Startup Customer Development (Seedcamp, London)


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This is the first major update to my slides on Slideshare in almost a year. My thinking has evolved significantly after helping take an additional 8 startups to market.

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  • Rational approach to customer acquisition for early-stage consumer companies.
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Startup Customer Development (Seedcamp, London)

  1. Startup Customer Development<br />Sean Ellis <br />Seedcamp 2009 (London)<br />Sept 22, 2009<br />
  2. #1 Startup Risk = Customers<br />Huge challenge to acquire & convert<br />Little useful guidance available<br />Hard to know where to start (hundreds of things you “could do”)<br />2<br /><br />
  3. What Really Mattered on Road to IPOs?<br />Understand users and use cases<br />Focus on right metrics & optimize<br />Apply engineering to marketing<br />Early execution is most critical<br />3<br /><br />
  4. Primary Focus Now Critical Zone<br />Critical<br />Zone<br />IPOs<br />Growth Stage<br />Then light advising in growth stage<br />4<br /><br />
  5. Customer Development Framework<br />5<br /><br />
  6. Growth Starts with the Product<br />6<br /><br />
  7. What is Product/Market Fit?<br />People want/need your product<br />And they represent large enough market<br />Differentiated from alternatives<br />Users will pay for your product<br />Or you are advertising supported<br />7<br /><br />
  8. “Life of any startup can be divided into two parts -before P/M fit and after P/M fit”<br />Marc Andreessen<br />Founder Netscape, Opsware, Ning<br />8<br /><br />
  9. PayPal’s Quest for P/M Fit<br />$200K seed funding - cryptography<br />“No one really needed it” Max Levchin<br />$4.5M VC funding - PDA payments<br />People preferred web demo (100X users)<br />$1.5B sale to eBay – web payments<br />9<br /><br />
  10. Survey Your Product/Market Fit<br />Free template at<br />10<br /><br />
  11. Key Product/Market Fit Question<br />“How would you feel if you could no longer use Product?”<br />11<br /><br />
  12. Transition to Growth<br />12<br /><br />
  13. Transition to Growth<br />Track/report right metrics<br />Positioning (based on perceived value)<br />Viable economics (business model)<br />13<br /><br />
  14. Optimize Before Growing<br />Landing pages<br />Funnel (acquisition through transaction)<br />12%<br />13%<br />8%<br />…<br />14<br /><br />
  15. Scalable Growth Now Possible<br />15<br /><br />
  16. Test from Free to Paid Channels<br />16<br /><br />
  17. Driving/Managing Growth<br />Budget to maximize positive ROI spend<br />17<br /><br />
  18. Improve Lifetime Value<br />Customer retention is critical<br />Cross/up sell additional products<br />This expands profitable channels<br />18<br /><br />
  19. Complete Startup Pyramid<br />Growth<br />Optimize<br />Economics<br />Positioning<br />Product/Market Fit<br />Twitter: @seanellis<br />Blog:<br />