The focus on this set of slides are on customer development, mainly motivated by Steve Blank's "4 Steps to Epiphany", and centered a lot on customer discovery & validation. Based on a three hour session I have conducted on customer development for a summer school between Nanyang Technopreneurship Centre, Nanyang Technological University & Chonnam University, Korea on 18 June 2013.
2. Steven Blank & Bob Korf
“The Startup Owner’s Manual”
A startup is a temporary organization designed to search
for a repeatable and scalable business model.
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3. The primary objective of a startup is to
validate its business model hypotheses
(and iterate & pivot until it does).
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8. Customer Development for
an early stage company
• Step 1: Customer discovery
captures the founders’ vision &
turns it into a series of business
model hypotheses. Then it
develops a plan to test customer
reactions to those hypotheses
and turn them into facts.
• Step 2: Customer validation
tests whether the resulting
business model is repeatable &
scalable - otherwise go back
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9. Customer Development for
an early stage company II
• Step 3: Customer creation
starts the execution
process, builds the end-
user demand & drives into
sales channel to scale the
business.
• Step 4: Company-building
transitions the start-up into
a company focusing on
executing a validated
model.
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10. What not to do for customer discovery
• Please note that you are not going to do the following:
• Understand the needs & wants of all customers.
• Make a list of all features customers want before they
buy your product.
• hand Product Development a features list of the sum
of all customer requests.
• hand Product Development a detailed marketing
requirements documents.
• run focus groups & test customers’ reactions to your
product to see if they will buy
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13. Served Available
Market (SAM)
Target Market
Total Addressable
Market (TAM)
TAM = How big is the universe
SAM = How many can I reach
with my sales channel
Target Market (for a startup) =
Who will be the most likely
buyers
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16. Characteristics of a Earlyvangelist
Has a problem
Is aware of having a problem
Been actively looking for a solution
Assembled a solution out of parts
Has/Acquired a budget
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17. Market Type
• Is there an established, well-defined market with large
numbers of customers?
• Would some part of an existing market buy a product
designed to address its specific needs?
• Are there customers at the low end who will buy “good
enough” performance?
• Is there a “new market” to be created?
• Can you adopt/borrow/copy an already successful
business model & company from US and adapt it to
large local market (China, India, Brazil, Indonesia,
Russia)?
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18. Existing Market
Resegmented Market
(niche or low cost)
New Market Clone Market
Customers
Product Performance
Competition
Risks
Existing Existing New/New usage New
Better/Faster
1. Good enough at the
low end.
2. Good enough for
the niche.
Low in “traditional
attributes”, improved
by new customer
metrics
Good enough for local
market.
Existing Incumbents Existing Incumbents
Non-consumption/
Other startups
None, foreign
originators
Existing Incumbents
1. Existing Incumbents
2. Niche strategy fails.
Market Adoption Cultural Adoption
Market Type Trade-offs
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19. 9 Deadly Sins of New Product
Introduction Model
• Assuming “I know what the customer wants” - On day 1, a startup is a
faith-based initiative
• The “I know what features to build” flaw
• Focus on launch date.
• Emphasis on execution instead of hypotheses, testing, learning &
iteration.
• Traditional business plans presume no trials & no errors.
• Confusing traditional job titles with what a startup needs to
accomplish.
• Sales & marketing execute to a plan.
• Presumption of success leads to premature scaling.
• Management by crisis leads to a death spiral.
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21. Business Model Canvas
• Market Size: How big the opportunity is.
• Value Proposition: Product/Service, its benefits & minimum viable
product
• Customer Segments: who the customer is & what problems the product
solves
• Channels: how the product will be distributed and sold.
• Customer Relationships: How demand will be created.
• Value Proposition, Part 2: Market type hypothesis & competitive set/
differentiation.
• Key Resources: Suppliers, commodities or other essential elements of
the business.
• Key Partners: other enterprises essential to the success of the business.
• Revenue Streams: revenue & profit sources & size.
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24. Customer Validation
• Can the business scale?
• Is there a repeatable and scalable sales
roadmap? Does the company know the right
prospects to call on or acquire & what to say to
them to consistently deliver sales?
• Is the sales funnel predictable?
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26. Customer Development Manifesto 1
• Rule 1: There are no facts inside your building.
So get outside.
• Rule 2: Pair customer development with agile
development.
• Rule 3: Failure is an integral part of the search.
• Rule 4: Make continuous iterations & pivots
• Rule 5: No business plan survives first contact
with customers.
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27. Customer Development Manifesto 2
• Rule 6: Design experiments & tests to validate your
hypotheses.
• Rule 7: Agree with market type: it changes everything.
• Rule 8: Startup metrics differ from those in existing
companies.
• Rule 9: Fast decision-making, cycle time, speed &
tempo.
• Rule 10: It’s all about passion i.e. startups demand
executives to be comfortable with uncertainty, chaos &
change.
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28. Customer Development Manifesto 3
• Rule 11: Startup job titles are very different
from a large company.
• Rule 12: Preserve all cash until needed.
Then spend.
• Rule 13: Communicate & share learning.
• Rule 14: Customer development success
begins with buy-in.
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29. References
• Eric Ries, “The Lean Startup”
• Steve Blank & Bob Dorf, “The Startup Owner’s
Manual”
• Alastair Croll & Benjamin Yoskovitz, “Lean
Analytics: Use Data to Build a Better Startup
Faster”
• Business Model Generation by Alexander
Osterwalder & Yves Pigneur
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30. Contact Me
• You can connect with me via
LinkedIn with my email
bleongcw@gmail.com
• You can check out my blog:
http://www.bernardleong.com
• You can follow me via twitter:
@bleongcw
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