Ideation, business models; and how and where to start

Ideation, business models; and
how and where to start
By Saberi Marais

Introductions
• Innovus
• Me
– About.me/saberi
– I know my strengths
www.strengthsfinder.com
http://sf1.strengthsfinder.com/HomePage.aspx
Fact:
Entrepreneurship is about you and your
team!
It is not only about:
• Your idea/ technology/ opportunity
• How much money you have, will raise,
what car you will eventually drive
• Your business model/ Business plan
It is about:
• How you
• Make/ source
• Take advantage of
• Execute- make decisions
• Handle risk
Regarding your opportunity/ place of
work/ idea/ technology
• If you work according to your
strengths, you’ll be happier and more
effective.

Outline
• Introduction: Background and rationale
• Idea and customer development process
– Customer discovery
• Business model canvas
– Customer validation
– Customer creation
– Company building

References
• Steve Blank and Bob Dorf’s: The Startup
Owner’s Manual: The step-by-step guide for
building a great company
Every tech
developer &
business developer
should refer to this
book. Especially for
the South African
context.

References
• Alexander Osterwalder and Yves Pigneur’s:
Business model generation

References
• Eric Ries’: The lean startup

References
• Harvard Business review articles:
– “Why the Lean Startup changes everything” by
Steve Blank
– “What entrepreneurs get wrong” by Onyemah,
Pasquera and Ali

Introduction:
Background and rationale

Traditional startup process
Identify
idea/
opportunity
Write a
business
plan
Raise
funding
Receive
funding and
execute
• Assemble a
team
• Develop
product
Introduce
the product
to the
market &
start selling
Success?
Failure?
The model that we’re used to and that’s been promoted

Traditional process
Identify
idea/
opportunity
Write a
business
plan
Raise
funding
Receive
funding and
execute
• Assemble a
team
• Develop
product
Introduce
the product
to the
market &
start selling
Success?
Failure?
Right place at the right time OR
Informed and guided by research & development OR
Solution for a call for proposals, etc…

Traditional process
Identify
idea/
opportunity
Write a
business
plan
Raise
funding
Receive
funding and
execute
• Assemble a
team
• Develop
product
Introduce
the product
to the
market &
start selling
Success?
Failure?
Static plan that captures your idea and assumptions.
Excel model IS BRILLIANT! Because it makes you an
overnight millionaire.

Traditional process
Identify
idea/
opportunity
Write a
business
plan
Raise
funding
Receive
funding and
execute
• Assemble a
team
• Develop
product
Introduce
the product
to the
market &
start selling
Success?
Failure?
Assemble a team of designers, sales, marketing.
Developers write many lines of code.
Factories run overtime building you prototype.

Traditional process
Identify
idea/
opportunity
Write a
business
plan
Raise
funding
Receive
funding and
execute
• Assemble a
team
• Develop
product
Introduce
the product
to the
market &
start selling
Success?
Failure?
Introduce the product to market.
Secure supply agreements with retailers or distribution
companies and watch the volume sales.

Traditional process
Identify
idea/
opportunity
Write a
business
plan
Raise
funding
Receive
funding and
execute
• Assemble a
team
• Develop
product
Introduce
the product
to the
market &
start selling
Success?
Failure?
Depending on how the market reacts, you either make a
success or failure…
What happens when you fail? How do you know what went
wrong? Which of your assumptions are invalid?
Obligations to funders and shareholders?

Traditional process
Identify
idea/
opportunity
Write a
business
plan
Raise
funding
Receive
funding and
execute
• Assemble a
team
• Develop
product
Introduce
the product
to the
market &
start selling
Success?
Failure?
Research by Shikar Gosh (HBS): Failure rate of startups is 75%!!!
Does the model meet our needs?

Where do we start?I was sitting where you are now, thinking to myself:
“This information (accompanying the traditional
model and process) is great. But where do I actually
start? What do I do next to apply the information?
How does it slot into my execution plans? Do I focus
on product development? Should I raise funding
now? Later? When? What do the funders want to
hear?”
Because deep down I knew I needed more
guidance. Not only information.

Constraining factors for startup
growth• High cost for first customer acquisition and
getting a product wrong
• Long technology development cycles
• Few people with appropriate risk appetite to
form and execute a startup
• Structure of funding industry
– Innovation chasm
– Access to appropriate funding schemes
– Knowledge and experience of the funders
• Number of people capable of building startups
and lack of entrepreneurial ecosystems to
sustain the companies
Source: Onemeyah et al

Wrong assumptions linked to the
traditional process:
1. Startups are smaller versions of larger companies
1. Existing companies execute established business models,
and innovate them from time to time to remain
competitive
2. Startups explore suitable business models to take
advantage
3. Existing companies have management structures and
roles that are limiting to startups

2. The numbers and strategy in my business plan are
the key means of conveying the underlying value in
my business to raise funding
1. A plan is an untested series of hypotheses that need
validation
2. Need to demonstrate that your solution is needed, then
need to quantify that need to demonstrate that you are
delivering value

3. The only means of determining the success of a
startup is if the financials look good and the
opportunity and deal terms meet investors’
requirements
1. Need to start with validated hypotheses and sound,
executable business model
2. Need an informed plan to execute resulting strategy
3. Need to prove that you are delivering value to your
customer, staff and eventually shareholders

We need an alternative model and
process• To help Founders validate their vision and take advantage of ideas/
opportunities
– In a structured, iterative process
– Validation of real customer problems and needs
– Confirmation of assumptions of features
• To reduce wasting resources in the execution of your plan:
– Time: founders, investors, suppliers and customers
– Energy and pain: Founder’s and your investors
– Money: Founder’s, FFF and those of your investors
– Resources: material, customers, suppliers
• To reduce the number of unknown risks and reduce the impact of known
and unknown risks

Cash is king to startups
• Cash flow
Assumptions:
– You are selling whatever your service or product
offering is to customers
• You have met someone’s need or solved a problem
• You know how to reach your customer: marketing,
channels and promotion
– Your variable costs (materials, marketing etc) are
lower than your sales price, and therefore you are
making a profit
– Your total costs are less than you revenue so that
you are making a profit

The alternative is embedded in:
The Lean Startup method
It favors:
1. Experimentation over elaborate planning
2. Early customer feedback over intuition
3. Iterative design and development over big design upfront
It allows you to focus on developing solutions and problems that
are needed.

The principles and process
underlying Lean
1. State your hypotheses in a model (Business Model Canvas)
2. Test your hypotheses by getting out of the building/ making the
appropriate effort
1. Engage potential users, customers, partners to build rapport and obtain
feedback on
1. Elements of your business model: features, pricing, distribution channels,
resources, revenue
2. Focus on nimbleness and speed
3. Determine what your minimum viable product is with your immediate
customer feedback
3. Agile development (from software development)
1. An iterative and incremental product development process that eliminates
wasted time and resources

Starting with the end in mind is great,
however…• People often recommend back-tracking from the end point or
vision to know what they should do to start
• What if you actually need to validate whether you should
head in the direction of your vision at all?
• You need to determine :
• If the end that you have envisaged is relevant. Does anyone care about
your solution?
• If the plan you have mapped to reach your vision can be achieved.
• Can you do it alone? Who else do you need?
• You may gather some valuable information throughout the
validation process that adds to the feasibility of your plan

Alternative model incorporating
Customer Development
Identified
idea/
opportunity
Customer
discovery
Customer
validation
Customer
creation
Company
building
Pivot
Search, Learn, Build and
refine BM
Execute, ramp up BM.What you’re doing:
Gains Gains
Pivot Pivot
Transition
Gains
Pivot
Gains
Pivot
Purpose:
Reduce cost and wasted
resources
Take advantage of validated
business model
The crux of Blank and Dorf’s book

Identified
idea/
opportunity
Customer
discovery
Customer
validation
Customer
creation
Company
building
Pivot
Proof of concept/ early stage
funding/ grant-type funding
Growth/ ramp-up funding. More
“traditional” funding sources
Funding:
Gains Gains
Pivot Pivot
Transition
Gains
Pivot
Gains
Pivot

Identified
idea/
opportunity
Customer
discovery
Customer
validation
Customer
creation
Company
building
Pivot
Proof of concept/ early stage
funding/ grant-type funding
Growth/ ramp-up funding. More
“traditional” funding sources
Funding:
Gains Gains
Pivot Pivot
Transition
Gains
Pivot
Gains
Pivot
Spending:
Lean principles. Boot strapping.
Minimal expenses phase.
Once you’ve confirmed
everything -> increase burn rate
to launch into market.

Identified
idea/
opportunity
Customer
discovery
Customer
validation
Customer
creation
Company
building
Pivot
Provisional patent claim validation
phase More the final application filing territory,
because the innovation has been validated
IP protection:
Gains Gains
Pivot Pivot
Transition
Gains
Pivot
Gains
Pivot
The later you can file the better, but before publication or your competitors or
testing

Customer development process
Customer
discovery
• Based on
Founders’ vision
and business
model hypotheses
• Validate business
model hypotheses,
value proposition
Customer
validation
•Research and validate
the proposed VP
•Verify the business
model is repeatable &
scalable
•Min viable product
•Introduce to select
few/ specific
customers
•Pivot or proceed?
Customer
creation
• Start of
execution
• Building end-
user demand &
drives it into
identified sale
channels
• Scale sales
Build a
company
• Transition the
organization
from startup to a
company
• Executes a
validated,
scalable business
model

Customer discovery: Goals
• Goal 1: Converting the founders’ initial hypothesis about the
market and customers into facts.
• Goal 2: Test your understanding of the customer’s problem
and determine if your proposed solution is relevant. >
Establish proof of concept.
Build a relationship with customer segments: gain insights from
their feedback.
“Customers don’t behave like your business plan.” Blank
Customer
discovery

Steps
• Step 1: State the hypotheses
– 9 parts of business model canvas
– Write 1 pager briefs of each of them
• Step 2: Test the problem
– How important is the problem? How big can it become?
– Testing the components of the business model as well
– Gain deep insight into the customer’s workflow,
organization, product needs and update your canvas.
Customer
discovery
Get out of the
building! Make an
effort!

Steps
• insight into the customer’s workflow,
organization, product needs and update your
canvas.
• Step3: Test the solution
– Present your value proposition (product, pricing,
features) and minimum viable product to customers
• Step 4: Pivot or proceed?
– Stop and assess the results:
• Customer’s problems or needs and their reaction
• Confirm that the VP solves problems, passions or needs
• Determine the sizeable volume of customers
• Learned what customers are prepared to pay
• What the expected revenues should be and what sort of
return you could get
Customer
discovery

Business model canvas
• Alexander Osterwalder
• Definition of a business model:
– “It describes the rationale of how an organization creates,
delivers and captures value.” Osterwalder
• To sketch out your hypotheses across 9 components
of your business model
• Based in design thinking. The canvas facilitates
planning, collaboration and discussion.
• www.businessmodelgeneration.com
Customer
discovery

Customer
discovery
Source: Business Model Generation

How to use it:
• Use it as a customer discovery scorecard to
track progress in developing a viable business
model
• It’s a static snapshot of the business at a point
in time
• As a result, you will have many versions as you
learn and pivot, so keep track of them
• Look for insights and emerging strategies
Customer
discovery

How to use it:
• Read it from right to left
• It is suppose to be a macro-level snapshot of
your business, the finer detail &/ questions &/
leads will follow through using the canvas
• Use post-it notes. Color pens. Tell stories
about your hypotheses.
• Describe your organization, your competitors
and enterprises with separate canvases.
Customer
discovery

BMC: Customer segments
• Defines for whom you are going to create value, reach and serve
• Customers must want or need your product or service
• A company cannot survive without profitable customers for long
• Look for common needs, behaviors & attributes
– They need different offers
– They are reached through different distribution channels
– They need different types of relationships
– They have significantly different profitabilities
– They will pay for different aspects of your offering
• Make a conscious decision about which customer segment to serve, which
to ignore and why
Customer
discovery

BMC: Value proposition
• The bundle of products and services that create value for a
specific Customer Segment
• The VP is why the customer selects you over your competition
• It solves a customer problem or satisfies a need. Which are
those needs?
• Compete on
• Newness
• Performance
• Customization
• You “get the job done”
• Design
• What is the minimum viable product that the customer will be
interested in?
Customer
discovery
• Brand/ status
• Price
• Cost reduction
• Risk reduction
• Accessibility
• Convenience

Design your VP and your CS hypotheses
Customer
discovery
Source: www.businessmodelalchemist.com

Design your VP and your CS hypotheses
Customer
discovery
http://bit.ly/10TenJ7
Source: www.businessmodelalchemist.com

BMC: Channels
• How do you communicate and reach your Customer
Segment?
• Through which channels do they expect to be reached? Which
ones work best? Which ones are the most cost efficient?
• How do your competitors reach their CS?
• There is no point in having a Value Proposition if your
customer doesn’t know about it.
Customer
discovery

BMC: Channels
• Communication, distribution and sales channels are a
company’s interface with their customer.
• These are points of contact that play a role in your customer
experience.
• 5 Phases of Channels
– Awareness
– Evaluation
– Purchase
– Delivery
– After sales
Customer
discovery

BMC: Customer Relationship
• How do we acquire, keep and grow customers?
• Clarify the types of relationships you want/ have to establish
with specific customer segments
• Personal, Automated, self service?
• What does your customer segment expect???
• Motivated by
– Acquiring customers
– Retaining them
– Growing customer segments
– Boosting sales by upselling to them
• What costs are involved in acquiring, retaining and growing
customer segments?
Customer
discovery

BMC: Revenue streams
• The cash you make from each customer segment
• For which value are customers willing to pay?
• For what do they currently pay?
• Profit= revenues- costs
• What is the revenue model?
• Generate revenue streams with their own pricing, auctioning,
market dependent factors, volume factors or yield
management factors
• 1s off transaction or recurring revenue from the same
customer?
• What are your pricing tactics?
Customer
discovery

• The cash you make from each customer segment
• For which value are customers willing to pay?
• For what do they currently pay?
• Profit= revenues- costs
• What is the revenue model?
• What are your pricing tactics?
Customer
discovery

• Options:
– Asset sales
– Usage fee
– Subscription fee
– Lending/ renting/ leasing
– Licensing
– Brokerage fees
– Advertising
Customer
discovery

BMC: Key resources
• What assets do you need to make your VP and business
model work?
• Enables you to
– Create and offer your VP
– Reach customers through channels
– Maintain relationships with CSs
– Earn revenues
• Can be a combination of
– Physical
– Financial
– Intellectual
– Human
Customer
discovery

BMC: Key partnerships
• The network of suppliers and partners to make a business
model work
• Partnerships to optimize business models, reduce risk, acquire
resources
• Types
– Strategic alliances between non-competitors
– Cooperation: strategic partnerships btw competitors
– JVs to develop new business
– Buyer- supplier relationships to assure reliable supplies
Customer
discovery

BMC: Key partnerships
• Ask:
– Who are your partners?
– Who are your key suppliers?
– Which KR are you acquiring from partners?
– Which KA do partners perform?
Customer
discovery

BMC: Cost structure
• What are the most important costs of your business model?
• Which key resources are most expensive?
• Which key activities are most expensive?
• Is your model
– Cost driven
– Value –driven
• With the following characteristics:
– Fixed costs
– Variable costs
– Economies of scale
– Economies of scope
Customer
discovery

Example Business Model CanvasCustomer
discovery

Business model patterns
• Un-bundling business models
• The long tail
• Multi-sided platforms
• Free as a business model
• Open business model

3 core business types:
1. Customer relationship business
2. Product innovation business
3. Infrastructure business
Are driven by differences in economics, competition and culture
3 types may co-exist within a single company,
ideally they are “unbundled” into separate entities
To avoid conflicts or undesirable trade-offs
Unbundling business models

Product
innovation
Customer
relationship
management
Infrastructure
management
Economics Early market
entry.
Charge premium
prices.
Speed is key.
High cost of
customer
acquisition.
Economies of
scope are key.
High fixed costs. Large
volumes are essential to
achieve low unit costs.
Competition Battle for talent.
Low barrier of
entry.
Small players
thrive.
Battle for scope. Battle for scale.
Culture Employee
centered.
Highly service-
orientated.
Customer comes
first mentality.
Cost cutting focused.
Predictable.
Efficient.
Unbundling business models

• It’s about selling less of more.
• Offer a large number of niched products, each of which sell
relatively infrequently
• They require low inventory costs and strong platforms to
provide the niched content to buyers
• Contributors to the growth of Long Tail business models:
- Decrease in cost of technology eg. Recording music
- Democratization of distribution. Internet access
- Falling search cost to connect supply with demand. Serach engines, user
ratings, communities of interest have added to the easy.
The Long Tail

• At least one substantial Customer Segment is able to continuously benefit
from a free-of-charge offer
• Non-paying customers are financed by another part of the business model
or by another Customer Segment
Relies on certain principles:
• The demand for FREE will always out-number the demand generated from
selling items at any price point
• Examples
- The “Bait” and “Hook” model
- The Freemium model
Free business models

Example of Free business model: Bait and Hook

Customer development process
Customer
discovery
•Based on Founders’
vision and business
model hypotheses
•Validate business
model hypotheses,
value proposition
Customer
validation
•Research and
validate if customers
actually care.
•Research and
validate the
proposed VP
•Verify the business
model is repeatable
& scalable
•Min viable product
•Introduce to select
few/ specific
customers
•What market type
are you dealing with?
•Pivot or proceed?
Customer
creation
•Start of execution
•Building end-user
demand & drives it
into identified sale
channels
•Scale sales
Build a
company
•Transition the
organization from
startup to a company
•Executes a validated,
scalable business
model

Minimum viable product
• A strategy used for fast and quantitative market testing of a product or product
feature, popularized by Eric Ries (author of The Lean Startup)
• Product has sufficient features to allow it to be demonstrated, an no more.
• It is not a minimal product, but a strategy to assist in the eventual sale of the
product
• Released to a subset of customers, e.g. early adopters or industry
• Customer must understand the value and use of the product
• They must give you feedback
• Strategy to:
– Avoid building products that customers don’t want
– Maximize information about the customer and their needs
• It is part of a customer development methodology
Customer
discovery

Minimum viable product
• Demonstrate the value in your technology in the
most tangible form possible, where enable someone
else to see the value in it
– Illustrated diagrams or 3D models
– Process diagrams
– 3D printing of your initial designs
– Animations or videos
Customer
discovery

• When is it sufficiently demonstrated?
– Could be caught in a vicious development cycle
and never reach the market
– Use of time and money
– Limits can be guided by performance metrics or
industry standards
– Aim to attract client or
end-user feedback
in the process
Proof of concept/
demonstration
Develop
Validate
DesignTest
Re-
design
Customer
discovery

Pivots: it’s the Founder’s call
so do it right
• Concept coined by Eric Ries
• Are integral to the customer development process and a contributor
toward learning, innovating startups
• Pivoting is when you change a fundamental part of the business model.
For example:
– Incorrect pricing strategy
– Misunderstood customer needs/ problem
• Pivots are not failures, they are learning opportunities
– Embrace that startups fail regularly
– Experiments that you design will fail
• Traditional companies were rigid to the prospect of making mistakes and
pivoting resulting in the firing of people!
• Operating in (chaos + speed + pivots) = SUCCESS!
Customer
discovery

More on pivots
• Behavior that will lead you to not pivoting:
– Not seeing the bigger picture. Your perspective
and focus is too close to the job-at-hand.
• Step back and gain perspective of feedback you are
getting,
– Innovation/ Product infatuation. “Product love”
limits your ability to see the wood from the trees.
You deem the innovation or product an extension
of yourself and your abilities. You ignore feedback
on:
• Execution: what you can realistically achieve with what
you have available.
Source: Inc.com http://bit.ly/13zylbC

Enabling pivots to work for you
• Make change part of your company culture
– Accept and communicate change. It does not
diminish your stature as a leader and people
won’t lose confidence in you. The opposite is
true.
• Don’t go it alone
– Those around you can give you guidance,
perspective and coaching. Don’t surround
yourself with “yes” men.
• Leverage and listen
Source: Inc.com http://bit.ly/13zylbC

Customer Validation
• Proves existence of a set of customers
• Confirms customers will accept the MVP
• Serious, measurable purchase intent among
customers. How?
– Tests sales to convince customers to hand over
money
– Online software: no. of plays, no. of uses
– Letters of intent or demand for a minimum
volume
• Aims to prove there is product: market fit
Customer
Validation

Customer Validation
• Proves that the business model tested and iterated has a
repeatable , scalable BM that can deliver volume of customers
needed to build a profitable business model
• During Customer validation:
– Company tests its ability to scale:
• Product
• Customer acquisition
• Pricing and
• Channels
– Develop a sales road map for the market it identifies and targets
Customer
Validation

Customer Validation
• Sales road map relies on information
confirmed in your business model and builds
on it
– Value proposition
– Customer segments
– Customer relationships
– Channels
– Revenue model
Customer
Validation

Customer Validation
• Sales road map answers:
– Who influences a sale and who recommends it?
– Who is the decision maker?
– Who controls the budget for the product you are
selling?
– Length of a sale? No.’ of sales calls?
– What is the profile of the early buyers/ Early
evangelists of a product?
• It is not the same as employing a sales force.
• Test your MVP by asking customers if they’ll
Customer
Validation

Customer Validation Steps
1. Prepare to sell
2. Sell to “EarlyVangelists”
3. Develop positioning
4. Pivot or Proceed?
Founders must lead the sales validation team to
get further insights into their choice of business
model. Only Founder can make a call to Pivot or
Proceed.
Customer
Validation

Customer Validation Steps
“Earlyvangelists” or early adopters
• Small subset of users or customers
• Will make a “leap of faith”. They will buy &/ use unfinished, untested
products and give you feedback about it
• Characteristics:
– They want to be “the first” for the sake of gaining a competitive edge of
bragging rights
– They have or understand the problem or need you want to solve
– They are actively searching for a solution
• Will spread the good news, often virally, about your product/ service to
their circle of influence
• One potential mistake is to give heavily discounted alpha or beta products
because then expectations of price are set
Customer
Validation

Transition move/ Escape velocity
• Transition move is when you make the leap from (Customer discovery +
Customer validation) to (Customer creation + Building a company)
• It is a major move based on:
– You have established a profitable business model
– Customers give you repeatable business
• It requires honest reflection on whether you have a scalable, profitable
business
• These are the qualifiers for the move onto Customer creation!
• Are you going to spend significant money to sale the business?
– Relies on the facts that you have gathered thus far
Customer
validation

Transition move/ Escape velocity
1. Assemble date
2. Validate business model
3. Validate financial model
4. Re-validate business model
5. Pivot or Proceed?
Metrics that matter in the decision:
1. Value Proposition
2. Customer relationships and the associated costs
3. Market type and attractiveness, number of units sold
4. Cost structure
5. Channel and associated costs of sales
6. Revenue streams and selling prices
7. Burn rate
8. Cash flow positive? Over what time period?
Customer
validation

Customer creation
• After initial sales success, company now
accelerates the production and supply of its
product/ service to its customer
• Increase the monthly spend (burn rate) to
create end-user demand
• Then driving the demand to the sales channels
from you BM
Customer
creation

Customer creation
• The market type a company decides to address is
very important because it influences their
strategy
• Different market types have different revenue
curves and urn rates.
• Market characteristics and dynamics dictate entry
and execution
• Market types
1. New product to an existing market
• Marketing relatively easy
• Users can describe the market and what matters most to
them
• New entrant has a significant VP to what is existing out
there.
Customer
creation

Customer creation
• Market types
2. New product into a new market
• Company involves customers in the creation of the
product
• Or significant change in costs to create a new segment
of users
• Product is probably unknown to users/ customers so
getting feedback is challenging
• Key is not competing, but understanding if there is a
large enough customer base and if they can be
convinced to buy your product
• Be cautious to spend significantly on marketing and
Customer
creation

Customer creation
• Market types
3. New product into an existing market :
• Existing companies are missing an opportunity that
you can take an advantage of
• “Blue Ocean Strategy” by Kim and Mauborgne
• Re-segment that market as a low-cost entrant
(competing on price)
– Are there customers who will buy a “good enough” product at
a lower price?
• Re-segment the market as a niche entrant
– Is there a market segment that will buy a new product
designed to address more specific needs?
– Is the niche sizeable enough?
Customer
creation

Customer creation
• Market types
4. Cloning a successful business model in another
territory
• When an existing business has been proven in one
country but hasn’t been introduced in another
• Be careful of Trademark infringement.
Customer
creation

Build a company
• Established a validated business
• Delivering to a sizeable customer segment
• Now it looks more like a company and less like
a startup
– The guesses/ hypotheses have been confirmed
and being taken advantage of
• Might mean a change of management
• Typically have to appoint the traditional roles
of a business
Build a
company

Findings from HBR: Onyemah,
Pequera & Ali
• Interviewed entrepreneurs in Hong Kong,
Kenya, Mexico, Nigeria, UK & US
• Findings
1. What entrepreneurs regret doing:
• Starting late
• Failing to listen to what prospective clients thought of
their idea or product. Their passion and ego made them
respond negatively to feedback.
• Offering discounts too early as result of pressure from
VC and themselves to make early sales
• Making early sales to a “soft” client base: family and
friends
• Failing to seek strategic buyers. Can the buyer give you

Findings from HBR: Onyemah,
Pequera & Ali
• Findings
2. Getting past “gatekeepers” issues
• Being able to articulate your value proposition for a
sale
• When entrepreneurs made a sale, they didn’t focus on
the accounts receivable from debtors
• Being able to handle the following objections from
customers regarding:
– Efficacy
– Credibility
– Size of the company
– Price
– Switching costs

Customer’s objection Issue Proposed solution
Efficacy Skepticism of new products to
deliver on their VP.
Offer free trial samples
Credibility Age, Gender, Personal
background or experience level.
Tout partners or board members
with solid industry reputations.
Size of the company How do you ease prospective
clients’ concern about the fact
that you’re a small company?
In small companies customers
deal with the CEO, not a sales
rep.
Small companies can focus on
product quality and value.
Price Prospect will push your price
boundaries! Early customer
discount
Counter the prospect’s
cost:benefit reasoning toward
discounts
Switching costs Prospects change in routines,
procedures, systems or
relationships to switch to you
product/ service
Sell the upside of switching: save
costs over a period, save pain
that they have or may develop

In Conclusion
• Get out of the building! That is where the facts are. Not at your desk. Pick
up the phone. Make skype calls.
– Reality from ZA is that our TAM, SAM and Target Markets are not
necessarily here. We need valuable networks to reach info.
• Strike a balance between your Passion(Vision) and Objectivity
– Both can be used to convince others of the opportunity
– Passion: pulls you through the challenges
– Objectivity: your reality check for decisions
• Decisions must be based on fact, not faith
• Be creative in sourcing solutions to meet customer challenges.
• Don’t be afraid to experiment. Design your experiments well and test
them to validate your hypotheses.

In Conclusion
• Failure is an integral part of the search. If you are afraid to fail
in a startup, you are destined to fail.
• Make continuous iterations and pivots.
• Focus your efforts. Fast decision making. The iron is HOTTT!
Strike!
• Communicate and share learnings. Soundboard them with
your team, mentor or coach.
• Customer development starts with the customer’s buy-in.
• Don’t lose the passion. Be comfortable with uncertainty,
chaos and change. Embrace it.

In Conclusion
• If your funders want a business plan, give it to them. The
customer development process will give you facts to justify
your assumptions in the plan. A plan is a good tool to align
your thoughts and give you focus.
• Business models are dynamic, and evolve as you pivot and
make iterations.
• Keep track of your progress. Step back and re-evaluate.
• Preserve cash while searching for a repeatable and scalable
business model. Once these have been established, spend it!

Please connect with me
• Twitter: @_saberi
• LinkedIn: Saberi Marais
“A rising tide raises all boats.” JKF.

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