How to Start and Grow your Startup 3. Starting Up -The Startup Process -Customer Development -Product Development

1. Starting Up
The Startup Process
Customer Development
Product Development for Startups

2. The Startup Process
The Startup Process:
Turning ideas into products that customer will pay for

3. The Startup Process
• Product/Market fit
• How to get to product/market fit

4. The Startup Process
• Product/Market fit
– Factors for startup success
• Market
• Team
• Product
– Product/Market fit
• Being in a good market with a product that can satisfy that market
Source: Marc Andreessen

5. The Startup Process
• How to get to product/market fit
– Multiple iterations
Observe Orient
Act Decide
– How to make a startup work
• Technology infrastructure commoditization
• Better methodologies: Customer and product development
• Online marketing: SEM, Social
• Global Labor Pool
Source: Eric Ries

6. The Startup Process
• Learn more
– Marc Andreessen, “The only thing that matters”
– Eric Ries, “Principles of Lean Startups”
– Eric Ries, “Lean Startups – Low Burn by Design, not Crisis”
– Paul Graham, “Six Principles for Making New Things”

7. Customer Development Process
Iteration Execution
The Search for a Business The Growth of a Business
Product/Market Fit
The Customer Development Process:
Learn what the market wants before scaling
Source: Steve Blank & Eric Ries

8. Customer Development Process
• Customer Development Principles
• The Customer Development Process

9. Customer Development Process
• Customer Development Principles
– Distinct phases of product & company growth
– Learning & iteration vs. linear execution
– Getting out of the building
– Different market types
– Finding the right market for the product
Source: Steve Blank & Eric Ries

10. Customer Development Process
• The Customer Development Process
Iteration Execution
The Search for a Business The Growth of a Business
Product/Market Fit
Test hypotheses - Build a Create end-user Scale via relentless
Problem and product repeatable and demand and fill the execution
concept scalable sales sales pipeline
process
Source: Steve Blank

11. Customer Development Process
• The Customer Development Process - Customer Discovery
– Principles
• There are no facts inside the building, so get outside
• Test problem and product concept hypotheses
– Exit Criteria
• What are customers’ top problems? How much will they pay to
solve them?
• Does the product concept solve them? Do customers agree? How
much will they pay?
• Draw a day-in-the-life of a customer – Before & after your product
• Draw the organizational chart of users & buyers
Source: Steve Blank

12. Customer Development Process
• The Customer Development Process - Customer Validation
– Principles
• Develop a repeatable and scalable sales process
• Only earlyvangelists are crazy enough to buy
– Exit Criteria
• Is there a proven sales roadmap? Organizational chart? Influence
map?
• Do you understand the sales cycle?
• Is there a set of orders ($’s) validating the roadmap?
• Does the financial model make sense?
Source: Steve Blank

13. Customer Development Process
• The Customer Development Process - Customer Creation
– Principles
• Creation comes after proof of sales
• Creation is a strategy not a tactic
– Exit Criteria
• Right startup strategy to execute
• Positioning tested & complete
• Launch strategy matches startup type
• Demand creation activities match startup type
• First year objectives match startup type
Source: Steve Blank

14. Customer Development Process
• The Customer Development Process - Customer Creation
– Customer Creation Activities
Market Type First Year Objectives Positioning Demand Creation Launch
Existing Market Market share Product Drive demand into Credibility
differentiation the sales channel Existing basis of
competition
Resegmented Market reframing & new Segmentation & Educate market & Segmentation &
Market market share innovation drive demand into innovation
channel New basis of
competition
New market Market adoption Defining the new Customer Credibility &
market, the need education innovation
& the solution Market education &
standards setting
Source: Steve Blank

15. Customer Development Process
• The Customer Development Process - Company Building
– Principles
• Move from earlyvangelists to mainstream customers
• Build your company’s organization & management
– Exit Criteria
• Sales growth plan matches market type
• Spending plan matches market type
• Right team for the stage of company
• Mission-oriented culture?
Source: Steve Blank

16. Customer Development Process
• Learn more
– Steve Blank, “The Four Steps to the Epiphany”
– Steve Blank, “The Customer Development Methodology”
– Eric Ries, “Lean Startups – Low Burn by Design, not Crisis”
– Steve Blank, “Web Startups and Customer Development”
– Eric Ries, “What is customer development?”

17. Product Development for Startups
Product Development for Startups:
Multiple iterations increase learning and flexibility
Source: IDEO

18. Product Development for Startups
• Product Development for Startups
• Customer Development Engineering

19. Product Development for Startups
• Product Development for Startups
– Known and unknown problems and solutions
Traditional Product Development
Unit of Progress: Advance to Next Stage
Waterfall
Requirements
Specification
Design
Problem: known
Solution: known Implementation
Verification
Maintenance
Source: Eric Ries

20. Product Development for Startups
• Product Development for Startups
– Known and unknown problems and solutions
Agile Product Development
Unit of Progress: A line of Working Code
“Product Owner” or in-house customer
Problem: known
Solution: unknown
Source: Eric Ries

21. Product Development for Startups
• Product Development for Startups
– Known and unknown problems and solutions
Product Development for Startups
Unit of Progress: Validated Learning About Customers
Customer Development
Hypotheses,
Experiments,
Problem: unknown Insights
Data,
Solution: unknown Feedback,
Insights
Source: Eric Ries

22. Product Development for Startups
• Product Development for Startups
– Development principles
• Embrace change: Build what you need today
• Process-oriented development so change is painless
• Prefer flexibility to perfection: Ship early and often
• Test-driven to find and prevent bugs
• Continuous improvement vs. ship-and-maintain
Source: Eric Ries

23. Product Development for Startups
• Customer Development Engineering
– Product Development Cycle
IDEAS
LEARN BUILD
DATA CODE
MEASURE
Source: Eric Ries

24. Product Development for Startups
• Customer Development Engineering
– Customer Development Engineering Tactics
• Build:
– Small batches
– Continuous Deployment
• Measure:
– Split-testing
• Learn:
– Building a Minimum Viable Product
– Five Whys Root Cause Analysis
Source: Eric Ries

25. Product Development for Startups
• Learn more
– Eric Ries, “Lean Startups”
– Eric Ries, “Customer Development Engineering”
– Eric Ries, “Lean Startups – Low Burn by Design, not Crisis”
– Eric Ries, “How to build a Lean Startup”