Startup NEXT Seattle - Week 1 - Customer Development and Value of Ideas. Dave Parker 2014.04.08.

1. Customer Development &
The Value of Ideas
April 2014

2. Agenda
• Customer Development
• Value of Ideas
• Economics of Ideas
• Value Propositions
• Closing Thoughts @DaveParkerSEA
www.UP.co

3. About Dave
• Serial Entrepreneur - Five Startups, 2 sold, 1 closed, 2 Active.
• Board Member - Mid Market Companies, six exits
• FormerVC - $250M Intl Fund
• VP Programs & People at UP Global
• Husband & Dad @DaveParkerSEA
www.UP.co

4. Section Title 2 Section Title 1
No campaign plan survives first contact with the enemy
Field Marshall Helmuth Graf von Moltke
!
No Plan Survives First Contact With Customers
Steve Blank

5. My Assumptions
• You want to spend the next five weeks answering real
questions
• It takes as long to build a small idea as a big idea
• Investors have opinions on every idea - you need facts to
overcome opinions
• You want to build something that matters
• Passion is important but not sufficient

6. Yes?

7. What is Customer Development?
• Talking to Prospects about your idea
• Maximizing learning
• Showing a demo
• Getting real <hard> feedback

8. Who isYour Customer?
• Business to Business
• Business to Consumer
• Not both
• What problem are you solving for them
• What’s different at Launch and at Scale?
• You need to survive to get to scale

9. Customer Development
• Interviews work - surveys don’t - panels, maybe
• Get out of the building - Interview real prospects (they aren’t
customers until they pay)
• Ask for referrals & Introductions
• Have a great value prop <below>

10. Sidebar - Build a List
• Build an email list of prospects
• Ask them to opt-in
• Setup a free Mailchimp account
• Send a two week update (every two weeks)
• What we built, what we’re going to build, where we need
help

11. Tracking Customer Dev
• Business Model Canvas is great… and to start, match:
• Value Prop
• Customer Segment
• Let customers define priorities of your build (not what’s
easiest to build)
• If you have a “Fatal Flaw” in your idea when do you want to
know - five weeks or five years?

12. What to Ask?
• Ask them about their biggest problems & how they solve
them
• Ask them about tools they use today
• Challenges they have in their work
• Magic wand question - what would you make go away
• Ask the questions to disprove your hypothesis

13. Test/Learn/Pivot on your MVP
• What is your biggest risk? Take it on first!
• State you hypothesis
• Ask if it’s a problem
• Pivot/change

14. Value of Ideas

15. Hard to
Build
LowValue
Can’t
Build
HighValue
Easy to
Build

16. Hard to
Build
LowValue
Can’t
Build
HighValue
Easy to
Build

17. Hard to
Build
LowValue
Can’t
Build
HighValue
Easy to
Build

18. Hard to
Build
LowValue
Can’t
Build
HighValue
Easy to
Build
Mobile App for
Organic Farmers
OnVashon

19. Hard to
Build
LowValue
Can’t
Build
HighValue
Easy to
Build
Mobile App for
Organic Farmers
OnVashon

20. Cost of Ideas
• Ideas do matter and so does Execution
• Bad Ideas well executed will fail
• Great teams in bad markets will fail
• What’s the Cost of an Idea?
• How do you tell if your idea is a good idea?

21. Value of Ideas
• What will a customer pay you?
• Does it save or make them $$?
• Pain Pill orVitamin?
• What’s the value of entertainment?
• Bad Ideas & Bad Markets

22. Progressive Improvements & Copycats
• Most ideas are a progression
• Adding design to the ugliest thing you know
• There are very view innovations - and customers won’t be
looking for it!
• Copycats are fine - if you know the market

23. Economics of Ideas

24. Cost of an Idea
• What will it cost to build it?
• Build length, team,“man months”
• Cost to maintain it?
• Support/customer service
• What’s your roadmap

25. Cost of Customer Acquisition
• How will you acquire customers?
• Direct Sales, channel, web direct, white label, retail?
• What will it cost you to sustain traffic
• Paid search - requires demand
• Organic search - slow
• Excludes PR and one-time efforts

26. Revenue > Costs

27. Value Proposition

28. DefiningYourValue Prop
• Products & Services
• Gain Creators
• Pain Relievers
• “Associate Test”
• Use the cohort

29. Closing Thoughts

30. DefiningYourValue Prop
• Co-Founders
• Team/Culture
• Legal
• Trusting your gut
• Do you match the idea?

31. Section Title 2 Section Title 1

32. Thanks!

33. Resources
•Startup Owners Manual - Steve Blank & Bob Dorf
•Business Model Canvas - Alex Osterwalder
•Business Model Generation
•Simon Sinek - Start with Why Video
•DKParker.com Blog