Todd Hooper provides an overview of customer development and discusses three simple rules for startups. Customer development involves synchronizing product development with customer feedback to achieve problem/solution and product/market fit. It is the opposite of traditional product development. The key stages are customer discovery, validation, creation and company building. Three rules of customer development are to get out of the building, listen to customers first then talk, and test hypotheses by building for a few passionate customers rather than many indifferent ones.

1. Customer development Todd Hooper [email_address]

2. About me Early case of the entrepreneur bug Four startups Momentum - CEO and Founder Acquired 1996 WatchGuard – Vice President IPO 1999 Trillium Lane Labs – President and Founder Acquired 2005 Napera Networks – CEO and Founder Founded 2006

3. Family, religion, friendship ... these are the three demons you must slay if you wish to succeed in business. -- Monty Burns

4. Three simple rules

5. Customer development The most critical stage that almost everyone gets wrong The only opinions that matter are from users and customers “All of the answers lie outside the building” Steve Blank

6. steveblank.com

7. What is customer development? A process to increase the odds of our startup succeeding Synchronized, parallel effort to product development Develop for the few, not the many Ideal for startups – the exact opposite to large corporate product development

8. Customer Development Customer Discovery – Achieve Problem/Solution Fit Customer Validation – Achieve Product/Market Fit Customer Creation – Drive Demand Company Building – Scale the Company

9. Traditional approach

11. Customer development approach

12. What kind of startup are we? Entering existing markets iPhone, Google Creating new markets Tivo, Palm Resegment existing markets with low price Clearwire, WatchGuard Resegment existing markets with niche Starbucks, In-n-Out Burger

13. Market Type Characteristics Existing Market Resegmented Market New Market Customers Exist Exist New Customer needs Performance Cost Perceived need Simplicity and convenience Performance Better/faster Good enough at low end Good enough at high end Improves customers life, ROI or problem/pain Competition Incumbents Incumbents Apathy/other startups Risks Incumbents Incumbents Niche strategy fails Market adoption

14. Customer discovery State your hypothesis 1-2 pages on each item

15. Stop! Have you got your Company incorporated? Name? One page website? Domain? Business cards with company name and domain?

16. Customers Find customers Personally speak to at least 30 customers Founders are the first sales people Validate them Are they really a customer? What do they consider ‘value’? ROI? Work through your ideas with them Test your critical assumptions “ User stories” Develop them Get them to engage – prototypes, beta, MVP Customer champions Ask for the order. Can you sell these people your product?

17. Customer discovery Test “Problem” Hypothesis

18. First reality check Entire team Present all customer data What problems did they have? How painful were they? How is a customers life with and without our product? Would they pay for it? How well does our product solve their problem? Prioritize features to customer problems Review your other hypotheses in light of customer info

19. Customer discovery Test “Product” Hypothesis

20. Second reality check Product reactions Loved it Liked it, but they want this or that feature Not very excited No need for it Remember, you are a startup Fast to market – v1.0 is just the first step Don’t get trapped in feature wars Is this customer willing to become an advisor ?

21. Customer discovery Verify

22. What aren’t we going to do? Enumerate needs and wants of all customers Make a list of all the generic features and hand that list to developers Run focus groups to test customer reactions after we build it

23. Three rules Get out of the building Listen to customers first, then talk Test your hypothesis Building for a few customers that love or hate your idea is better than building for the indifferent Be open to change Business and product plans rarely survive first contact with reality

24. Good luck! [email_address]