Customers Before Code – Music Startup Academy, May 12, 2015
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To build a music tech product that sells and a startup that wins, founders must first deeply understand their market and the customers they intend to serve. What problems do they need solved or jobs do they need done? How much would they pay for something that does the job better? How many of them are there and how will you reach them? Until you can answer these questions, it's not yet time to code. In his talk, Shawn will address how to turn a shiny object into a salable product, applying principles from Lean Startup and Evidence-Based Entrepreneurship.
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- 1. CUSTOMERS BEFORE CODE SHAWN YEAGER, BACK PORCH GROUP MUSIC STARTUP ACADEMY – NASHVILLE, MAY 12, 2015
- 5. “SPOTIFY NEARS DEAL TO RAISE $400 MILLION AT $8.4 BILLION VALUATION” WSJ.COM,APRIL 10, 2015
- 6. 6
- 9. THIS SHIT IS HARD
- 11. 11
- 12. “A STARTUP IS AN ORGANIZATION FORMED TO SEARCH FOR A REPEATABLE AND SCALABLE BUSINESS MODEL.” –STEVE BLANK
- 13. 13
- 14. “LEAN STARTUP ISN'T ABOUT BEING CHEAP [BUT IS ABOUT] BEING LESS WASTEFUL AND STILL DOING THINGS THAT ARE BIG.” –ERIC RIES
- 15. WHAT LEADS TO WASTE? BOILING THE OCEAN – BUILDING TOO MUCH TOO SOON REQUIRING UNREALISTIC CHANGES IN USER BEHAVIOR REQUIRING UNREALISTIC CHANGES IN RIGHTS HOLDERS' BUSINESS MODELS LETTING ONE BIG CUSTOMER/PARTNER DRIVE PRODUCT 15
- 16. 16
- 17. 17
- 19. 19 LEANSTACK.COM
- 20. DO INTERVIEWS IN PERSON WRITE A SCRIPT TAKE NOTES RECORD INTERVIEWS KEEP GOING UNTILYOU HAVE “FIT” 20
- 21. DON’T USE A SURVEY USE THE PHONE WING IT LETTHE RESULTS COLLECT DUST 21
Editor's Notes
- Good morning, everyone, and thank you for being here. Thanks also to the Music Business Association for inviting me to speak with you today. My name is Shawn Yeager. I’m a partner with Back Porch Group, a venture-building and consulting company here in Nashville. We build and help others build companies and products in music and entertainment. I’m also co-founder of Endorsee, a music tech startup and one of BPG’s portfolio companies. So, I’m here to today to talk to you not as a theoretician, but as a fellow practitioner.
- Before we get started, a small bit of housekeeping. I’d love your feedback. Feel free to use #CBCMSA on Twitter, and you can find me on Twitter @shawnyeager. A quick poll: How many of you currently have a startup? How many of you are business founders? How many are technical founders?
- In the time we have together today, I have just one goal: to convince you that your potential customers & users really do know best. This is not to say they have specific answers to offer you, but that you as founders have the ability to draw information from them that collectively can dramatically increase your odds of success.
- This is often the alternative – the opposite of listening to your customers. It’s what plagues most startups: shiny object syndrome. We become fascinated by building something new, sexy - something shiny, and it blinds us to what the market really wants. This problem is rampant in music tech.
- Combine Shiny Object Syndrome with the siren song of becoming the next Spotify, and it’s easy for us founders to stray off course. When we do, we run the risk of becoming another one of these…
- This is list of dead music tech startups from 2007 from the Wall Street Journal’s All Things Digital. 2007 was a long time ago, but it paints a picture. Let’s look at how music tech has faired in the past year.
- 927 results for these search terms that I ran yesterday. Using TechCrunch as a proxy, there’s a lot of dead or dying music tech just in the past year.
- This report was published by fortune.com in September of last year. The #1 reason cited for failure by the startup founders surveyed: no market need. They built the wrong product. But the point is not to go all doom and gloom on you. My primary point is this…
- Not only do you have the typical array of challenges: the right team, talent, technology, customer acquisition, capital and the like… You also have music industry-specific challenges: licensing, IP, legal frameworks, and on and on. So why not use every tool at your disposal to increase your odds of success? My other point is this…
- Between becoming the next Spotify and landing in the deadpool, there’s a GREAT DEAL of opportunity. So many interesting problems to solve, so many users and fans clamoring for new experiences. How do we go after it? Ultimately, it boils down to this…
- The is the #1 piece of advice that Paul Graham, founder of Y Combinator, offers to startup founders. It sounds simple in theory, but in practice… not so easy.
- Silicon Valley entrepreneur and U.C. Berkeley professor Steve Blank defines a startup this way. Another definition I like is that startups exist to turn educated guesses into facts. We are organisms that exist to learn. The question then becomes How best to do so?
- Based on the principles of Lean Manufacturing developed by Toyota in the late 80s, The Lean Startup is a methodology for more effectively and successfully building startups. If you follow the mainstream tech press, you’d think that EVERYONE is an adherent, but the truth is that it’s still taking hold. How many of you own this book? How many of you have read it? (keep your hands up) How many of you put the principals to use every day? (keep your hands up, now you can go get a cup of coffee if you want)
- At it’s core, being a Lean startup is about reducing waste – time, energy, capital – and finding the right solution for a market that wants what you’re building and is willing to pay you for it.
- In our work at BPG, we see the same problems over and over again.
- Customer Development is how we avoid or at least minimize the impact of these problems. This process answers four crucial questions: Does a specific product solve a known problem for an identifiable group of users (Customer Discovery)? Is the market saleable and large enough that a viable business might be built (Customer Validation)? Is the business scalable through a repeatable sales and marketing roadmap (Company Creation)? What company departments and operational processes are needed to support scale (Company Building)?
- This is the business model canvas developed by Alexander Osterwalder. If you don’t know it, you really should. It’s another incredibly powerful tool for startups. Customer development is about testing the top risks in your business model one by one. If the risks are insurmountable, then you pivot and do it all over again until you find a model that works.
- Here’s the punchline: customer development is what you do before you write a SINGLE LINE OF CODE. This is usually the hardest thing for developers and engineers to swallow, but it is crucial to maximizing your startup’s runway and chances for success.
- From Ash Maurya’s excellent leanstack.com, this is the basic structure of a customer interview. There’s a lot here, and it requires study and practice, but I want to touch on the high points. [Walk through each piece and what it gets you]
- Fit = 80% or more of your interviews validate your hypothesis
- Ultimately, Customer Development is about optimizing what you build for what the market wants. Across my almost 20 year career in technology, I’ve been part of boot-strapped, ventured-backed and public companies. With some, we got it very right and with others, we got it very wrong, burning obscene amounts of money trying to force a product on a market that simply didn’t want what we had built. Applying Customer Development and understanding your potential customers is a big part of how you avoid those mistakes. These are a few great resources to get you started.
- I hope my time with you today proves valuable, and I’d love to hear how your customer development goes. [Mind if I take a group photo?] Thank you, and enjoy the rest of the day.