
  
Center	
  for	
...
Agenda	
  
1.  Startups	
  vs	
  Companies	
  
2.  Business	
  Models	
  
3.  Customer	
  Development	
  
 
1.  Startups	
  vs	
  Companies	
  
What’s	
  a	
  Company?	
  
What’s	
  a	
  Company?	
  
A	
  business	
  organiza5on,	
  that	
  sells	
  a	
  product	
  
or	
  service	
  in	
  exch...
How	
  are	
  Companies	
  organized?	
  
How	
  are	
  Companies	
  organized?	
  
Companies	
  are	
  organized	
  around	
  	
  	
  	
  	
  	
  	
  
Business	
  ...
Key activities Value
proposition
Customer
relationships
Customer
segments
Cost
structure
Key
resources
Revenue
streams
Cha...
9	
  
Nespresso
machines"
retail" mail"
order"
Nespresso"
.com"
call"
center"
Nespresso
stores"
households"
business"
1 x ...
What’s	
  a	
  Startup?	
  
What’s	
  a	
  Startup?	
  
A	
  temporary	
  organiza8on	
  	
  
designed	
  to	
  search	
  	
  
for	
  a	
  repeatable	...
What’s	
  a	
  Startup?	
  
A	
  temporary	
  organiza8on	
  	
  
designed	
  to	
  search	
  	
  
for	
  a	
  repeatable	...
What’s	
  a	
  Startup?	
  
A	
  temporary	
  organiza8on	
  	
  
designed	
  to	
  search	
  	
  
for	
  a	
  repeatable	...
Business	
  Models	
  
Visualiza5on	
  of	
  
the	
  business	
  
model	
  framwork	
  
Key activities ?? Value propositio...
Startups	
  Search	
  
Companies	
  Execute	
  
 	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  Startups	
  ≠	
  Small	
  companies	
  
But	
  s8ll…	
  
What	
  We	
  Used	
  to	
  Believe	
  
Strategy	
  
 
Start by developing a Business Plan…
 
…make the financial forecasts…
 
…then Execute
What	
  We	
  Now	
  Know	
  
Strategy	
  
	
  
5-­‐Year	
  Plans	
  
 
Develop and Execute the Business Plan
Why?
No Business Plan survives
first contact with customers
“Everybody	
  has	
  a	
  plan	
  un5l	
  they	
  get	
  punched	
  in	
  the	
  face”	
  
	
  	
  Mike	
  Tyson	
  
Searching for a Business Model
comes before
Executing a business plan
Key activities Value
proposition
Customer
relationships
Customer
segments
Cost
structure
Key
resources
Revenue
streams
Cha...
Solu8on	
   Unfair	
  Advantage	
   Customer	
  Segments	
  
Key	
  Metrics	
   Channels	
  
Cost	
  Structure	
   Revenue...
Business	
  Model	
  	
  
Hypotheses	
  
Search	
  
Strategy	
  
Execu5on	
  
Opera5ng	
  Plan	
  +	
  
Financial	
  Model...
What	
  We	
  Used	
  to	
  Believe	
  
Process	
  
We	
  Built	
  Startups	
  by	
  	
  
Managing	
  Processes	
  
Product	
  Management	
  
+	
  
Waterfall	
  Engineering	
...
Concept	
   Product	
  Dev.	
   Alpha/Beta	
  
Test	
  
Launch/	
  
1st	
  Ship	
  
Tradi8onal	
  Development	
  Process	
...
Concept	
   Product	
  Dev.	
   Alpha/Beta	
  
Test	
  
Launch/	
  
1st	
  Ship	
  
Tradi8onal	
  Development	
  Process	
...
Tradi8onal	
  Development	
  Process	
  
Has	
  Two	
  Implicit	
  Assump8ons	
  
Concept	
   Product	
  Dev.	
   Alpha/Be...
Tradi8on	
  –	
  Hire	
  Marke8ng	
  
-­‐ 	
  Create	
  Marcom	
  	
  
	
  	
  Materials	
  
-­‐	
  Create	
  Posi5oning	
...
Tradi8on	
  –	
  Hire	
  Sales	
  
-­‐ 	
  Create	
  Marcom	
  	
  
	
  	
  Materials	
  
-­‐	
  Create	
  Posi5oning	
  
...
Tradi8on	
  –	
  Hire	
  Business	
  Development	
  
-­‐ 	
  Create	
  Marcom	
  	
  
	
  	
  Materials	
  
-­‐	
  Create	...
Example	
  -­‐	
  Recognize	
  these?	
  
Online	
  clothes	
  retailer	
  specialized	
  in	
  
fashion	
  and	
  sports	...
What	
  happened?	
  
40	
  %	
  of	
  visitors	
  could	
  not	
  access	
  the	
  site.	
  	
  
Mac	
  users	
  could	
 ...
"Our	
  strong	
  investor	
  base	
  offers	
  a	
  solid	
  
founda5on	
  for	
  boo.com.	
  The	
  fact	
  that	
  
such...
The	
  problem	
  –	
  untested	
  assump8ons!	
  
Visualiza5on	
  of	
  
the	
  business	
  
model	
  framwork	
  
Key	
 ...
What’s	
  wrong	
  with	
  this	
  picture?	
  
•  Both	
  Customer	
  Problems	
  and	
  Product	
  Features	
  
are	
  h...
-­‐ 	
  Create	
  Marcom	
  	
  
	
  	
  Materials	
  
-­‐	
  Create	
  Posi5oning	
  
-­‐	
  Hire	
  PR	
  Agency	
  
-­‐...
What	
  We	
  Now	
  Know	
  
Process	
  
	
  
More startups fail from
a lack of customers than from a
failure of product development
Because	
  
•  We	
  have	
  processes	
  to	
  manage	
  	
  
product	
  development	
  
	
  
•  We	
  have	
  no	
  proc...
An	
  Inexpensive	
  Fix	
  
Focus	
  on	
  understanding	
  Customers	
  and	
  
Markets	
  from	
  Day	
  One!	
  
Visualiza5on	
  of	
  
the	
  busi...
Solu8on	
   Unfair	
  	
  
Advantage	
  
Customer	
  	
  
Segments	
  
Key	
  Metrics	
   Channels	
  
Cost	
  Structure	
...
Business	
  Model	
  	
  
Hypotheses	
  
Strategy	
  
Process	
   “Customer”	
  &	
  
Agile	
  Development	
  
Opera8ng	
 ...
What	
  We	
  Used	
  to	
  Believe	
  
Organiza5on	
  
Hire and Build a
Functional Organization
What	
  We	
  Now	
  Know	
  
Organiza5on	
  
Founders run an agile
“Customer Development” Team
No sales, marketing and business
development
Business	
  Model	
  	
  
Hypotheses	
  
Organiza5on	
  
Customer	
  	
  
Development	
  Team,	
  	
  
Founder-­‐driven	
 ...
Business	
  Model	
  	
  
Hypotheses	
  
Organiza5on	
  
Customer	
  	
  
Development	
  Team,	
  	
  
Founder-­‐driven	
 ...
 
2.  Business	
  Models	
  
Key activities Value
proposition
Customer
relationships
Customer
segments
Cost
structure
Key
resources
Revenue
streams
Cha...
Key activities Value
proposition
Customer
relationships
Customer
segments
Cost
structure
Key
resources
Revenue
streams
Cha...
Solu8on	
   Unfair	
  	
  
Advantage	
  
Customer	
  	
  
Segments	
  
Key	
  Metrics	
   Channels	
  
Cost	
  Structure	
...
 
• 	
  A	
  diagram	
  of	
  components	
  and	
  rela8onships	
  
• 	
  A	
  scorecard	
  for	
  hypothesis	
  tes8ng	
  
Solu8on	
   Unfair	
  	
  
Advantage	
  
Customer	
  	
  
Segments	
  
Key	
  Metrics	
   Channels	
  
Cost	
  Structure	
...
Customers	
  and	
  problems	
  
Who	
  is	
  the	
  customer?	
  
Mul8-­‐sided	
  market?	
  
Different	
  from	
  user?	
...
Customers	
  and	
  problems	
  
-­‐	
  jobs	
  to	
  be	
  done	
  
What	
  func8onal	
  jobs	
  is	
  your	
  customer	
...
Customers	
  and	
  problems	
  
-­‐	
  customer	
  pains	
  
What	
  does	
  your	
  customer	
  find	
  too	
  costly?	
 ...
Customers	
  and	
  problems	
  
-­‐	
  customer	
  gains	
  
Which	
  savings	
  would	
  make	
  your	
  customer	
  
ha...
Solu8on	
   Unfair	
  	
  
Advantage	
  
Customer	
  	
  
Segments	
  
Key	
  Metrics	
   Channels	
  
Cost	
  Structure	
...
Unique	
  Value	
  Proposi5ons/Solu5on	
  
What	
  are	
  your	
  products	
  and	
  
services?	
  
	
  
How	
  do	
  they...
Can	
  your	
  product/service:	
  
	
  
•  Produce	
  savings?	
  
•  Make	
  your	
  customers	
  feel	
  
bePer?	
  	
 ...
Can	
  your	
  product/service:	
  
	
  
•  Outperform	
  current	
  
solu8ons?	
  	
  
•  Produce	
  outcomes	
  that	
  ...
Product	
  Market	
  Fit	
  
Geeng	
  this	
  right	
  is	
  essen8al!	
  
Product	
  Market	
  Fit	
  
Geeng	
  this	
  right	
  is	
  essen8al!	
  
Solu8on	
   Unfair	
  	
  
Advantage	
  
Customer	
  	
  
Segments	
  
Key	
  Metrics	
   Channels	
  
Cost	
  Structure	
...
How	
  Do	
  You	
  Want	
  Your	
  Product	
  to	
  Get	
  to	
  
Your	
  Customer?	
  
79	
  
Yourself
Through someone e...
Web	
  Channels	
  
80	
  
Physical	
  Channels	
  
81	
  
How	
  Does	
  Your	
  Customer	
  Want	
  to	
  Buy	
  
Your	
  Product	
  from	
  your	
  Channel?	
  
82	
  
•  Same da...
Solu8on	
   Unfair	
  	
  
Advantage	
  
Customer	
  	
  
Segments	
  
Key	
  Metrics	
   Channels	
  
Cost	
  Structure	
...
Customer	
  Rela5onships	
  
Customer	
  Rela5onships	
  
Solu8on	
   Unfair	
  	
  
Advantage	
  
Customer	
  	
  
Segments	
  
Key	
  Metrics	
   Channels	
  
Cost	
  Structure	
...
WS	
  
Map	
  out	
  your	
  Business	
  Model	
  
45	
  minutes	
  
Be	
  clear	
  about	
  Product	
  Market	
  Fit!	
  
Tips	
  
Specific >> General
“I believe [type of person]
experiences [problem]
while performing [task]”.
 
3.  Customer	
  Development	
  
To	
  repeat	
  
More	
  startups	
  fail	
  from	
  	
  
a	
  lack	
  of	
  customers	
  than	
  from	
  a	
  
failure	
  of	
  product	
 ...
…	
  because	
  they	
  think	
  startups	
  =	
  small	
  companies…	
  
…they	
  focus	
  on	
  execu8ng	
  the	
  plan…	
  
•  Both	
  Customer	
  Problems	
  and	
  Product	
  Features	
  
are...
…	
  so	
  they	
  scale	
  on	
  untested	
  assump8ons…	
  
…	
  and	
  end	
  up	
  going	
  bust.	
  
“We	
  have	
  been	
  too	
  visionary.	
  We	
  
wanted	
  everything	
  to	...
So	
  what	
  to	
  do?	
  
Focus	
  on	
  Customers	
  and	
  Markets	
  from	
  Day	
  
One!	
  
Visualiza5on	
  of	
  
the	
  business	
  
model	
 ...
Product	
  and	
  Customer	
  Development	
  
Product Development
Customer Development
Company
Building
Customer
Discovery...
Problem:	
  unknown	
   Solu8on:	
  unknown	
  
Product	
  and	
  Customer	
  Development	
  
Customer	
  Development:	
  Key	
  Ideas	
  
•  Parallel	
  process	
  to	
  Product	
  Development	
  (agile)	
  
•  Meas...
Customer	
  Development	
  Heuris8cs	
  
•  There	
  are	
  no	
  facts	
  inside,	
  so	
  get	
  out	
  of	
  the	
  bui...
•  Customer	
  Discovery	
  
	
  	
  	
  Ar8culate	
  and	
  Test	
  your	
  Business	
  Model	
  Hypotheses	
  
•  Custom...
Customer Discovery
•  Articulate and test
your BM hypotheses
•  No selling, just listening
•  Must be done by CEO/
project...
building
block
building
block
building
block
building
block
building
block
building
block
building
block
building
block
bu...
But,	
  
Realize	
  it’s	
  just	
  Hypotheses!	
  
Guess Guess
Guess
Guess
Guess
Guess
Guess
GuessGuess
”Do	
  you	
  have	
  this	
   	
  	
  
problem?” 	
   	
  	
  
1. 	
   	
   	
   	
  	
  
2. 	
   	
   	
   	
  	
  
3. 	...
”Do	
  you	
  have	
  this	
   	
  ”Tell	
  me	
  about	
  it,	
  how	
   	
  	
  
problem?” 	
   	
  do	
  you	
  solve	
...
”Do	
  you	
  have	
  this	
   	
  ”Tell	
  me	
  about	
  it,	
  how	
   	
  ”Does	
  something	
  like	
  this	
  
probl...
Tips	
  and	
  examples	
  
Be	
  prepared	
  to	
  go	
  off	
  script	
  
	
  
If	
  users	
  get	
  worked	
  up	
  –	
  don’t	
  stay	
  on	
  scri...
Don’t	
  talk	
  
You	
  should	
  be	
  talking	
  as	
  8Ple	
  as	
  possible!	
  
	
  
Don’t	
  fear	
  ”uncomfortable...
Ask	
  brief	
  follow-­‐ups	
  
That	
  sounds	
  expensive/inefficient/painful…	
  
	
  
Tell	
  me	
  more!	
  
	
  
When...
Get	
  psyched	
  to	
  hear	
  things	
  you	
  	
  	
  	
  	
  	
  
don’t	
  want	
  to	
  hear	
  
Don’t	
  assume	
  things	
  
	
  
	
  
Bad:	
  You	
  love	
  walking	
  your	
  dog!	
  
	
  
Good:	
  How	
  do	
  you	...
If you could wave a magic wand and be
able to do anything that you can’t do today,
what would it be?
(Don’t worry about if...
Write	
  up	
  results	
  a.s.a.p.	
  
Take	
  notes.	
  
	
  
Write	
  upp	
  results	
  insights	
  immediately	
  ater	...
More	
  interview	
  8ps	
  
	
  
hPp://www.cindyalvarez.com/communica8on/customer-­‐
development-­‐interviews-­‐how-­‐to-...
 
	
  
“nice	
  to	
  
have”	
  
Jackpot!	
  
1.	
  Has	
  a	
  problem	
  
2.	
  Understands	
  he	
  or	
  she	
  has	
 ...
Much	
  faster	
  to	
  build	
  =>	
  	
  
get	
  quan8ta8ve	
  feedback	
  sooner.	
  
	
  
Use	
  a	
  low-­‐fi	
  landi...
hPp://blog.kissmetrics.com/landing-­‐page-­‐blueprint/	
  
Landing	
  page	
  design	
  
Test	
  Solu8on	
  Hypothesis	
  
1)	
  ”We	
  believe	
  you	
  have	
  this	
  important	
  problem”	
  	
  
	
  	
  –	
...
Dropbox	
  
•  1st	
  solu8on	
  test:	
  a	
  three	
  minute	
  video	
  made	
  in	
  the	
  
founder’s	
  apartment	
 ...
Test Product Hypotheses	
  
Ater	
  demoing,	
  ask	
  about	
  other	
  things:	
  	
  
Posi8oning	
  –	
  how	
  do	
  t...
Build	
  out	
  a	
  high-­‐fidelity	
  web	
  page	
  with	
  “func8oning”	
  
back-­‐end,	
  based	
  on	
  lessons	
  le...
Consistent	
  answers	
  from	
  “enough”	
  people?	
  
What	
  are	
  your	
  customers	
  top	
  problems?	
  
How	
  m...
Customer Validation
•  Develop	
  and	
  sell	
  MVP	
  to	
  passionate	
  earlyvangelists	
  
•  Validate	
  a	
  repeat...
Based	
  on	
  your	
  insights	
  from	
  Customer	
  Discovery,	
  sell	
  
the	
  smallest	
  feature	
  set	
  custome...
The	
  Apple	
  I,	
  Apple’s	
  first	
  product,	
  was	
  sold	
  as	
  an	
  assembled	
  circuit	
  
board	
  and	
  l...
The	
  owner	
  of	
  this	
  unit	
  added	
  a	
  keyboard	
  and	
  a	
  wooden	
  case.	
  
hPp://en.wikipedia.org/wik...
Minimal	
  Viable	
  Product	
  
hPp://37signals.com/svn/posts/2963-­‐what-­‐happens-­‐to-­‐user-­‐experience-­‐in-­‐a-­‐m...
The	
  MVP	
  is	
  not	
  the	
  goal	
  =	
  Requires	
  commitment	
  
to	
  itera8on!	
  
	
  
•  “A	
  complex	
  sys...
Do	
  you	
  have	
  a	
  proven	
  sales	
  roadmap?	
  
Organiza8on	
  chart?	
  Influence	
  map?	
  
No	
  staffing	
  un...
If	
  yes	
  –	
  Start	
  execu8ng	
  
If	
  no	
  –	
  Pivot!	
  
• 	
  The	
  heart	
  of	
  Customer	
  Development	
  
• 	
  Change	
  without	
  crisis	
  	...
YouTube - Customer Need Pivot
Pivot	
  
Adapt	
  the	
  Business	
  Model	
  
un8l	
  you	
  can	
  prove	
  it	
  
works	
  
search	
  
execu8on	
  
•  Grow	
  customers	
  from	
  few	
  to	
  many	
  
•  Comes	
  ater	
  proof	
  of	
  sales	
  
•  Inject	
  $’s	
  for...
•  (Re)build	
  company’s	
  organiza8on	
  &	
  management	
  
•  Dev.-­‐centric	
  ⇒	
  Mission-­‐centric	
  ⇒	
  Proces...
•  Customer	
  Discovery	
  
	
  	
  	
  Ar8culate	
  and	
  Test	
  your	
  Business	
  Model	
  Hypotheses	
  
•  Custom...
Don’t	
  do	
  a	
  Boo!	
  
Concept	
   Product	
  Dev.	
   Alpha/Beta	
  
Test	
  
Launch/	
  
1st	
  Ship	
  
“We	
  ha...
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
by	
  Steve	
  Blank	
  and	
  Bob	
  Dorf	
  
	
  
More	
  info:	
  www.steveblank.c...
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
developed	
  by	
  Steve	
  Blank	
  and	
  Bob	
  Dorf	
  
	
  
...
 
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
Chalmers	
  University	
  of	
  Technology	
  
Center	
  for	
  B...
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Startup camp chalmers innovation 19 september 2014
Upcoming SlideShare
Loading in …5
×

Startup camp chalmers innovation 19 september 2014

3,548 views

Published on

Henrik Berglund's presentation at CI Startup Camp 2013-09-19

Published in: Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
3,548
On SlideShare
0
From Embeds
0
Number of Embeds
2,957
Actions
Shares
0
Downloads
25
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Startup camp chalmers innovation 19 september 2014

  1. 1.                 Henrik  Berglund   Chalmers  University  of  Technology   Center  for  Business  Innova8on   henber@chalmers.se   www.henrikberglund.com   @khberglund      Business  Models/Customer  Development     2013-­‐09-­‐19   1  
  2. 2. Agenda   1.  Startups  vs  Companies   2.  Business  Models   3.  Customer  Development  
  3. 3.   1.  Startups  vs  Companies  
  4. 4. What’s  a  Company?  
  5. 5. What’s  a  Company?   A  business  organiza5on,  that  sells  a  product   or  service  in  exchange  for  revenue  and  profit  
  6. 6. How  are  Companies  organized?  
  7. 7. How  are  Companies  organized?   Companies  are  organized  around               Business  Models  
  8. 8. Key activities Value proposition Customer relationships Customer segments Cost structure Key resources Revenue streams Channels Key partners Business  Model   hPp://www.businessmodelalchemist.com/  
  9. 9. 9   Nespresso machines" retail" mail" order" Nespresso" .com" call" center" Nespresso stores" households" business" 1 x machine" sales" repetitive pod sales" distribution channels" coffee" production facilites" production" B2C distribution" brand" marketing" brand"patents" machine manufacturer" production" B2C distribution" brand" marketing" Nespresso club" brand" brand" Nespresso pods" Example:  Nespresso  
  10. 10. What’s  a  Startup?  
  11. 11. What’s  a  Startup?   A  temporary  organiza8on     designed  to  search     for  a  repeatable  and  scalable  business  model  
  12. 12. What’s  a  Startup?   A  temporary  organiza8on     designed  to  search     for  a  repeatable  and  scalable  business  model  
  13. 13. What’s  a  Startup?   A  temporary  organiza8on     designed  to  search     for  a  repeatable  and  scalable  business  model  
  14. 14. Business  Models   Visualiza5on  of   the  business   model  framwork   Key activities ?? Value proposition ?? Customer relationships ?? Customer segments ?? Cost structure ?? Key resources ?? Revenue streams ?? Channels ?? Key partners ??
  15. 15. Startups  Search   Companies  Execute  
  16. 16.                        Startups  ≠  Small  companies  
  17. 17. But  s8ll…  
  18. 18. What  We  Used  to  Believe   Strategy  
  19. 19.   Start by developing a Business Plan…
  20. 20.   …make the financial forecasts…
  21. 21.   …then Execute
  22. 22. What  We  Now  Know   Strategy    
  23. 23. 5-­‐Year  Plans  
  24. 24.   Develop and Execute the Business Plan
  25. 25. Why?
  26. 26. No Business Plan survives first contact with customers
  27. 27. “Everybody  has  a  plan  un5l  they  get  punched  in  the  face”      Mike  Tyson  
  28. 28. Searching for a Business Model comes before Executing a business plan
  29. 29. Key activities Value proposition Customer relationships Customer segments Cost structure Key resources Revenue streams Channels Key partners Business  Models   hPp://www.businessmodelalchemist.com/  
  30. 30. Solu8on   Unfair  Advantage   Customer  Segments   Key  Metrics   Channels   Cost  Structure   Revenue  Streams   Type:   Asset  sales   Usage  fee   Subscrip8on  fees   Lending/Ren8ng/Leasing   Licensing   Brokerage  fees   Adver8sing   Fixed  Pricing:   List  price   Product  feature   Customer  segment   Volume   Dynamic  Pricing   Nego8a8on   Yield  management   Real-­‐8me  market   Interview  30-­‐50  customers   Build  MVP   Ongoing  burn  (fixed  and  variable  costs)          Direct        Distributor        OEM        Retail        VAR        Web   Unique  Value   Proposi8on   Alterna8ves   Customers;  Users   Early  Adopters   Why  you  are  different  and  worth    geeng  aPen8on     Result  customers  want        +  specific  period  of  8me        +  address  objec8ons   Acquisi8on   Ac8va8on   Reten8on   Revenue   Referral   Not  easily  copied  or  bought   Problem   Alterna8ves  
  31. 31. Business  Model     Hypotheses   Search   Strategy   Execu5on   Opera5ng  Plan  +   Financial  Model  
  32. 32. What  We  Used  to  Believe   Process  
  33. 33. We  Built  Startups  by     Managing  Processes   Product  Management   +   Waterfall  Engineering  
  34. 34. Concept   Product  Dev.   Alpha/Beta   Test   Launch/   1st  Ship   Tradi8onal  Development  Process    
  35. 35. Concept   Product  Dev.   Alpha/Beta   Test   Launch/   1st  Ship   Tradi8onal  Development  Process   Has  Two  Implicit  Assump8ons  
  36. 36. Tradi8onal  Development  Process   Has  Two  Implicit  Assump8ons   Concept   Product  Dev.   Alpha/Beta   Test   Launch/   1st  Ship   Customer  Problem:  known   Product  Features:  known   Works  well  for  incremental  development  projects   targe5ng  exis5ng  customers.  
  37. 37. Tradi8on  –  Hire  Marke8ng   -­‐   Create  Marcom        Materials   -­‐  Create  Posi5oning   -­‐  Hire  PR  Agency   -­‐  Early  Buzz   -­‐  Create  Demand   -­‐  Launch  Event   -­‐  “Branding”   Marke5ng   Concept   Product  Dev.   Alpha/Beta   Test   Launch/   1st  Ship  
  38. 38. Tradi8on  –  Hire  Sales   -­‐   Create  Marcom        Materials   -­‐  Create  Posi5oning   -­‐  Hire  PR  Agency   -­‐  Early  Buzz   -­‐  Create  Demand   -­‐  Launch  Event   -­‐  “Branding”   -­‐  Build  Sales   Organiza5on   Marke5ng   Sales   -­‐  Hire  Sales  VP   -­‐  Hire  1st    Sales  Staff   Concept   Product  Dev.   Alpha/Beta   Test   Launch/   1st  Ship  
  39. 39. Tradi8on  –  Hire  Business  Development   -­‐   Create  Marcom        Materials   -­‐  Create  Posi5oning   -­‐  Hire  PR  Agency   -­‐  Early  Buzz   -­‐  Create  Demand   -­‐  Launch  Event   -­‐  “Branding”   -­‐  Build  Sales   Organiza5on   Marke5ng   Sales   -­‐  Hire  Sales  VP   -­‐  Hire  1st    Sales  Staff   Concept   Product  Dev.   Alpha/Beta   Test   Launch/   1st  Ship   -­‐  Hire  First  Bus  Dev   -­‐  Do  deals  for  FCS  Business     Development  
  40. 40. Example  -­‐  Recognize  these?   Online  clothes  retailer  specialized  in   fashion  and  sports  (e.g.  Adidas,  Fila,  Vans,   Converse,  DKNY  and  Fred  Perry).     Raised  $160  million  (JP  Morgan,  Goldman   Sachs,  Bernard  Arnault,  BenePon  +  six).   Developed  an  innova8ve  site  with  3D,   zoom,  360⁰  rota8on  and  virtual   mannequins,  powered  by  lots  of  JavaScript   and  Flash  Anima8ons.   Rapidly  grew  to  420  people  and  spent   heavily  on  PR  pre  launch.   Delayed  launch  repeatedly  due  to   technological  problems.   Finally  launched  in  18  countries   simultaneously    8:59  November  3  1999  EST.  
  41. 41. What  happened?   40  %  of  visitors  could  not  access  the  site.     Mac  users  could  not  operate  the  site  at  all.     The  site  was  very  difficult  to  use  and  full  of   errors,  oten  causing  computers  to  freeze.       Extremely  slow  to  load  without  broadband.   Only  one  in  four  aPempts  to  make  a   purchase  worked.     Low  conversion  rates  (0.25%).   Conversion  rates  did  double  by  Christmas.   30%  returns,  not  10%  as  projected.   A  “low-­‐bandwidth  version”  was  relaunched   within  months.   But  low  sales  +  high  costs    “Eighty-­‐one  minutes     to  pay  too  much  money   for  a  pair  of  shoes  that  I   am  s8ll  going  to  have  to   wait  a  week  to  get?”   =>  Bankruptcy.  
  42. 42. "Our  strong  investor  base  offers  a  solid   founda5on  for  boo.com.  The  fact  that   such  interna5onal  investors  have   invested  in  boo.com  reflects  the  power   of  our  business  model  and  the  boo.com   brand."       Patrik  Hedelin,  Execu2ve  Chairman.   (Press  Release,  Nov  3  1999)   Validated  Business  Model?  
  43. 43. The  problem  –  untested  assump8ons!   Visualiza5on  of   the  business   model  framwork   Key  ac5vi5es   Partnering,     E-­‐commerce,   Global  taxes  &   payments,   Marke5ng   Value    proposi5on   Fashion  and  sports  online,   Realis5c  shopping  experience,   “Life-­‐s5le  choice”   .       Customer   rela5onships   Paid  &  Earned  Media   Visitor  numbers,   Conversion  rates       Customer   segments   “young,  well-­‐off,   fashion-­‐  conscious   18  to  24  year  olds”         Cost  structure   Call  centres,   Return  rates,   Inventory   Key   resources   Developers,   Risk  capital   Revenue     Streams   Online  sales/  full  retail   price,   CAC  &  Life5me  Value   Channels   Buying  online,   Channel  conflicts,   Zone  pricing   Key  partners   Brands,   Warehouses,   Logis5cs    
  44. 44. What’s  wrong  with  this  picture?   •  Both  Customer  Problems  and  Product  Features   are  hypotheses   •  Emphasis  on  execu8on  rather  than  learning  and   discovery   •  No  relevant  milestones  for  marke8ng  and  sales   •  Oten  leads  to  premature  scaling  and  a  heavy   spending  hit  if  product  launch  fails     You  do  not  know  if  you  are  wrong  un5l  you   are  out  of  money/business   Concept   Product  Dev.   Alpha/Beta   Test   Launch/   1st  Ship  
  45. 45. -­‐   Create  Marcom        Materials   -­‐  Create  Posi5oning   -­‐  Hire  PR  Agency   -­‐  Early  Buzz   -­‐  Create  Demand   -­‐  Launch  Event   -­‐  “Branding”   -­‐  Build  Sales   Organiza5on   Marke5ng   Sales   -­‐  Hire  Sales  VP   -­‐  Hire  1st    Sales  Staff   Concept   Product  Dev.   Alpha/Beta   Test   Launch/   1st  Ship   -­‐  Hire  First  Bus  Dev   -­‐  Do  deals  for  FCS  Business     Development  
  46. 46. What  We  Now  Know   Process    
  47. 47. More startups fail from a lack of customers than from a failure of product development
  48. 48. Because   •  We  have  processes  to  manage     product  development     •  We  have  no  process  to  manage     ”customer  development”    
  49. 49. An  Inexpensive  Fix  
  50. 50. Focus  on  understanding  Customers  and   Markets  from  Day  One!   Visualiza5on  of   the  business   model  framwork   Key activities Value proposition Customer relationships Customer segments Cost structure Key resources Revenue streams Channels Key partners
  51. 51. Solu8on   Unfair     Advantage   Customer     Segments   Key  Metrics   Channels   Cost  Structure   Revenue  Streams   Unique  Value   Proposi8on   Problem  
  52. 52. Business  Model     Hypotheses   Strategy   Process   “Customer”  &   Agile  Development   Opera8ng  Plan  +   Financial  Model   Product  Management   &  Waterfall  Development   Search   Execu5on  
  53. 53. What  We  Used  to  Believe   Organiza5on  
  54. 54. Hire and Build a Functional Organization
  55. 55. What  We  Now  Know   Organiza5on  
  56. 56. Founders run an agile “Customer Development” Team No sales, marketing and business development
  57. 57. Business  Model     Hypotheses   Organiza5on   Customer     Development  Team,     Founder-­‐driven   Customer  Development,   Agile  Development   Opera8ng  Plan  +   Financial  Model   Product  Management   Agile  or  Waterfall  Development   Func5onal  Organiza5on    by  Department   Search   Execu5on   Strategy   Process  
  58. 58. Business  Model     Hypotheses   Organiza5on   Customer     Development  Team,     Founder-­‐driven   Customer  Development,   Agile  Development   Opera8ng  Plan  +   Financial  Model   Product  Management   Agile  or  Waterfall  Development   Func8onal  Organiza8on    by  Department   Search   Execu5on   Strategy   Process  
  59. 59.   2.  Business  Models  
  60. 60. Key activities Value proposition Customer relationships Customer segments Cost structure Key resources Revenue streams Channels Key partners Business  Models   hPp://www.businessmodelalchemist.com/  
  61. 61. Key activities Value proposition Customer relationships Customer segments Cost structure Key resources Revenue streams Channels Key partners Business  Models   hPp://www.businessmodelalchemist.com/  
  62. 62. Solu8on   Unfair     Advantage   Customer     Segments   Key  Metrics   Channels   Cost  Structure   Revenue  Streams   Unique  Value   Proposi8on   Who  are  your  customers?     Who  are  earlyvangelists?     Problem   Single,  clear,  compelling     message  that  states  why     you  are  different  and     worth  buying  from   That  can’t  be  easily     bought,  or  imitated?     How  do  you  reach     customers?     Key  features     MVP   What  are  you  customers’   key  jobs/pains/gains?   What  metrics  are     most  cri8cal     to  track?   Customer  Acquisi8on  Costs     Distribu8on  Costs   Hos8ng   People   etc.       Fixed/variable   Revenue  Model   Life  Time  Value     Revenue/pricing   etc.  
  63. 63.   •   A  diagram  of  components  and  rela8onships   •   A  scorecard  for  hypothesis  tes8ng  
  64. 64. Solu8on   Unfair     Advantage   Customer     Segments   Key  Metrics   Channels   Cost  Structure   Revenue  Streams   Unique  Value   Proposi8on   Who  are  your  customers?     Who  are  earlyvangelists?     Problem   Single,  clear,  compelling     message  that  states  why     you  are  different  and     worth  buying  from   That  can’t  be  easily     bought,  or  imitated?     How  do  you  reach     customers?     Key  features     MVP   What  are  you  customers’   key  jobs/pains/gains?   What  metrics  are     most  cri8cal     to  track?   Customer  Acquisi8on  Costs     Distribu8on  Costs   Hos8ng   People   etc.       Fixed/variable   Revenue  Model   Life  Time  Value     Revenue/pricing   etc.  
  65. 65. Customers  and  problems   Who  is  the  customer?   Mul8-­‐sided  market?   Different  from  user?   hPp://www.businessmodelalchemist.com/2012/08/achieve-­‐product-­‐market-­‐fit-­‐with-­‐our-­‐brand-­‐ new-­‐value-­‐proposi8on-­‐designer.html  
  66. 66. Customers  and  problems   -­‐  jobs  to  be  done   What  func8onal  jobs  is  your  customer   trying  get  done?  (e.g.  perform  or   complete  a  specific  task,  solve  a  specific   problem…)     What  social  jobs  is  your  customer  trying   to  get  done?  (e.g.  trying  to  look  good,   gain  power  or  status…)     What  emo8onal  jobs  is  your  customer   trying  get  done?  (e.g.  esthe8cs,  feel  good,   security…)   “What  jobs  are  the  customers  you  are   targe2ng  trying  to  get  done”  
  67. 67. Customers  and  problems   -­‐  customer  pains   What  does  your  customer  find  too  costly?   (e.g.  takes  a  lot  of  8me,  costs,  effort)       What  makes  your  customer  feel  bad?       (e.g.  frustra8ons,  annoyances)       How  are  current  solu8ons  under-­‐ performing  for  your  customer?                             (e.g.  lack  of  features,  performance,   malfunc8on)       What  nega8ve  social  consequences  does   your  customer  encounter  or  fear?                   (e.g.  loss  of  face,  power,  trust,  or  status)     “What  are  the  costs,  nega2ve  emo2ons,  bad   situa2ons  etc.  that  your  customer  risks   experiencing  before,  during,  and  a>er  ge?ng   the  job  done.”  
  68. 68. Customers  and  problems   -­‐  customer  gains   Which  savings  would  make  your  customer   happy?  (e.g.  in  terms  of  8me,  money  and   effort)     What  would  make  your  customer’s  job  or   life  easier?  (e.g.  flaPer  learning  curve,   more  services,  lower  cost  of  ownership)     What  posi8ve  social  consequences  does   your  customer  desire?  (e.g.  makes  them   look  good,  increase  in  power,  status)     What  are  customers  looking  for?  (e.g.   good  design,  guarantees,  features)     What  do  customers  dream  about?  (e.g.   big  achievements,  big  reliefs)   “What  are  the  benefits  your  customer   expects,  desires  or  would  be  surprised  by.”  
  69. 69. Solu8on   Unfair     Advantage   Customer     Segments   Key  Metrics   Channels   Cost  Structure   Revenue  Streams   Unique  Value   Proposi8on   Who  are  your  customers?     Who  are  earlyvangelists?     Problem   Single,  clear,  compelling     message  that  states  why     you  are  different  and     worth  buying  from   That  can’t  be  easily     bought,  or  imitated?     How  do  you  reach     customers?     Key  features     MVP   What  are  you  customers’   key  jobs/pains/gains?   What  metrics  are     most  cri8cal     to  track?   Customer  Acquisi8on  Costs     Distribu8on  Costs   Hos8ng   People   etc.       Fixed/variable   Revenue  Model   Life  Time  Value     Revenue/pricing   etc.  
  70. 70. Unique  Value  Proposi5ons/Solu5on   What  are  your  products  and   services?     How  do  they  create  value  for   the  customer  segments?  
  71. 71. Can  your  product/service:     •  Produce  savings?   •  Make  your  customers  feel   bePer?     •  Put  an  end  to  difficul8es?   •  Wipe  out  nega8ve  social   consequences?   Unique  Value  Proposi5ons/Solu5on  
  72. 72. Can  your  product/service:     •  Outperform  current   solu8ons?     •  Produce  outcomes  that  go   beyond  their  expecta8ons?     •  Make  your  customer’s  job   or  life  easier?     •  Create  posi8ve  social   consequences?         Unique  Value  Proposi5ons/Solu5on  
  73. 73. Product  Market  Fit   Geeng  this  right  is  essen8al!  
  74. 74. Product  Market  Fit   Geeng  this  right  is  essen8al!  
  75. 75. Solu8on   Unfair     Advantage   Customer     Segments   Key  Metrics   Channels   Cost  Structure   Revenue  Streams   Unique  Value   Proposi8on   Who  are  your  customers?     Who  are  earlyvangelists?     Problem   Single,  clear,  compelling     message  that  states  why     you  are  different  and     worth  buying  from   That  can’t  be  easily     bought,  or  imitated?     How  do  you  reach     customers?     Key  features     MVP   What  are  you  customers’   key  jobs/pains/gains?   What  metrics  are     most  cri8cal     to  track?   Customer  Acquisi8on  Costs     Distribu8on  Costs   Hos8ng   People   etc.       Fixed/variable   Revenue  Model   Life  Time  Value     Revenue/pricing   etc.  
  76. 76. How  Do  You  Want  Your  Product  to  Get  to   Your  Customer?   79   Yourself Through someone else Retail Wholesale Bundled with other goods or services " " " " "
  77. 77. Web  Channels   80  
  78. 78. Physical  Channels   81  
  79. 79. How  Does  Your  Customer  Want  to  Buy   Your  Product  from  your  Channel?   82   •  Same day •  Delivered and installed •  Downloaded •  Bundled with other products •  As a service •  … " " " " " "
  80. 80. Solu8on   Unfair     Advantage   Customer     Segments   Key  Metrics   Channels   Cost  Structure   Revenue  Streams   Unique  Value   Proposi8on   Who  are  your  customers?     Who  are  earlyvangelists?     Problem   Single,  clear,  compelling     message  that  states  why     you  are  different  and     worth  buying  from   That  can’t  be  easily     bought,  or  imitated?     How  do  you  reach     customers?     Key  features     MVP   What  are  you  customers’   key  jobs/pains/gains?   What  metrics  are     most  cri8cal     to  track?   Customer  Acquisi8on  Costs     Distribu8on  Costs   Hos8ng   People   etc.       Fixed/variable   Revenue  Model   Life  Time  Value     Revenue/pricing   etc.  
  81. 81. Customer  Rela5onships  
  82. 82. Customer  Rela5onships  
  83. 83. Solu8on   Unfair     Advantage   Customer     Segments   Key  Metrics   Channels   Cost  Structure   Revenue  Streams   Unique  Value   Proposi8on   Who  are  your  customers?     Who  are  earlyvangelists?     Problem   Single,  clear,  compelling     message  that  states  why     you  are  different  and     worth  buying  from   That  can’t  be  easily     bought,  or  imitated?     How  do  you  reach     customers?     Key  features     MVP   What  are  you  customers’   key  jobs/pains/gains?   What  metrics  are     most  cri8cal     to  track?   Customer  Acquisi8on  Costs     Distribu8on  Costs   Hos8ng   People   etc.       Fixed/variable   Revenue  Model   Life  Time  Value     Revenue/pricing   etc.  
  84. 84. WS  
  85. 85. Map  out  your  Business  Model   45  minutes  
  86. 86. Be  clear  about  Product  Market  Fit!  
  87. 87. Tips   Specific >> General “I believe [type of person] experiences [problem] while performing [task]”.
  88. 88.   3.  Customer  Development  
  89. 89. To  repeat  
  90. 90. More  startups  fail  from     a  lack  of  customers  than  from  a   failure  of  product  development…   To  repeat  
  91. 91. …  because  they  think  startups  =  small  companies…  
  92. 92. …they  focus  on  execu8ng  the  plan…   •  Both  Customer  Problems  and  Product  Features   are  hypotheses   •  Emphasis  on  execu8on  rather  than  learning  and   discovery   •  No  relevant  milestones  for  marke8ng  and  sales   •  Oten  leads  to  premature  scaling  and  a  heavy   spending  hit  if  product  launch  fails     You  do  not  know  if  you  are  wrong  un5l  you   are  out  of  money/business   Concept   Product  Dev.   Alpha/Beta   Test   Launch/   1st  Ship  
  93. 93. …  so  they  scale  on  untested  assump8ons…  
  94. 94. …  and  end  up  going  bust.   “We  have  been  too  visionary.  We   wanted  everything  to  be  perfect,  and   we  have  not  had  control  of  costs"       Ernst  Malmsten   (BBC  News,  May  18  2000)  
  95. 95. So  what  to  do?  
  96. 96. Focus  on  Customers  and  Markets  from  Day   One!   Visualiza5on  of   the  business   model  framwork   Key activities Value proposition Customer relationships Customer segments Cost structure Key resources Revenue streams Channels Key partners
  97. 97. Product  and  Customer  Development   Product Development Customer Development Company Building Customer Discovery Customer Validation Customer Creation + Concept   Product  Dev.   Alpha/Beta   Test   Launch/   1st  Ship  
  98. 98. Problem:  unknown   Solu8on:  unknown   Product  and  Customer  Development  
  99. 99. Customer  Development:  Key  Ideas   •  Parallel  process  to  Product  Development  (agile)   •  Measurable  checkpoints  not  5ed  to  FCS  but  to  customer   insights   •  Emphasis  on  itera5ve  learning  and  discovery  before  execu5on   •  Must  be  done  by  small  team  including  CEO/project  leader  
  100. 100. Customer  Development  Heuris8cs   •  There  are  no  facts  inside,  so  get  out  of  the  building!     •  Develop  for  the  few,  not  for  the  many   •  Earlyvangelists  make  your  company,  and  are  smarter  than  you!   •  Develop  a  minimum  viable  product  to  maximize  fast  learning.   •  Nail  it  before  you  scale  it  –  low  burn  by  design!  
  101. 101. •  Customer  Discovery        Ar8culate  and  Test  your  Business  Model  Hypotheses   •  Customer  Valida5on        Sell  your  MVP  and  Validate  your  MB  &  Sales  Roadmap   •  Customer  Crea5on          Scale  via  relentless  execu8on  and  fill  the  sales  pipeline   •  Company  Building        (Re)build  company’s  organiza8on  &  management   Customer  Development:  Four  Stages   search   execu8on  
  102. 102. Customer Discovery •  Articulate and test your BM hypotheses •  No selling, just listening •  Must be done by CEO/ project manager
  103. 103. building block building block building block building block building block building block building block building block building block building block building block building block
  104. 104. But,   Realize  it’s  just  Hypotheses!  
  105. 105. Guess Guess Guess Guess Guess Guess Guess GuessGuess
  106. 106. ”Do  you  have  this       problem?”       1.           2.           3.           Test Customer Problem Hypotheses
  107. 107. ”Do  you  have  this    ”Tell  me  about  it,  how       problem?”    do  you  solve  it  today?”     1.        1.         2.        2.         3.        3.         Test Customer Problem Hypotheses
  108. 108. ”Do  you  have  this    ”Tell  me  about  it,  how    ”Does  something  like  this   problem?”    do  you  solve  it  today?”  solve  your  problem?”   1.        1.      1.   2.        2.      2.   3.        3.      3.   Listen  carefully  to  what  they  say  at  each  step!     Focus  on  learning  -­‐  Don’t  try  to  sell  them  on  your  idea!     In  the  process  you  find  out  about  other  BM  parts  as  well:   workflow,  benefits  (to  users  &  others),  preferred  channels,  cri5cal   influencers,  respected  peers  etc…     You  want  to  become  a  domain  expert!   Test Customer Problem Hypotheses
  109. 109. Tips  and  examples  
  110. 110. Be  prepared  to  go  off  script     If  users  get  worked  up  –  don’t  stay  on  script,     but  follow  their  lead  and  drill  down!    
  111. 111. Don’t  talk   You  should  be  talking  as  8Ple  as  possible!     Don’t  fear  ”uncomfortable  silence”     (let  them  break  it).     80/20  is  a  good  ra8o  to  aim  for.  
  112. 112. Ask  brief  follow-­‐ups   That  sounds  expensive/inefficient/painful…     Tell  me  more!     When  was  the  last  2me  that  happened?     Can  you  give  an  example?     What  do  you  mean  by  that?     Can  you  explain  that  a  liMle  more?     What  else  do  you  do?     How  do  you  feel  about  that?     What  are  you  thinking?  
  113. 113. Get  psyched  to  hear  things  you             don’t  want  to  hear  
  114. 114. Don’t  assume  things       Bad:  You  love  walking  your  dog!     Good:  How  do  you  feel  about  walking  your  dog?     Even  Bener:  What  was  it  like  the  last  8me  you  walked  your  dog?  
  115. 115. If you could wave a magic wand and be able to do anything that you can’t do today, what would it be? (Don’t worry about if it’s possible)
  116. 116. Write  up  results  a.s.a.p.   Take  notes.     Write  upp  results  insights  immediately  ater  the  interview!  
  117. 117. More  interview  8ps     hPp://www.cindyalvarez.com/communica8on/customer-­‐ development-­‐interviews-­‐how-­‐to-­‐what-­‐you-­‐should-­‐be-­‐learning         hPp://giffconstable.com/2012/12/12-­‐8ps-­‐for-­‐early-­‐customer-­‐ development-­‐interviews-­‐revision-­‐3/           hPp://jasonevanish.com/2012/01/18/how-­‐to-­‐structure-­‐and-­‐ get-­‐the-­‐most-­‐out-­‐of-­‐customer-­‐development-­‐interviews/          
  118. 118.     “nice  to   have”   Jackpot!   1.  Has  a  problem   2.  Understands  he  or  she  has  a  problem   3.  Ac8vely  searching  for  a  solu8on   4.  Cobbled  together  an  interim  solu8on   5.  CommiPed  funds  for  a  solu8on   Useful  people  to  talk  to  
  119. 119. Much  faster  to  build  =>     get  quan8ta8ve  feedback  sooner.     Use  a  low-­‐fi  landing  page  as  subs8tute  for   (and  introduc8on  to)  conversa8ons.     Key  to  drive  traffic  through  AdWords/ Facebook  Ads/Promoted  Tweets  etc.     Build  (design  test),  measure  (run  test)  and   analyze  (evaluate  test)!     Web  
  120. 120. hPp://blog.kissmetrics.com/landing-­‐page-­‐blueprint/   Landing  page  design  
  121. 121. Test  Solu8on  Hypothesis   1)  ”We  believe  you  have  this  important  problem”        –  listen  (check).       2)  Demo  how  your  product  solves  the  problem.  Focusing   on  a  few  key  features.     Include  workflow  story:  ”life    before  our  product”  and     ”life  ater  our  product”  –  listen!     3)  ”What  would  this  solu8on  need  to  have  for  you  to   purchase  it?”  Listen,  ask  follow  up  ques8ons.  
  122. 122. Dropbox   •  1st  solu8on  test:  a  three  minute  video  made  in  the   founder’s  apartment  before  a  complete  code  was   wriPen.   –  Generated  valuable  feedback  from  visionary  customers.   •  2nd  solu8on  test:  another  video  of  the  product  that  was   posted  on  a  social  network.   –  Wai8ng  list  jumped  from  5  000  to  75  000.   •  Dropbox’s  original  intent  was  to  build  and  ship  their   product  in  eight  weeks.     •  Instead,  they  gathered  feedback  and  launched  a  public   version  18  months  later.  
  123. 123. Test Product Hypotheses   Ater  demoing,  ask  about  other  things:     Posi8oning  –  how  do  they  describe  the  product?   Product  category  (new,  exis8ng,  resegmented)   Compe8tors   Features  needed  for  first  version   Preferred  revenue  model   Pricing   Addi8onal  service  needs   Marke8ng  –  how  do  they  find  this  type  of  product?   Purchasing  process   Who  has  a  budget?   etc.  
  124. 124. Build  out  a  high-­‐fidelity  web  page  with  “func8oning”   back-­‐end,  based  on  lessons  learned.       “Mechanical  Turk”-­‐solu8on.     Ask  for  money:  first  “pre-­‐order”  then  charging.     Con8nue  to  test,  measure  and  analyze!     Web  
  125. 125. Consistent  answers  from  “enough”  people?   What  are  your  customers  top  problems?   How  much  will  they  pay  to  solve  them?   Does  your  product  concept  solve  them?   Do  customers  agree?     How  much  will  they  pay  for  it?  When?   Can  you  draw  a  day-­‐in-­‐the-­‐life  of  a  customer?   Before  &  ater  your  product   Can  you  draw  the  org  charts  of  users,  buyers   and  channels?     Customer  Discovery:  Exit  Criteria  
  126. 126. Customer Validation •  Develop  and  sell  MVP  to  passionate  earlyvangelists   •  Validate  a  repeatable  sales  roadmap   •  Verify  the  business  model  
  127. 127. Based  on  your  insights  from  Customer  Discovery,  sell   the  smallest  feature  set  customers  are  willing  to  pay   for!     •  Purpose  1:  Reduce  wasted  engineering  hours      (and  wasted  code)     •  Purpose  2:  Get  something  into  the  hands  of   earlyvangelists  as  soon  as  possible  =>  maximize   learning!  (cf.  landing  page)   Minimal  Viable  Product  
  128. 128. The  Apple  I,  Apple’s  first  product,  was  sold  as  an  assembled  circuit   board  and  lacked  basic  features  such  as  a  keyboard,  monitor,  and   case.    
  129. 129. The  owner  of  this  unit  added  a  keyboard  and  a  wooden  case.   hPp://en.wikipedia.org/wiki/Apple_Inc.  
  130. 130. Minimal  Viable  Product   hPp://37signals.com/svn/posts/2963-­‐what-­‐happens-­‐to-­‐user-­‐experience-­‐in-­‐a-­‐minimum-­‐viable-­‐
  131. 131. The  MVP  is  not  the  goal  =  Requires  commitment   to  itera8on!     •  “A  complex  system  that  works  is  invariably   found  to  have  evolved  from  a  simple  system   that  worked.”     •  “A  complex  system  designed  from  scratch   never  works  and  cannot  be  made  to  work.   You  have  to  start  over,  beginning  with  a   working  simple  system.”   Minimal  Viable  Product   John  Gall  System-­‐an8cs:  How  Systems  Really  Work  and  Especially  How  They  Fail  
  132. 132. Do  you  have  a  proven  sales  roadmap?   Organiza8on  chart?  Influence  map?   No  staffing  un8l  roadmap  is  proven!     Do  you  have  a  set  of  orders  ($’s)  of  the   product  valida8ng  the  roadmap?     Is  the  business  model  scalable?   LTV  >  CAC   Customer  Valida8on:  Exit  Criteria  
  133. 133. If  yes  –  Start  execu8ng  
  134. 134. If  no  –  Pivot!   •   The  heart  of  Customer  Development   •   Change  without  crisis        (and  without  firing  execu8ves)   “The  idea  that  successful  startups  change  direc2ons  but   stay  grounded  in  what  they've  learned”  
  135. 135. YouTube - Customer Need Pivot
  136. 136. Pivot   Adapt  the  Business  Model   un8l  you  can  prove  it   works  
  137. 137. search   execu8on  
  138. 138. •  Grow  customers  from  few  to  many   •  Comes  ater  proof  of  sales   •  Inject  $’s  for  scale   •  This  is  where  you  “cross  the  chasm”     Customer  Crea8on  
  139. 139. •  (Re)build  company’s  organiza8on  &  management   •  Dev.-­‐centric  ⇒  Mission-­‐centric  ⇒  Process-­‐centric   Company Building
  140. 140. •  Customer  Discovery        Ar8culate  and  Test  your  Business  Model  Hypotheses   •  Customer  Valida5on        Sell  your  MVP  and  Validate  your  BM  &  Sales  Roadmap   •  Customer  Crea5on          Scale  via  relentless  execu8on  and  fill  the  sales  pipeline   •  Company  Building        (Re)build  company’s  organiza8on  &  management   Summary  –  Customer  Development  
  141. 141. Don’t  do  a  Boo!   Concept   Product  Dev.   Alpha/Beta   Test   Launch/   1st  Ship   “We  have  been  too  visionary.  We   wanted  everything  to  be  perfect,  and   we  have  not  had  control  of  costs"       Ernst  Malmsten   (BBC  News,  May  18  2000)  
  142. 142.                 by  Steve  Blank  and  Bob  Dorf     More  info:  www.steveblank.com   Buy  the  book:  hPp://www.amazon.com/gp/product/0984999302/     Presenta8on  based  on  
  143. 143.                         developed  by  Steve  Blank  and  Bob  Dorf     hPp://www.slideshare.net/sblank/       Using  slides  from  
  144. 144.                         Chalmers  University  of  Technology   Center  for  Business  Innova8on   www.henrikberglund.com   Follow  me  on  twiner:  @khberglund       Henrik  Berglund   2013-­‐09-­‐19   161  

×