The document discusses the importance of customer discovery in developing products that users want. It introduces the customer development model, which involves focusing on customer discovery, customer validation, customer creation, and company building. The goal of customer discovery is to develop a minimum viable product to test hypotheses about the customer, problem, and solution. Interviews are important for gathering facts outside the company to inform these hypotheses. Premature scaling, or scaling before validating the market, is a common pitfall that can cause startups to fail. Taking the time for thorough customer discovery helps startups build the right product to meet customer needs.

1. Customer Discovery
Sean Ammirati
Partner, BirchmereVentures
Adjunct Professor, Carnegie Mellon University
#CMULean

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. Why is this important?
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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. http://www.flickr.com/photos/stuckincustoms/5881027457/#CMULean

6. #CMULean

7. http://www.flickr.com/photos/data70/4748860721/sizes/o/in/photostream/#CMULean

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. Most Startups FAIL not
because what they
imagine can’t build it,
but because
NO ONE WANTS
what they built.
#CMULean

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. 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. 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. 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. 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. “The FACTS
Reside OUTSIDE
the Building”
#CMULean

16. Interviews
Problem
Current
Situation
Proposed
Solution
#CMULean

17. Reach into extended network ...
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18. #CMULean#CMULean
http://blog.startupcompass.co/pages/startup-genome-report-extra-on-premature-scal

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. #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. #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.