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Customer Discovery: Lean Entrepreneurship

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Customer Discovery is the first of four steps in the Customer Development process originally documented in Steve Blank's The Four Steps to the Epiphany.

The important thing to figure out as an entrepreneur at this step of development is: Does your product / service solve a problem for an identifiable group of users?

Slides for my Lean Entrepreneurship course @ Carnegie Mellon University (94-840)

Published in: Business, Technology
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Customer Discovery: Lean Entrepreneurship

  1. 1. Customer Discovery Sean Ammirati Partner, BirchmereVentures Adjunct Professor, Carnegie Mellon University #CMULean
  2. 2. The Customer Development Model #CMULean Focus Customer Discovery Customer Validation Customer Creation Company Building A product solves a problem for an identifiable group of users The market is saleable and large enough that a viable business might be built The business is scalable through a repeatable sales and marketing roadmap Company departments and operational processes are created to support scale
  3. 3. Why is this important? #CMULean
  4. 4. Dec 2006 Conviction to build FeedHub Aug 2007 Private Beta of FeedHub Sept 2007 Launch FeedHub @ Demo 2007 10 months of “Stealth Mode” #CMULean
  5. 5. http://www.flickr.com/photos/stuckincustoms/5881027457/#CMULean
  6. 6. #CMULean
  7. 7. http://www.flickr.com/photos/data70/4748860721/sizes/o/in/photostream/#CMULean
  8. 8. In a sense there's just one mistake that kills startups: not making something users want. If you make something users want, you'll probably be fine, whatever else you do or don't do.And if you don't make something users want, then you're dead, whatever else you do or don't do. Paul Graham, Y Combinator http://www.paulgraham.com/startupmistakes.html
  9. 9. Most Startups FAIL not because what they imagine can’t build it, but because NO ONE WANTS what they built. #CMULean
  10. 10. “Launch early enough to be embarrassed by your product’s first version” Reid Hoffman, Co-Founder & Chairman LinkedIn Source: http://www.flickr.com/photos/joi/1431818434/sizes/l/in/photostream/#CMULean
  11. 11. The Customer Development Model #CMULean Today’s Focus Customer Discovery Customer Validation Customer Creation Company Building A product solves a problem for an identifiable group of users The market is saleable and large enough that a viable business might be built The business is scalable through a repeatable sales and marketing roadmap Company departments and operational processes are created to support scale
  12. 12. C-P-S Hypothesis Customer: I believe my best customers are Marketers. Problem: They have no idea if a specific campaign is generating a return on investment (ROI). Solution: Analytics that easily demonstrate marketing ROI. #CMULean Example Source: The Entrepreneur's Guide to Customer Development The objective is to define a hypothesis that is testable...
  13. 13. C-P-S Hypothesis v2 #CMULean Example Source: The Entrepreneur's Guide to Customer Development Customer: I believe my best customers are small and medium- sized business (SMB) marketers. Problem: Who cannot easily measure campaign ROI because existing solutions are too expensive, complicated to deploy, and display a dizzying array of nonactionable charts. Solution: Low cost, easy to deploy analytics systems designed for non-technical marketers who need actionable metrics.
  14. 14. 3 Other Key Hypothesis 1. Your business: assumptions concerning business model, partners, relationships, and dependencies captured in your ecosystem diagram. 2. Your product: the features requirements you believe are necessary to complete your final MAP. 3. Your funnel: assumptions about how you will acquire and convert your customers. Adapted from The Entrepreneur's Guide to Customer Development #CMULean
  15. 15. “The FACTS Reside OUTSIDE the Building” #CMULean
  16. 16. Interviews Problem Current Situation Proposed Solution #CMULean
  17. 17. Reach into extended network ... #CMULean
  18. 18. #CMULean#CMULean http://blog.startupcompass.co/pages/startup-genome-report-extra-on-premature-scal
  19. 19. #CMULean#CMULean http://blog.startupcompass.co/pages/startup-genome-report-extra-on-premature-scal Premature scaling is the most common reason for startups to perform worse. They tend to lose the battle early on by getting ahead of themselves. Startups can prematurely scale their team, their customer acquisition strategies or over build the product.
  20. 20. #CMULean#CMULean http://blog.startupcompass.co/pages/startup-genome-report-extra-on-premature-scal Startups need 2-3 times longer to validate their market than most founders expect. This underestimation creates the pressure to scale prematurely.
  21. 21. #CMULean#CMULean http://blog.startupcompass.co/pages/startup-genome-report-extra-on-premature-scal In our dataset we found that 70% of startups scaled prematurely along some dimension.While this number seemed high, this may go a long way towards explaining the 90% failure rate of startups.

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