The document is a guide for startups on achieving product/market fit through customer discovery and understanding value propositions. It emphasizes the importance of identifying customer segments, addressing the right problems, and validating business models to avoid common pitfalls that lead to failure. Key steps include problem discovery, user identification, and testing value propositions to meet customer needs effectively.

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GETTING YOUR STARTUP TO SCALE
Bob Dorf
Co-author “The Startup Owner’s Manual” and allegedly retired serial entrepreneur, educator, trainer

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Welcome…Great to be here!
Four things to do this afternoon:
1. Focus on your future…it’s found in “Product/Market Fit”
2. The basics of Customer Discovery
3. How to drill deeper…and deeper…and learn from your customers
…regardless of how old your startup is
…whether you’re for profit or a social venture
…and “must do’s” unless you’re filing for your IPO
4. Whatever YOU want to ask or talk about

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The Key to Your Startup’s Future:
Product/Market Fit
…THE CONSISTENT, REPEATABLE MATCH BETWEEN:
A CUSTOMER SEGMENT
WITH A HIGH LEVEL OF BUYING INTEREST
IN YOUR VALUE PROPOSITION
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This Old Guy from a NYC housing project has
spent a TON of time “on the farm…”
… startup #1 grew to include USA’s #1 agrimarketing pr agency
…how many hog auctions have YOU been to?
…I’ve met the world’s largest pig and butter cow personally
…Have promoted Roundup, Lasso, AvadexBW, Purina Hog/Cattle Chows……
…and done zillions of windshield surveys on major US/Canadian farms
..
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enough about me…let’s get to work…
WHAT DOES P/M FIT LOOK LIKE?
1. I KNOW WHO THE BUYER IS
2. I KNOW TYPE OF COMPANY TO TARGET
3. I KNOW WHO MUST BE “IN THE ROOM”
4. AND I KNOW HOW TO PITCH TO THEM
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PRODUCT/MARKET FIT: WINNERS
• THE FORD MODEL “T”
• THE “EASTERN” SHUTTLE
• MS OFFICE
• QUICKBOOKS
• VIAGARA
• GOOGLE
• SNAPCHAT
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PRODUCT/MARKET FIT: NOT SO HOT…
• THE FORD EDSEL
• NEW COKE
• MYSPACE at AGE 3
• BLACKBERRY at AGE ~12
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PRODUCT/MARKET FIT: NOT SO HOT…
So before you join the “not so hot” club…
find Product/Market Fit
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PRODUCT/MARKET FIT: LOW INTEREST
• CHANGE THE CUSTOMER SEGMENT
• CONSIDER PRICING,“FREEMIUM”
MAYBE JUST FOR NOW
• DID ONE OR TWO FEATURES STAND OUT?
• IS THE TEAM PITCHING WELL?
• IS A SALES CHANNEL NEEDED?
• HAVE MARKETING TESTS FAILED?
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PRODUCT/MARKET FIT MISMATCH
SMARTPHONE MANAGEMENT TOOLS FOR BODEGAS:
• “MY P&L IS MY POCKET”
• “I DON’T WANT THE GOVERNMENT TO SEE”
• NOT FAMILIAR WITH PDA TECHNOLOGY
• NOT INTERESTED IN EXTRA WORK
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PRODUCT/MARKET FIT: FIXING IT
SMARTPHONE MANAGEMENT FOR BODEGAS:
• NARROW THE CUSTOMER SEGMENT
• FOCUS CALLS ONLY ON THE SEGMENT
• …BIGGER BODEGAS/2 CASH REGISTERS
• …NICELY STOCKED, REFLECTS INVESTMENT
• ……NEEDS THE VALUE THE TOOL DELIVERS
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2 Roots of Most FAILURES
1. BAD OR WEAK VALUE PROPOSITION
• DOESN’T SOLVE AN URGENT BIG NEED
• NO CLEAR COMPETITIVE ADVANTAGE
• PRICING SEEMS UNREASONABLE
• SOLUTION NOT INNOVATIVE, IMPRESSIVE
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2 Roots of Most FAILURES
1. BAD OR WEAK VALUE PROPOSITION
• DOESN’T SOLVE AN URGENT BIG NEED
• NO CLEAR COMPETITIVE ADVANTAGE
• PRICING SEEMS UNREASONABLE
• SOLUTION NOT INNOVATIVE, IMPRESSIVE
BUT Maybe:
…you exposed it to the wrong people
…you didn’t explain it to customers well
…your pitch stressed wrong features/benefits
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2 Roots of Most FAILURES
2. MIS-TARGET CUSTOMER SEGMENT
• TALKING TO USERS INSTEAD OF PAYERS
• OVERLOOKING REGULATORS, BUYING GROUPS, CROP CYCLES
• MISUNDERSTANDING SALES CHANNEL
• FAILING TO RECOGNIZE IMPORTANCE OF LOCAL REFERENCES
• CONFUSING INTEREST WITH ENTHUSIASM
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2 Roots of Most FAILURES
2. MIS-TARGET CUSTOMER SEGMENT
• TALKING TO USERS INSTEAD OF PAYERS
• TALKING TO KIDS…NOT THEIR PARENTS
• MISUNDERSTANDING CHANNEL or ROLE
• CONFUSING INTEREST WITH ENTHUSIASM
BUT Maybe…
…they think it should be free(i.e. content)
…”not my problem” or “not my authority”
…the company should pay, or “I have this already”
…yawn
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VALUE PROPOSITION: FIXING IT
1. RESTACK BENEFITS/CHANGE THE PITCH
2. A/B TEST DIFFERENT COPY APPROACHES
3. A/B TEST DIFFERENT REVENUE MODELS
• RENT VS BUY
• FREEMIUM WITH IN-APP PURCHASES
• FREE TRIAL BEFORE PURCHASE
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VALUE PROPOSITION: FIXING IT
1. RESTACK BENEFITS/CHANGE THE PITCH
2. A/B TEST DIFFERENT COPY APPROACHES
3. A/B TEST DIFFERENT REVENUE MODELS
• RENT VS BUY
• FREEMIUM WITH IN-APP PURCHASES
• FREE TRIAL BEFORE PURCHASE
4. ADD OR SUBTRACT FEATURES,FUNCTIONS
5. TRY AIMING AT A DIFFERENT TARGET…
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CUSTOMER SEGMENTS: FIXING IT
1. AIM AT DIFFERENT AUDIENCE PAYERS VS USERS, MEN VS WOMEN,
PARENTS VS KIDS, SMALL TOWN VS BIG CITY
2. NARROW(OR EXPAND) YOUR TARGET:
Regulators, NGO’s, Community Leaders, Educators
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CUSTOMER SEGMENTS: FIXING IT
1. AIM AT DIFFERENT AUDIENCE PAYERS VS
USERS, MEN VS WOMEN, PARENTS VS KIDS, SMALL TOWN VS BIG CITY
2. NARROW YOUR TARGET
3. SELECT TARGETS BY DEMOGRAPHICS
ONLINE OR OFF, RICH OR POOR, MANAGER OR STAFF, AGE, GENDER, CITY VS COUNTRY
4. FIND THE SMALLEST POSSIBLE UNIVERSE!
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PRODUCT/MARKET FIT: DID YOU FIND IT?
1. A PREDICTABLE % SAY YES!
2. IF SO, TEST IT A SECOND TIME
3. CAN YOU BE PROFITABLE AT THAT %?
4. IF SO, MOVE FORWARD!
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PRODUCT/MARKET FIT: WHAT IF I HAVE IT?
1. TEST IT AGAIN TO REVALIDATE
2. TEST MARKET FOR FLANKER SEGMENTS
3. A/B TEST A BETTER/DIFFERENT VALUE PROP
OR…
4. MOVE ON TO CUSTOMER DISCOVERY
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DISCOVERY starts with a Bunch of
Hypotheses

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3key Discovery phases
1: Does anybody care?
…are we solving a serious problem?
…are we filling a “big” need?
…(is there a big market opportunity?)
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3key Discovery phases
1: Does anybody care?
…are we solving a serious problem?
…are we filling a “big” need?
…(is there a big market opportunity?)
2: Who Else solves the Problem Today?
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3key Discovery phases
1: Does anybody care?
…are we solving a serious problem?
…are we filling a “big” need?
…(is there a big market opportunity?)
2: Who Else solves the Problem Today?
3: Is Solution better/cheaper/faster?
…are the scores 4’s and 5’s or worse?
…are they eager to tell others or buy?
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Customer Discovery:
MUCH more than “do you like it?”
• How big is the market? Not today…eventually!
• Who’s the customer?
• What’s the product/service/need?
• Does the product solve the problem? Fill the need?
• Who else solves it? Cheaper? Better? Faster?
• How do you create demand?
• How do you deliver the product?
• Will the customer let you make money?
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Customer Discovery:
FIRST, Some Ground Rules
• START ANYWHERE…focus on unknowns first
• You don’t have to be an early stage startup to use it well
• You’re never selling, always asking, probing
• Let the customer steer the interaction
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Customer Discovery:
FIRST, Some Ground Rules
• You’re never selling, always asking, probing
• Let the customer steer the interaction
• No customer can answer every question
• Never fear refining and testing again
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Customer Discovery:
FIRST, Some Ground Rules
• You’re never selling, always asking, probing
• Let the customer steer the interaction
• No customer can answer every question
• Never fear refining and testing again
• DON’T STOP asking til you’re celebrating!
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You’re Always Hypothesis Testing!
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From the beginning:
6 Core Discovery Steps
1. Problem Discovery…”Does anybody care?”
2. User Discovery…”Who uses it, how often?”
3. Value Prop: Clarity, Refinement, Excitement
4. Competitive Set and Stature
5. Will Anybody Buy it?
6. How do I find them?
…p.s. I will NOT go thru them all today!
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Cautions about the 6 Steps
1. You don’t need to do them all/do in order
2. Start with your biggest questions, whether they’re in or out of order
3. Ask the same question again..and again:
1. Reduce the number of choices
2. Probe different segments, sub-segments
3. Just pick up the phone…answers are on the way!
…I PROMISE NOT TO GO THROUGH ALL SIX…JUST ENUF TO GIVE YOU A SENSE!
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Discovery: STEP ONE!
• PRIMARY MISSION is “test the problem”
• Anything else is gravy…get what you can
• Avoid details on product wherever possible
• …how do you solve it now
• …anyone solve it well for you
• …problems with current solutions
…but mostly: do customers jump up’n’down?
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Step 1: Problem Discovery
“Does Anybody Care??”
• Most b-to-b sales solve serious, costly problems
• More b-to-c sales fill needs
• Are Hermes scarves and Facebook “needs?”
• Is a user’s problem a boss’s problem too?
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Step 1: Problem Discovery
“Does Anybody Care??”
• Most b-to-b sales solve serious, costly problems
• More b-to-c sales fill needs
• Are Hermes scarves and Facebook “needs?”
• Is a user’s problem a boss’s problem too?
Our job:
1. Validate the robust, hungry market opportunity
2. Identify the neediest customer segment
3. Narrow the segment(for now) best you can
4. Keep asking til you get an overwhelming response
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Step 1: Problem Discovery
QUESTIONS to ask
1. How serious/urgent is the problem(top 5?)
2. How important is solution to company/boss?
3. Are you solving/satisfied w/solution today?
4. What solutions have you tried? Seen?
• Explore strengths/weaknesses of each
• Encourage enthusiasm for competitive features
5. “If money were no object…”
6. Availability of Budget to Solve Problem
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Step 1: Problem Discovery
TESTS to Launch
1. How serious/urgent is the problem(top 5?)
2. How important is solution to company/boss?
TESTS:
1. Stack Rank Set of Relevant Business Problems
2. Check vs. key segments: user/manager/payer
3. Describe problem/severity as you see it
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Step 1: Problem Discovery
TESTS to Launch
3. What solutions have you tried? Seen?
• Explore strengths/weaknesses of each
• Encourage enthusiasm for competitive features
4. Are you solving/satisfied w/solution today?
TESTS:
1. List/rank packaged, homegrown solutions today
2. Describe experience solving problem today
3. What’s Missing in Current Solution to Problem
4. Identify features/functions of favorite
4a. If using “key” solution, tell us experience
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Step 1: Problem Discovery
Ways to Drill Deeper
• Put a monetary or time cost on the problem
• Identify budget availability to solve problem
• Zero in on “problem owner” in corporation
• Segment key competitor users, dig deeper
• Segment non-solvers, probe reasons why not
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Step 2: User Discovery
Who Uses it…How Often
• Seasonal Use or Year Round(how much is a customer worth?)
• Is the purchase regulated(gov’t) or managed(lender)?
• Define User Base inside the Organization
• How Much Time Users Spend Solving Problem
• Is this problem somebody’s fulltime job?
• Management Prioritization of Solution
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Step 2: User Discovery
Who Uses it…How Often
• Define User Base inside the Organization
• How Much Time Users Spend Solving Problem
• Is this problem somebody’s fulltime job?
• Management Prioritization of Solution
Our job:
• Quantify users @ enterprise? How big is it?
• Quantify pain, urgency of need for solution
• Understand buyer v recommender v user
• Understand obstacles to making a sale
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Step 2: User Discovery
QUESTIONS to ask
1. Size of Company, Number or % With Problem
2. Potential Economic Value of Solving the Problem
3. Quantify time devoted to solving problem
4. Bolster with frequency, urgency/timing
5. Define job title of user, manager
6. Define professional level of user
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Step 2: User Discovery
TESTS to Launch
1. Size of Company, Number or % With Problem
2. Potential Economic Value of Solving the Problem
3. Quantify time devoted to solving problem
4. Bolster with frequency, urgency/timing
TESTS:
1. Size of Company, Number with Problem (Q)
2. Estimate #users, hours spent solving (Q)
3. Management Focus on Solving Problem (N/Q)
4. Frequency/Recurrence/Timing of Problem(N)
5. Why isn’t the Problem Solved at Copmany(V/N)
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Step 2: User Discovery
TESTS to Launch
5. Define job title of user, manager
6. Define professional level of user
TESTS:
1. Tell me about your experience and role
2. How well are you solving problem today?
3. How long searching for solution
4. How often is boss involved with problem
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Step 2: User Discovery
Ways to Drill Deeper
• Dive deeper with largest user segment
• Get referred to boss; probe priority with her
• How often does boss come “down the hall…”
• Is budget available, obtainable for solution
• Ask user to suggest price/range
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Step 3: Value Proposition Clarity
“Understand Value and Benefit?”
• Do customers understand our “FAB” proposition?
• Which features, benefits are most valued?
• Is it compelling vs. other (or no) Solution?
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Step 3: Value Proposition Clarity
“Understand Value and Benefit?”
• Do customers understand our “FAB” proposition?
• Which features, benefits are most valued?
• Is it compelling vs. other (or no) Solution?
Our job:
1. Be sure customers understand our Value Prop
2. Learn how Value Prop differs from User to Buyer
3. Assure proper prioritization of FAB sell points
4. Identify attributes that make us stand out
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Step 3: Value Prop Validation
QUESTIONS to ask
1. Enthusiasm for Value Prop as Stated
2. Prioritize Features, then Benefits, for User
3. Prioritize Value Prop in Boss’s Eyes
4. Potential for Improving Results vs status quo
5. If available today at fair price, want to buy?
6. Probe Ideas for most valuable, missing features
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Step 3: Value Prop Validation
TESTS to Launch
1. Enthusiasm for Value Prop as Stated
2. If available today at fair price, want to buy?
TESTS:
1. Prioritize Features, then Benefits for You(Q)
2. How helpful in solving problem(Q)
3. Could solution make you “hero” at company(Q)
4. Buying enthusiasm(Q); Ease of Approval(Q)
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Step 3: Value Prop Validation
TESTS to Launch
3. Prioritize Value Prop in Boss’s Eyes
4. Potential for Improving Results vs status quo
5. If available today at fair price, want to buy?
TESTS:
1. How Would Your Boss Evaluate Product
2. Value Prop Improvements vs. Status Quo
3. Willingness to recommend or purchase
4. Could solution make you “hero” at company
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Step 3: Value Prop Validation
TESTS to Launch
6. Missing or Desired Features
TESTS:
1. Estimate time using each key feature
2. What other features/functions would you like?
3. “If money were no object, what else?”
4. Select from List of Potential Features
5. Talk about how your personal use case
6. Talk about business improvements/results sought
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Step 3: Value Prop Validation
Ways to Drill Deeper
• Dive deeper with largest user segment
• Get referred to boss; probe priority with her
• Solicit mass reaction to suggested features(Q)
• Split users based on experience, education(Q)
• Drill down based on purchase enthusiasm/lack
• Drill into unenthusiastic with restacked VP
• Drill into enthusiasts for feature prioritization
• WHAT ELSE?
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Step 4: Competitive Set/Stature
“Who Else Solves This Problem?”
• What Competitors Has the Customer Seen?
• Most remarkable competitor or brand
• Experience with Competitive Solutions
• Have they tried home-grown solution? Result?
• Any brand/other preference in the category?
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Step 4: Competitive Set/Stature
“Who Else Solves This Problem?”
• What Competitors Has the Customer Seen?
• Most remarkable competitor or brand
• Experience with Competitive Solutions
• Have they tried home-grown solution? Result?
• Any brand/other preference in the category?
Our job:
• Determine key competitors,their advantages
• Identify unique core of our value proposition
• Find segments who like our solution best
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MORE QUESTIONS to Ask
• Why would anybody buy yours?
• Will anybody else pay/subsidize/finance the purchase?
• Can the product/service be leased, not sold?
• How do I find the customer? Media, personal contact, drone?
• Are personal recommendations/field trials/academic proof needed?
• Are application services or tools, approvals or licenses essential to sale?
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KEEP ASKING
QUESTIONS!

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KEEP ASKING
QUESTIONS…
YOUR CUSTOMERS HAVE THE ANSWERS!

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How do you know when Discovery is “done?”
Key Partners
Who are our key partners/ suppliers
Key Activities
Which key activities does the biz model require
Value Proposition
What value do we deliver to the customer
Customer Relationships
What type of relationship does each segment
require of us
Customer Segments
For whom are we creating value
Channels
Through which channel does each segment want
to be reached
Revenue Streams
How much is each segment willing to pay and how would they like to pay us this amount
Cost Structure
What are our cost drivers
Key Resources
Which key resources does the biz model require
 identify key market segments
(geography/application) and customer segments (e.g.
operator versus owner)
 how many customers in each segment and estimated
potential volume for each customer
 how do customers make money … key customer
pain/gain points in each segment
 how are buying decisions made in each segment - id
process, hurdles, decision makers
 what does an Earlyvangelist look like in each segment
 who influences purchases in each segment (trade
groups, key resellers, trend watchers)
 key distinctive product features & benefits for the
target customer segment
 total cost of ownership for segment versus
alternatives
 why will segment buy Durathon versus alternatives
(i.e. value proposition)
 minimum feature set (i.e. our launch configuration)
and ultimate feature set
 opportunities to claim IP or trademark / is there
freedom to practice
 what regulatory/ certification/ transportation/
customs requirements should be met or could be
differentiator
 which segments can only or best be reached through a
channel partner
 which channel partners are important to optimize
sales in each segment
 what are channel partners' requirements and cost to
become a proactive sales channel
 initial channel partner response to value proposition &
customer segments
 What are price /performance characteristics of competing technology
 What is the 2013 price target for 1 MM cells
 What is the 2015 price target for 10 MM cells
 what is optimum sales method for each segment (asset sale, lease, pay for performance, etc.)
 product positioning/elevator pitch for each segment
 Prospect roadmap: how to get face-to-face with
right person at prospects in each segment
 key competitors in each segment and their market
share
 key competitors' characteristics & dynamics
 What outbound marketing/ advertising/ promotion
activities are needed
 support tools required by segment (white papers,
TCO calc., tradeshow)
 pipeline of leads
x
x
x
X = number of in depth customer data points / data sources used to validate hypothesis
red = low hypothesis confidence
yellow = medium hypothesis confidence
green = high hypothesis confidence
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4 50
3
Complete regional overview
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 Populate life cycle data for performance guarantees
 Educate market on metric: $/kWh-day delivered
over life of asset
 Establish strong partnerships with channel partners
 Integrated power system engineering – compatibility
for retrofit and optimized system solutions
 Financing options for Power services operators
 Launch reliability
0
593/18/2017

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3 Questions to “DONE:”
603/18/2017

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When It Doesn’t Work
(that’s most of the time…)

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do it again!

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this is how
GREAT
companies
are born!!!

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remember:
GET OUT OF
THE BUILDING!
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QUESTIONS??
@bobdorf
www.bobdorf.nyc
tools/more: www.steveblank.com
online canvas: www.canvanizer.com