Customer Development in start-ups, with Boo.com as an example of what may go wrong, Palm Pilot as an example of a demo prototype (early MVP), and Groupon and YouTube as examples of pivots.
This presentation is based on the Customer Development theory developed by Steve Blank and Bob Dorf (http://www.steveblank.com), and is based on slides developed by Steve Blank and Bob Dorf (http://www.slideshare.net/sblank/).
Henrik Berglund - Customer Development for startups
1.
Customer
Development
for
Startups
Henrik
Berglund
Chalmers
University
of
Technology
Center
for
Business
Innova8on
henber@chalmers.se
www.henrikberglund.com
@khberglund
2013-‐02-‐15
1
2. Presenta8on
based
on
by
Steve
Blank
and
Bob
Dorf
More
info:
www.steveblank.com
Buy
the
book:
hJp://www.amazon.com/gp/product/0984999302/
3. Using
slides
from
developed
by
Steve
Blank
and
Bob
Dorf
hJp://www.slideshare.net/sblank/
4. Agenda
1. Startups
(Old
and
new
view)
2. Business
Models
WS
3. Customer
Development
WS
5. Part
1
Startups
(What
We
Used
to
Believe
What
We
Now
Know)
28. Tradi8onal
Development
Process
Has
Two
Implicit
Assump8ons
Customer
Problem:
known
Concept
Product
Dev.
Alpha/Beta
Launch/
Test
1st
Ship
Product
Features:
known
Works
well
for
incremental
development
projects
targe@ng
exis@ng
customers.
29. Tradi8on
–
Hire
Marke8ng
Concept
Product
Dev.
Alpha/Beta
Launch/
Test
1st
Ship
-‐
Create
Marcom
-‐
Hire
PR
Agency
-‐
Create
Demand
Marke@ng
Materials
-‐
Early
Buzz
-‐
Launch
Event
-‐
Create
Posi@oning
-‐
“Branding”
30. Tradi8on
–
Hire
Sales
Concept
Product
Dev.
Alpha/Beta
Launch/
Test
1st
Ship
-‐
Create
Marcom
-‐
Hire
PR
Agency
-‐
Create
Demand
Marke@ng
Materials
-‐
Early
Buzz
-‐
Launch
Event
-‐
Create
Posi@oning
-‐
“Branding”
-‐
Hire
Sales
VP
-‐
Build
Sales
Sales
-‐
Hire
1st
Sales
Staff
Organiza@on
31. Tradi8on
–
Hire
Business
Development
Concept
Product
Dev.
Alpha/Beta
Launch/
Test
1st
Ship
-‐
Create
Marcom
-‐
Hire
PR
Agency
-‐
Create
Demand
Marke@ng
Materials
-‐
Early
Buzz
-‐
Launch
Event
-‐
Create
Posi@oning
-‐
“Branding”
-‐
Hire
Sales
VP
-‐
Build
Sales
Sales
-‐
Hire
1st
Sales
Staff
Organiza@on
Business
-‐
Hire
First
Bus
Dev
-‐
Do
deals
for
FCS
Development
32. Example
-‐
Recognize
these?
Online
clothes
retailer
specialized
in
fashion
and
sports
(e.g.
Adidas,
Fila,
Vans,
Converse,
DKNY
and
Fred
Perry).
Raised
$160
million
(JP
Morgan,
Goldman
Sachs,
Bernard
Arnault,
BeneJon
+
six).
Developed
an
innova8ve
site
with
3D,
zoom,
360⁰
rota8on
and
virtual
mannequins,
powered
by
lots
of
JavaScript
and
Flash
Anima8ons.
Rapidly
grew
to
420
people
and
spent
heavily
on
PR
pre
launch.
Delayed
launch
repeatedly
due
to
technological
problems.
Finally
launched
in
18
countries
simultaneously
8:59
November
3
1999
EST.
34. What
happened?
40
%
of
visitors
could
not
access
the
site.
“Eighty-‐one
minutes
to
pay
too
much
money
Mac
users
could
not
operate
the
site
at
all.
for
a
pair
of
shoes
that
I
The
site
was
very
difficult
to
use
and
full
of
am
s8ll
going
to
have
to
errors,
oren
causing
computers
to
freeze.
wait
a
week
to
get?”
Extremely
slow
to
load
without
broadband.
Only
one
in
four
aJempts
to
make
a
purchase
worked.
Low
conversion
rates
(0.25%).
Conversion
rates
did
double
by
Christmas.
30%
returns,
not
10%
as
projected.
A
“low-‐bandwidth
version”
was
relaunched
within
months.
But
low
sales
+
high
costs
=>
Bankruptcy.
35. Validated
Business
Model?
"Our
strong
investor
base
offers
a
solid
founda@on
for
boo.com.
The
fact
that
such
interna@onal
investors
have
invested
in
boo.com
reflects
the
power
of
our
business
model
and
the
boo.com
brand."
Patrik
Hedelin,
Execu2ve
Chairman.
(Press
Release,
Nov
3
1999)
36. The
problem
–
untested
assump8ons!
Value
proposi@on
Customer
Key
ac@vi@es
Fashion
and
sports
online,
rela@onships
Partnering,
Realis@c
shopping
experience,
Paid
&
Earned
Media
E-‐commerce,
“Life-‐s@le
choice”
Visitor
numbers,
Global
taxes
&
.
Conversion
rates
payments,
Customer
Marke@ng
segments
Key
partners
Brands,
Warehouses,
Visualiza@on
of
“young,
well-‐off,
fashion-‐
conscious
18
to
24
year
olds”
Logis@cs
the
business
model
framwork
Cost
structure
Revenue
Key
Channels
Streams
Call
centres,
Buying
online,
resources
Online
sales/
full
retail
Return
rates,
Channel
conflicts,
price,
Developers,
Inventory
Zone
pricing
Risk
capital
CAC
&
Life@me
Value
37. What’s
wrong
with
this
picture?
Concept
Product
Dev.
Alpha/Beta
Launch/
Test
1st
Ship
• Both
Customer
Problems
and
Product
Features
are
hypotheses
• Emphasis
on
execu8on
rather
than
learning
and
discovery
• No
relevant
milestones
for
marke8ng
and
sales
• Oren
leads
to
premature
scaling
and
a
heavy
spending
hit
if
product
launch
fails
You
do
not
know
if
you
are
wrong
un@l
you
are
out
of
money/business
38. Concept
Product
Dev.
Alpha/Beta
Launch/
Test
1st
Ship
-‐
Create
Marcom
-‐
Hire
PR
Agency
-‐
Create
Demand
Marke@ng
Materials
-‐
Early
Buzz
-‐
Launch
Event
-‐
Create
Posi@oning
-‐
“Branding”
-‐
Hire
Sales
VP
-‐
Build
Sales
Sales
-‐
Hire
1st
Sales
Staff
Organiza@on
Business
-‐
Hire
First
Bus
Dev
-‐
Do
deals
for
FCS
Development
43. Focus
on
Customers
and
Markets
from
Day
One!
Value proposition
Key activities Customer
relationships
Customer
Key partners segments
Visualiza@on
of
the
business
model
framwork
Cost Key Channels Revenue
structure resources streams
44. Problem
Solu8on
Unique
Value
Unfair
Customer
Proposi8on
Advantage
Segments
Key
Metrics
Channels
Cost
Structure
Revenue
Streams
46. Product
and
Customer
Development
Product Development
Concept
Product
Dev.
Alpha/Beta
Launch/
Test
1st
Ship
+
Customer Development
Customer Customer Customer Company
Discovery Validation Creation Building
48. Search
Execu@on
Strategy
Business
Model
Opera8ng
Plan
+
Hypotheses
Financial
Model
Process
Customer
&
Product
Management
&
Waterfall
Development
Agile
Development
54. Founders run a
Customer Development Team
No sales, marketing and business
development
55. Search
Execu@on
Strategy
Business
Model
Opera8ng
Plan
+
Hypotheses
Financial
Model
Customer
Development,
Product
Management
Process
Agile
Development
Agile
or
Waterfall
Development
Customer
Func@onal
Organiza@on
Organiza@on
Development
Team,
by
Department
Founder-‐driven
64. What’s
a
Startup?
A
temporary
organiza8on
designed
to
search
for
a
repeatable
and
scalable
business
model
65. What’s
a
Startup?
A
temporary
organiza8on
designed
to
search
for
a
repeatable
and
scalable
business
model
66. What’s
a
Startup?
A
temporary
organiza8on
designed
to
search
for
a
repeatable
and
scalable
business
model
67. The
goal
is
not
to
remain
a
startup
Large
Startup
Transi@on
Company
The
goal
of
a
startup
is
to
become
a
large
company!
Failure
=
failure
to
transi@on.
69. Problem
Solu8on
Unique
Value
Unfair
Customer
Proposi8on
Advantage
Segments
What
are
you
customers’
Key
features
Single,
clear,
compelling
That
can’t
be
easily
Who
are
your
customers?
key
jobs/pains/gains?
message
that
states
why
bought,
or
imitated?
MVP
you
are
different
and
Who
are
earlyvangelists?
worth
buying
from
Key
Metrics
Channels
What
metrics
are
How
do
you
reach
most
cri8cal
customers?
to
track?
Cost
Structure
Revenue
Streams
Customer
Acquisi8on
Costs
Revenue
Model
Distribu8on
Costs
Life
Time
Value
Hos8ng
Revenue/pricing
People
etc.
etc.
Fixed/variable
70. Problem
Solu8on
Unique
Value
Unfair
Customer
Proposi8on
Advantage
Segments
What
are
you
customers’
Key
features
Single,
clear,
compelling
That
can’t
be
easily
Who
are
your
customers?
key
jobs/pains/gains?
message
that
states
why
bought,
or
imitated?
MVP
you
are
different
and
Who
are
earlyvangelists?
worth
buying
from
Key
Metrics
Channels
What
metrics
are
How
do
you
reach
most
cri8cal
customers?
to
track?
Cost
Structure
Revenue
Streams
Customer
Acquisi8on
Costs
Revenue
Model
Distribu8on
Costs
Life
Time
Value
Hos8ng
Revenue/pricing
People
etc.
etc.
Fixed/variable
71. Customers
and
problems
Who
is
the
customer?
Mul8-‐sided
market?
Different
from
user?
hJp://www.businessmodelalchemist.com/2012/08/achieve-‐product-‐market-‐fit-‐with-‐our-‐brand-‐
new-‐value-‐proposi8on-‐designer.html
72. Customers
and
problems
-‐
jobs
to
be
done
What
func8onal
jobs
is
your
customer
trying
get
done?
(e.g.
perform
or
complete
a
specific
task,
solve
a
specific
problem…)
What
social
jobs
is
your
customer
trying
to
get
done?
(e.g.
trying
to
look
good,
gain
power
or
status…)
What
emo8onal
jobs
is
your
customer
“What
jobs
are
the
customers
you
are
trying
get
done?
(e.g.
esthe8cs,
feel
good,
targe2ng
trying
to
get
done”
security…)
73. Customers
and
problems
-‐
customer
pains
What
does
your
customer
find
too
costly?
(e.g.
takes
a
lot
of
8me,
costs,
effort)
What
makes
your
customer
feel
bad?
(e.g.
frustra8ons,
annoyances)
How
are
current
solu8ons
under-‐
performing
for
your
customer?
(e.g.
lack
of
features,
performance,
malfunc8on)
“What
are
the
costs,
nega2ve
emo2ons,
bad
situa2ons
etc.
that
your
customer
risks
What
nega8ve
social
consequences
does
experiencing
before,
during,
and
a>er
ge?ng
your
customer
encounter
or
fear?
the
job
done.”
(e.g.
loss
of
face,
power,
trust,
or
status)
74. Customers
and
problems
-‐
customer
gains
Which
savings
would
make
your
customer
happy?
(e.g.
in
terms
of
8me,
money
and
effort)
What
would
make
your
customer’s
job
or
life
easier?
(e.g.
flaJer
learning
curve,
more
services,
lower
cost
of
ownership)
What
posi8ve
social
consequences
does
your
customer
desire?
(e.g.
makes
them
look
good,
increase
in
power,
status)
“What
are
the
benefits
your
customer
expects,
desires
or
would
be
surprised
by.”
What
are
customers
looking
for?
(e.g.
good
design,
guarantees,
features)
What
do
customers
dream
about?
(e.g.
big
achievements,
big
reliefs)
75. Problem
Solu8on
Unique
Value
Unfair
Customer
Proposi8on
Advantage
Segments
What
are
you
customers’
Key
features
Single,
clear,
compelling
That
can’t
be
easily
Who
are
your
customers?
key
jobs/pains/gains?
message
that
states
why
bought,
or
imitated?
MVP
you
are
different
and
Who
are
earlyvangelists?
worth
buying
from
Key
Metrics
Channels
What
metrics
are
How
do
you
reach
most
cri8cal
customers?
to
track?
Cost
Structure
Revenue
Streams
Customer
Acquisi8on
Costs
Revenue
Model
Distribu8on
Costs
Life
Time
Value
Hos8ng
Revenue/pricing
People
etc.
etc.
Fixed/variable
77. Unique
Value
Proposi@ons/Solu@on
Can
your
product/service:
• Produce
savings?
• Make
your
customers
feel
beJer?
• Put
an
end
to
difficul8es?
• Wipe
out
nega8ve
social
consequences?
78. Unique
Value
Proposi@ons/Solu@on
Can
your
product/service:
• Outperform
current
solu8ons?
• Produce
outcomes
that
go
beyond
their
expecta8ons?
• Make
your
customer’s
job
or
life
easier?
• Create
posi8ve
social
consequences?
81. Problem
Solu8on
Unique
Value
Unfair
Customer
Proposi8on
Advantage
Segments
What
are
you
customers’
Key
features
Single,
clear,
compelling
That
can’t
be
easily
Who
are
your
customers?
key
jobs/pains/gains?
message
that
states
why
bought,
or
imitated?
MVP
you
are
different
and
Who
are
earlyvangelists?
worth
buying
from
Key
Metrics
Channels
What
metrics
are
How
do
you
reach
most
cri8cal
customers?
to
track?
Cost
Structure
Revenue
Streams
Customer
Acquisi8on
Costs
Revenue
Model
Distribu8on
Costs
Life
Time
Value
Hos8ng
Revenue/pricing
People
etc.
etc.
Fixed/variable
82. How
Do
You
Want
Your
Product
to
Get
to
Your
Customer?
" Yourself
" Through someone else
" Retail
" Wholesale
" Bundled with other goods or services
82
85. How
Does
Your
Customer
Want
to
Buy
Your
Product
from
your
Channel?
" • Same day
" • Delivered and installed
• Downloaded
" • Bundled with other
" products
" • As a service
• …
"
85
86. Problem
Solu8on
Unique
Value
Unfair
Customer
Proposi8on
Advantage
Segments
What
are
you
customers’
Key
features
Single,
clear,
compelling
That
can’t
be
easily
Who
are
your
customers?
key
jobs/pains/gains?
message
that
states
why
bought,
or
imitated?
MVP
you
are
different
and
Who
are
earlyvangelists?
worth
buying
from
Key
Metrics
Channels
What
metrics
are
How
do
you
reach
most
cri8cal
customers?
to
track?
Cost
Structure
Revenue
Streams
Customer
Acquisi8on
Costs
Revenue
Model
Distribu8on
Costs
Life
Time
Value
Hos8ng
Revenue/pricing
People
etc.
etc.
Fixed/variable
89. Problem
Solu8on
Unique
Value
Unfair
Customer
Proposi8on
Advantage
Segments
What
are
you
customers’
Key
features
Single,
clear,
compelling
That
can’t
be
easily
Who
are
your
customers?
key
jobs/pains/gains?
message
that
states
why
bought,
or
imitated?
MVP
you
are
different
and
Who
are
earlyvangelists?
worth
buying
from
Key
Metrics
Channels
What
metrics
are
How
do
you
reach
most
cri8cal
customers?
to
track?
Cost
Structure
Revenue
Streams
Customer
Acquisi8on
Costs
Revenue
Model
Distribu8on
Costs
Life
Time
Value
Hos8ng
Revenue/pricing
People
etc.
etc.
Fixed/variable
97. …they
focus
on
execu8ng
the
plan…
Concept
Product
Dev.
Alpha/Beta
Launch/
Test
1st
Ship
• Both
Customer
Problems
and
Product
Features
are
hypotheses
• Emphasis
on
execu8on
rather
than
learning
and
discovery
• No
relevant
milestones
for
marke8ng
and
sales
• Oren
leads
to
premature
scaling
and
a
heavy
spending
hit
if
product
launch
fails
You
do
not
know
if
you
are
wrong
un@l
you
are
out
of
money/business
99. …
and
end
up
going
bust.
“We
have
been
too
visionary.
We
wanted
everything
to
be
perfect,
and
we
have
not
had
control
of
costs"
Ernst
Malmsten
(BBC
News,
May
18
2000)
102. Focus
on
Customers
and
Markets
from
Day
One!
Value proposition
Key activities Customer
relationships
Customer
Key partners segments
Visualiza@on
of
the
business
model
framwork
Cost Key Channels Revenue
structure resources streams
103. Product
and
Customer
Development
Product Development
Concept
Product
Dev.
Alpha/Beta
Launch/
Test
1st
Ship
+
Customer Development
Customer Customer Customer Company
Discovery Validation Creation Building
105. Customer
Development:
Key
Ideas
• Parallel
process
to
Product
Development
(agile)
• Measurable
checkpoints
not
@ed
to
FCS
but
to
customer
insights
• Emphasis
on
itera@ve
learning
and
discovery
before
execu@on
• Must
be
done
by
small
team
including
CEO/project
leader
106. Customer
Development
Heuris8cs
• There
are
no
facts
inside,
so
get
out
of
the
building!
• Develop
for
the
few,
not
for
the
many
• Earlyvangelists
make
your
company,
and
are
smarter
than
you!
• Develop
a
minimum
viable
product
to
maximize
fast
learning.
• Nail
it
before
you
scale
it
–
low
burn
by
design!
107. Customer
Development:
Four
Stages
search
execu8on
• Customer
Discovery
Ar8culate
and
Test
your
Business
Model
Hypotheses
• Customer
Valida@on
Sell
your
MVP
and
Validate
your
MB
&
Sales
Roadmap
• Customer
Crea@on
Scale
via
relentless
execu8on
and
fill
the
sales
pipeline
• Company
Building
(Re)build
company’s
organiza8on
&
management
108. Customer Discovery
• Articulate and test
your BM hypotheses
• No selling, just listening
• Must be done by CEO/
project manager
109. building
building
block
block
building
block
building
building
building
block
block
block
building
block
building
building
block
block
build
g
ing
building
buildin block
block
block
115. Test Customer Problem Hypotheses
”Do
you
have
this
”Tell
me
about
it,
how
problem?”
do
you
solve
it
today?”
1.
1.
2.
2.
3.
3.
116. Test Customer Problem Hypotheses
”Do
you
have
this
”Tell
me
about
it,
how
”Does
something
like
this
problem?”
do
you
solve
it
today?”
solve
your
problem?”
1.
1.
1.
2.
2.
2.
3.
3.
3.
Listen
carefully
to
what
they
say
at
each
step!
Focus
on
learning
-‐
Don’t
try
to
sell
them
on
your
idea!
In
the
process
you
find
out
about
other
BM
parts
as
well:
workflow,
benefits
(to
users
&
others),
preferred
channels,
cri@cal
influencers,
respected
peers
etc…
You
want
to
become
a
domain
expert!
117. Finding
people
Introduc8ons
(ask
everyone
you
know)
• Provide
the
exact
text
that
they
can
copy
and
paste
into
a
tweet
or
email
(They’re
doing
you
a
favor!
Make
it
as
easy
as
possible
for
them)
• Tell
them
exactly
how
you
are
going
to
communicate
with
their
contacts
(They’re
risking
a
bit
of
social
capital
for
you.
Be
very
clear
that
you
won’t
spam
or
annoy
people)
• Tell
them
your
goals
(What
do
you
think
you’ll
get/learn
if
they
make
this
intro
for
you?
People
want
to
know
that
they’re
contribu8ng
to
a
bigger
picture!)
118. Finding
people
AdWords,
Facebook
Ads,
Promoted
Tweets
Summarize
your
idea
and
get
it
in
front
of
people
who
have
expressed
an
interest
in
it
by
having
searched
for
your
keywords
and
clicked
your
ad
–
get
conversa8ons
(and/or
test
hypotheses
using
landing
pages).
hJp://www.cindyalvarez.com/best-‐prac8ces/customer-‐
development-‐interviews-‐how-‐to-‐finding-‐people
119. Finding
people
TwiJer
Search
Look
for
people
who
have
already
discussed
a
similar
product,
problem,
or
solu8on
and
address
a
tweet
directly
to
them:
“@username
Would
love
yr
feedback
on
[product/
problem/solu2on]
–
shd
only
take
2mins
[URL]
thanks!”
120. Finding
people
Google
Alerts
Set
up
Google
Alerts
for
your
product/problem/solu8on
–
when
it
finds
relevant
blog
posts
or
comments,
email
and
ask
for
feedback:
“I
read
your
[post/comment]
about
[product/problem/
solu2on].
I’m
currently
working
on
a
related
idea
and
I
think
your
opinion
would
be
very
valuable
to
me
–
could
you
take
2
minutes
and
check
out
[URL]?
Thank
you
–
I’d
be
happy
to
return
the
favor
any
2me.”
122. Web
Much
faster
to
build
=>
get
quan8ta8ve
feedback
sooner.
Use
a
low-‐fi
landing
page
as
subs8tute
for
(and
introduc8on
to)
conversa8ons.
Key
to
drive
traffic
through
AdWords/
Facebook
Ads/Promoted
Tweets
etc.
Build
(design
test),
measure
(run
test)
and
analyze
(evaluate
test)!
129. Reality check!
CustDev
and
ProdDev
teams
meet
and
discuss
the
lessons
learned
from
the
field.
”Here
is
what
we
thought
about
customers
and
their
problems,
here
is
what
we
found
out”
BM
hypotheses,
product
specs
or
both
are
jointly
revised.
130. Test
Solu8on
Hypothesis
1)
”We
believe
you
have
this
important
problem”
–
listen
(check).
2)
Demo
how
your
product
solves
the
problem.
Focusing
on
a
few
key
features.
Include
workflow
story:
”life
before
our
product”
and
”life
arer
our
product”
–
listen!
3)
”What
would
this
solu8on
need
to
have
for
you
to
purchase
it?”
Listen,
ask
follow
up
ques8ons.
132. “A
new
way
for
people
to
pay
for
train
8ckets
at
rail
sta8ons
using
an
electronic
payment
service,
like
PayPal,
on
their
mobile
phone.”
134. Dropbox
• 1st
solu8on
test:
a
three
minute
video
made
in
the
founder’s
apartment
before
a
complete
code
was
wriJen.
– Generated
valuable
feedback
from
visionary
customers.
• 2nd
solu8on
test:
another
video
of
the
product
that
was
posted
on
a
social
network.
– Wai8ng
list
jumped
from
5
000
to
75
000.
• Dropbox’s
original
intent
was
to
build
and
ship
their
product
in
eight
weeks.
• Instead,
they
gathered
feedback
and
launched
a
public
version
18
months
later.
136. Test Product Hypotheses
Arer
demoing,
ask
about
other
things:
Posi8oning
–
how
do
they
describe
the
product?
Product
category
(new,
exis8ng,
resegmented)
Compe8tors
Features
needed
for
first
version
Preferred
revenue
model
Pricing
Addi8onal
service
needs
Marke8ng
–
how
do
they
find
this
type
of
product?
Purchasing
process
Who
has
a
budget?
etc.
137. Web
Build
out
a
high-‐fidelity
web
page
with
“func8oning”
back-‐end,
based
on
lessons
learned.
“Mechanical
Turk”-‐solu8on.
Ask
for
money:
first
“pre-‐order”
then
charging.
Con8nue
to
test,
measure
and
analyze!
142. Reality check!
CustDev
and
ProdDev
teams
meet
and
discuss
the
lessons
learned.
”Here
is
what
we
thought
about
product
features
and
here
is
what
we
found
out”
BM
hypotheses,
product
specs
or
both
are
again
jointly
revised.
143. Customer
Discovery:
Exit
Criteria
Consistent
answers
from
“enough”
people?
What
are
your
customers
top
problems?
How
much
will
they
pay
to
solve
them?
Does
your
product
concept
solve
them?
Do
customers
agree?
How
much
will
they
pay
for
it?
When?
Can
you
draw
a
day-‐in-‐the-‐life
of
a
customer?
Before
&
arer
your
product
Can
you
draw
the
org
charts
of
users,
buyers
and
channels?
144. Customer Validation
• Develop
and
sell
MVP
to
passionate
earlyvangelists
• Validate
a
repeatable
sales
roadmap
• Verify
the
business
model
145. Minimal
Viable
Product
Based
on
your
insights
from
Customer
Discovery,
sell
the
smallest
feature
set
customers
are
willing
to
pay
for!
• Purpose
1:
Reduce
wasted
engineering
hours
(and
wasted
code)
• Purpose
2:
Get
something
into
the
hands
of
earlyvangelists
as
soon
as
possible
=>
maximize
learning!
(cf.
landing
page)
146. The
Apple
I,
Apple’s
first
product,
was
sold
as
an
assembled
circuit
board
and
lacked
basic
features
such
as
a
keyboard,
monitor,
and
case.
147. The
owner
of
this
unit
added
a
keyboard
and
a
wooden
case.
hJp://en.wikipedia.org/wiki/Apple_Inc.
149. Minimal
Viable
Product
The
MVP
is
not
the
goal
=
Requires
commitment
to
itera8on!
• “A
complex
system
that
works
is
invariably
found
to
have
evolved
from
a
simple
system
that
worked.”
• “A
complex
system
designed
from
scratch
never
works
and
cannot
be
made
to
work.
You
have
to
start
over,
beginning
with
a
working
simple
system.”
John
Gall
System-‐an8cs:
How
Systems
Really
Work
and
Especially
How
They
Fail
150. Types
of
earlyvangelists
Not
helpful
1.
Has
a
problem
2.
Understands
he
or
she
has
a
problem
3.
Ac8vely
searching
for
a
solu8on
4.
Cobbled
together
an
interim
solu8on
5.
CommiJed
and
can
quickly
fund
a
solu8on
Jackpot!
151. Customer
Valida8on:
Exit
Criteria
Do
you
have
a
proven
sales
roadmap?
Organiza8on
chart?
Influence
map?
No
staffing
un8l
roadmap
is
proven!
Do
you
understand
the
sales
cycle?
LTV,
CAC,
ROI
for
customers
etc.
Do
you
have
a
set
of
orders
($’s)
of
the
product
valida8ng
the
roadmap?
Is
the
business
model
scalable?
LTV
>
CAC
153. If
no
–
Pivot!
•
The
heart
of
Customer
Development
•
Change
without
crisis
(and
without
firing
execu8ves)
“The
idea
that
successful
startups
change
direc2ons
but
stay
grounded
in
what
they've
learned”
160. Customer
Crea8on
• Grow
customers
from
few
to
many
• Comes
arer
proof
of
sales
• Inject
$’s
for
scale
• This
is
where
you
“cross
the
chasm”
161. Company Building
• (Re)build
company’s
organiza8on
&
management
• Dev.-‐centric
⇒
Mission-‐centric
⇒
Process-‐centric
162. Summary
–
Customer
Development
• Customer
Discovery
Ar8culate
and
Test
your
Business
Model
Hypotheses
• Customer
Valida@on
Sell
your
MVP
and
Validate
your
BM
&
Sales
Roadmap
• Customer
Crea@on
Scale
via
relentless
execu8on
and
fill
the
sales
pipeline
• Company
Building
(Re)build
company’s
organiza8on
&
management
163. Don’t
do
a
Boo!
Concept
Product
Dev.
Alpha/Beta
Launch/
Test
1st
Ship
“We
have
been
too
visionary.
We
wanted
everything
to
be
perfect,
and
we
have
not
had
control
of
costs"
Ernst
Malmsten
(BBC
News,
May
18
2000)
165. Develop
a
Customer
Discovery
Plan?
• What
are
the
key
ques8ons
I
need
answered?
– (hint:
customers,
problems)
• Who
do
I
need
to
talk
with?
• How
will
I
get
them
to
talk
to
me?
• When
will
this
happen?
• How
will
I
know
I
am
done?
– With
problem
discovery?
– With
solu8on
discovery?
166. Tips
• Each
team
learns
and
evaluates
a
tool,
and
then
reports
back
to
the
whole
group:
– CrazyEgg.com
– KISSMetrics
– Unbounce
– Qualaroo
– Marketo.com
167. Presenta8on
based
on
by
Steve
Blank
and
Bob
Dorf
More
info:
www.steveblank.com
Buy
the
book:
hJp://www.amazon.com/gp/product/0984999302/
168. Using
slides
from
developed
by
Steve
Blank
and
Bob
Dorf
hJp://www.slideshare.net/sblank/