These are the slides alongside my webinar for Monash University. Talking about startup fundamentals of customers, prototyping and getting early traction.

3. 3
1. Introduction
2. Conversations
3. Prototyping
4. Proof
5. Galileo Perspective
6. Wrap Up and Extra Resources

4. 1. Introduction
Quick thoughts on startups
and creativity
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5. Ask questions and upvote
I’ve got a few polls throughout
I may also promote some of you to
panelists to chat about your startup
Let’s get...interactive
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6. Creating a new business is, at the core
of it, a very creative endeavour.
I’ve observed there are some key
fundamentals that remain constant across
all startups, especially in the first 6 months.
These ‘building blocks’ of a startup is what
we’ll go through today.
Welcome
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7. Goals for Today
Participantes from today should be able to:
● Understand why conversations with customers is important and how to
conduct their first set of interviews
● Understand some basics of creating low-fi prototypes and how to get early
results
● Understand how to demonstrate traction without needing to raise money
● What we look for at Galileo
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8. Poll: Why do you want to launch a startup?
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9. About James
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10. About James
● Founded INCUBATE at Sydney University for
last 8 years, launched 2012
● Founded Galileo Ventures (2018), a seed fund
and later-stage accelerator, which will be across
Aus and NZ
● Launched Emerging Innovations (2019) to
consult and help level-up ESOs
● Teaches Technology Venture Creation in
Engineering at Sydney University
● Computer Science Honours background from
Sydney University
● Been working with startups since 2009 (Atlassian
etc.)
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11. Quick Thoughts on Startups
N = 1
aka. each startup business is unique
But problems are not unique, ‘problems scale’
You need to be able to understand the core problem and customer
Working definition: Startups are about bringing new ideas to market to
solve problems utilising technology with the potential to grow large.
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12. Extra: Quick Thoughts on Startups
Understanding your inspiration is a key driver for me
Iterative-ideas versus step-change ideas aka 10x
Founders don’t need to be 10x
Important to start somewhere and keep making progress
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13. Source: Airtree Ventures
Extra: Momentum continues to build in Australia
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14. “Try to make sense of what you see and
wonder about what makes the universe
exist. Be curious, and however difficult life
may seem, there is always something you
can do, and succeed at. It matters that you
don’t just give up.”
— Stephen Hawking
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15. 2. Conversations
‘Don’t be selfish’
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16. Don’t be selfish
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● A common mistake in founders is becoming
too precious about their idea
● A startup is not about building your idea, it’s
about solving problems for others
● Founder-centric startups are more about
personality and ego than about doing
anything meaningful
● Problem-centric startups are about solving
problems people care about
● Aka ‘share the love’ [of solving things]

17. Don’t be selfish
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● The way to understand other people's problems is to...talk to them!
● Of course the founder needs to have a sense of direction –– vision.
● This is hard: balancing your vision with what you can achieve now –– little
steps that make meaningful progress sounds obvious
● BUT what should the little steps be?

18. Step 1: Conversations with customers
● More conversation than ‘customer interview’
● Get comfortable approaching strangers
● You don’t know if they will be your customer but you do know they have problems
● Create a set of 10 questions and get going
● The first conversations are always difficult but it gets better
● Once you’ve worked out how to ‘get in the door’ strangers love talking about their
problems
Remember: Don’t sell and let them do the talking
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19. Poll: Customer conversations
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20. The 15 minute rule
If you can get a stranger to talk for more than 15 minutes
about their problem there is a good chance they will pay for a
solution.
A customer who experiences the problem you’re trying to solve will often happily talk — or
vent — about the problem you’re going after. Getting them talking for more than an hour is
easy once they start going.
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21. Examples: Conversation questions
● How your customers are behaving today e.g. “How do you currently solve this
problem today?”
● The constraints that affect the choices and actions that your customers take e.g. “What
else is affected by this problem such as time or resourcing?”
● What frustrates or motivates your customers?
● How do your customers make decisions, spend money and determine value.
● Pro-tip: Always add “is there anything else about X that I should have
asked?” — you might be pleasantly surprised at the answers!
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Resource: Launching a Startup Guide (blog)

22. Customer conversation tips from founders
● Be conversational
● Adopt a beginner’s mindset when talking to customers
● Ask broad, open-ended questions
● Disarm politeness – get them to avoid telling you what you want to hear
● Separate behaviour from feedback (look for patterns, not desires)
● Ask “why” to get real motivations
● Always ask for introductions at the end
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23. Finding customers to talk to
Understand the ‘ponds’ in your industry:
● Social media groups e.g. FB, LinkedIn
groups
● Social media networks e.g. Instagram
profiles and followers
● Online forums e.g. discussion board and
newsletter lists
● Conferences and tradeshows
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24. Extra: Learn to love the cold call
How to talk to customers
1. Identify potential person with problem
2. Pick up the phone (or go visit them in real life)
3. Call/talk to them them
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25. Extra: Example opening script
● Founder: “Hi, I'm a student at X university looking to chat with [POTENTIAL
CUSTOMER (PC)]”
● PC: “That’s me, what is this about?”
● Founder: “I’m doing some research on [PROBLEM IN THEIR INDUSTRY] and have
spoken with [THEIR COMPETITOR] and was wondering if you have 2 minutes to chat
about it? Don’t worry, we’re not trying to sell you anything.”
● PC: “Ahh sure maybe, be quick I don’t have much time.”
● F: “Okay great thanks so much. Tell me about [PROBLEM IN THEIR INDUSTRY] and
how you currently get around this?”
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26. Extra: Finding this too difficult?
If you are finding it very difficult to find and talk to your
customers imagine how hard it will be to sell to them?
Gaining an understanding of not just your customers problems but also
how to find and talk to them is all part of the process of understanding
the problem. You need to discover where they ‘hang out’.
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27. 3. Prototyping
‘Wastage is the key to efficiency’
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28. Wastage is the key to efficiency
Founders should bias towards action
and experimentation
That means trying lots of things that
won’t work as well discovering things
that do
Successful startups have a high-volume
and high-pace of experimentation
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29. Wastage is the key to efficiency
Will you internally debate an idea or just
go try something with your customers?
This is one the biggest advantages a
startup has over established businesses.
You can try things quickly and ‘dirty’.
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30. Goal: Discover what is ‘Want / Pay / Build’ nexus
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31. Example: Buffer sign up page
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32. Example: Buffer sign up page
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“Sorry, we’re not ready now and
will quite understand if you stop
now, but if you are still interested,
let us know.”

33. Example: Clickable prototypes
● Creating a clickable prototype through
Keynote or other tools is a fast and free
way to test ideas
● Very quickly test usability and
functionality before building anything
● Need to think about core assumptions
to test beforehand
● Works well for web and mobile
applications
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Resource: Google Ventures Design Sprint

34. Example: Clickable prototypes
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35. Example: Concierge
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Concierge prototypes are about giving the
illusion of a working system i.e. ‘Wizard of Oz’
● Home cooked meals startup wanted to
test whether people would order online
and if home-chefs could fulfill extra orders
● Startup booted up a ‘marketplace’
template and manually added chefs
● Orders were placed through website and
startup manually placed orders to chefs
● Orders were hand delivered by startup

36. Example: Proof of concept prototype
● With complicated and physical products
the key is working out what
components/functionality can be shown
to work in some reduced form?
● Example: Testing electric VTOL aircraft
(i.e. flying taxis) is first done doing
functioning small scale prototypes
● Hardware/Physical devices are funded
on completing stages –– what are the
steps you need to prove to get to the next
stage?
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Vertia model aircraft. Source: AFR

37. Example: Proof of concept prototype
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Small scale prototype of the Vertia VTOL aircraft

38. “Success is walking from failure to failure with no loss of
enthusiasm.”
— Winston Churchill
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39. 4. Proof
‘Assumptions are for losers’
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40. Assumptions are for losers
● Every idea contains a set of assumptions
● But some are riskier than others –– what is your
riskiest assumption? Do you know what they are?
● Understanding and proving your assumptions to be
true (or false) is part of ‘proof’ that you have a
viable business
● The obvious assumption is ‘will people pay’ but
there is far more nuance in how and when people
want to use your product
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41. Assumptions are for losers
● Innovation is inherently ‘risky’ due to extreme
uncertainty and unknowable outcomes
● E.g. There is benefit to social media services but
we couldn’t foresee the social issues it would
create
● We’re in the business of creating new knowledge
to create new services to create new ways of doing
things
● Controlling for what you can know is an important
risk-reduction strategy
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42. Assumptions
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TEAM
Do you care (enough)?
Can you recruit people on your mission?
Does your team have the skills and resources?
TECHNOLOGY*
Can you create it?
Does the technology exist today in some form?
When will it be ready?
CUSTOMER
Do they have your problem?
Do they care enough to pay/use it?
Can you find and acquire them (at scale)?
MARKET
Is there enough demand for your solution?
Is the market growing or stagnating?
Will you become a market leader or one of many?
PRODUCT*
Can you build a first version/MVP?
When will customers start paying?
Can you continue to improve it?
Your startup
idea
*Note: I separate out product and technology here to
illustrate the nature of your first iterations of your
solution is typically separate from the technology you
plan to build. I.e. often you start with existing
solutions to make a ‘good enough’ product before
investing heavily in technology innovation to make it
‘market ready’.

43. Proof points to consider
● B2B can often start as a ‘consulting’ business, manually servicing their initial clients
before ‘switching on’ the self-service/scalable product
● B2C can often start with large pre-orders or EOIs in some form before investing in
manufacturing or software development
● Life Sciences and biotech often starts as R&D in a lab before ‘commercialising’ the
underlying IP created (how, why and who questions still apply)
● Deep-tech and medtech products often starts with an initial patentable concept before
doing market (customer) research to assess viability
● SMEs/Sole traders can typically start going with their existing skill set or accessing
traditional business loans –– it's more about finding customers
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44. Proof metrics I’ve seen
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● Website/In-person sign-ups with emails and other personal details
(B2B/B2C)
● Total product-trial registrations (B2B/B2C)
● Customer down payment for future product or service
(B2B/Deep-tech/Bio)
● EOI/MOU for large contracts or customers (B2B/Deep-tech/Bio)

45. Startup Metrics
CAC: Customer Acquisition Costs
How much does it cost to acquire one customer? It
will change a lot in the beginning but you want to
track it to get a sense of each channel.
LTV: Life-time value
Customer LTV is how much is customer can be
expected to bring into the company e.g. 1
customer will make 10 purchases on average.
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Resource: What does CAC Stand for?

46. Extra: Metrics I also track
PTR: ‘Potential Trial Revenue’
It’s difficult to express trial customers so I came up with
PTR to define people that have signed-up knowing the
minimum contract price. In this way it captures their intent
but is still not technically a ‘customer’ or ‘revenue’. It acts
a baseline of interest you’ve seen.
Sales funnel steps
How many ‘steps’ does it take for someone to give you
money? Often described in a sales funnel it’s important to
get sense of what you funnel looks like and the
conversation at each stage.
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47. Extra: Startup Metrics
ARR/MRR: Annual/Monthly Recurring Revenue: It should exclude one-off setup or consulting costs and only
things you will charge on a recurring basis to a customer.
Bookings/Booked Revenue is the value of a contract between the company and the customer. It reflects a
contractual obligation on the part of the customer to pay the company.
Revenue is money recognised when the service is actually provided or ratably over the life of the subscription
agreement.
TCV (total contract value) is the total value of the contract, and can be shorter or longer in duration. Make sure
TCV also includes the value from one-time charges, professional service fees, and recurring charges.
Burn Rate: Burn rate is the rate at which cash is decreasing. Typically described in monthly figures e.g. our
monthly burn rate is $15k.
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Resource: A16Z 16 Startup Metrics

48. 5. Galileo Perspective
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49. What we look for at Galileo
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● High-potential emerging founder –– next generation of founders
● Outsized ambition
● Special insight or expert in their field
● Affiliated with an existing accelerator, incubator or university
startup program is a plus
More information to follow in the coming months!

50. Startup Stages Continued
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Source: Galileo Ventures

51. 9. Wrap Up
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52. Emerging Innovation Masterclass:
Deep Dive on Startup Investors
Friday 17 April at 12 noon
bit.ly/monashwebinar
Sign up for my blog at jamesoutloud.com
Get updated on Galileo launch galileo.ventures/register
Before we finish
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53. Final Q&A
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54. Further Resources
● Open Source Seed Financing Docs – Link
● Legal Vision Publications – a good selection of startup manuals from an Australian context
● Curated list of Startup Resources from a Aus VC – Link
● Government Grants State by State Australia - Link
● Grants and Programs Australia – Link
● Building an investor pipeline spreadsheet TechStars – Link
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55. 55
Building Blocks of a Startup Webinar, March 2020 ©
Prepared by James Alexander for Monash University
E: james@galileo.ventures
W: galileo.ventures
B: jamesoutloud.com
Please note: This presentation is my personal opinion and does not necessarily reflect the views of Galileo Ventures Pty Ltd or
should be considered as investment advice.