The document provides information on how to build a startup, including lessons on common startup mistakes and tools for startups. It discusses how startups are different from large companies and should not try to emulate them. Specifically, it outlines customer development as the key process startups need to search for a business model, rather than executing a predetermined plan. Pivoting quickly based on customer feedback is also emphasized. The minimum viable product and business model canvas are presented as important startup tools.
6. Lifestyle Startups
Work to Live their Passion
Startup
• Serve known customer with
known product
• Work for their passion
7. Small Business Startups
Work to Feed the Family
Small
Startup
Business
• Serve known customer with
known product
• Feed the family
8. Small Business Startups
Work to Feed the Family
Small
Startup
Business
Exit Criteria
• known customer - Business Model found
known product
- Profitable business
• Feed the family
- Existing team
< $500K in revenue
9. Social Entrepreneurship Startups
Social Large
Startup Non-Profit
• Solve pressing social problems
• Social Enterprise: Profitable
• Social Innovation: New Strategies
10. Scalable Startup
Search Execute
Scalable Large
Startup Company
Goal is to solve for:
unknown customer and
unknown features
11. Scalable Startup
Search Execute
Scalable Large
Startup Company
Goal is to solve for: Exit Criteria
unknown customer and - Business model found
unknown features - Total Available Market > $500m
- Can grow to $100m/year
12. Buyable Startup
Born to Be Big
Search Sell
Scalable $2 to $50M
Startup Acquisition
Goal is to solve for: Sell to larger company
Internet, Mobile, Gaming Apps
30. Large Company Method –
Hire Marketing
Concept/ Product Alpha/Beta Launch/
Seed Round Dev. Test 1st Ship
- Create Marcom - Hire PR Agency - Create Demand
Marketing Materials - Early Buzz - Launch Event
- Create Positioning - “Branding”
31. Large Company Method –
Hire Sales
Concept/ Product Alpha/Beta Launch/
Seed Round Dev. Test 1st Ship
- Create Marcom - Hire PR Agency - Create Demand
Marketing Materials - Early Buzz - Launch Event
- Create Positioning - “Branding”
• Hire Sales VP • Build Sales
Sales • Hire 1st Sales Staff Organization
32. Large Company Method –
Hire Business Development
Concept Product Alpha/Beta Launch/
Dev. Test 1st Ship
- Create Marcom - Hire PR Agency - Create Demand
Marketing Materials - Early Buzz - Launch Event
- Create Positioning - “Branding”
• Hire Sales VP • Build Sales Channel /
Sales • Pick distribution Distribution
Channel
Business • Hire First • Do deals for FCS
Development Bus Dev
33. Large Company Method –
Hire Engineering
Concept Product Alpha/Beta Launch/
Dev. Test 1st Ship
- Create Marcom - Hire PR Agency - Create Demand
Marketing Materials - Early Buzz - Launch Event
- Create Positioning - “Branding”
• Hire Sales VP • Build Sales Channel /
Sales • Pick distribution Distribution
Channel
Business • Hire First • Do deals for FCS
Development Bus Dev
Engineering • Write MRD • Waterfall • Q/A •Tech Pubs
34. Lesson 4
WHAT DO WE NEED TO GET
STARTUPS RIGHT?
75. Customer Development is
how you search for the model
Search Execution
Customer Customer Customer Company
Discovery Validation Creation Building
Pivot
76. Customer Development
The Search For the Business Model
Search
Customer Customer
Discovery Validation
Pivot
77. Customer Development
Execution
Customer Customer Customer Company
Discovery Validation Creation Building
Pivot
78. Customer Discovery
Search
Customer Customer Customer Company
Discovery Validation Creation Building
Pivot
Execution
• Articulate and Test your hypotheses
• Design experiments, start listening
• Continuous Discovery
• Done by founders
79. Discovery
• How big is the market?
• Who’s the customer?
– What’s their problem/need
• What’s the product/service/need?
– Does it solve the customers problem?
• How do you create demand?
• How do you deliver the product?
• How do you make money?
80. Customer Development =
process to search
Business Model Canvas =
the Scorecard
Agile Engineering is How
•Research
Labs
•Technology
Design
•Marketing •Cost
•Farming
conventions.
•Demo, dem
o, and •Organic
•Demo and Reduction
We Build Startups
•Equipment
Manufactur
ers
customer
feedback
•Remove
labor force
demo!!
•Proximity is
paramount
Farmers
•Weeding
Service
•Distributio pains
•IP – Providers
n Network •Eliminate
Patents •Conventio
•Service •Video bio-waste •Dealers nal Farmers
Providers Classifier hazards •Direct Service
Files •Indirect Service
• … then Dealers
•Robust
Technology
Value- •Asset Sale
Driven •Direct Service with
equipment rental
•… then Asset Sale
81. Customer Validation
Search
Customer Customer Customer Company
Discovery Validation Creation Building
Pivot Execution
• Repeatable and scalable business model?
• Passionate earlyvangelists?
• Pivot back to Discovery if no customers
82. The Minimum Viable Product (MVP)
•Smallest feature set that gets you the most …
- orders, learning, feedback, failure…
- incremental and iterative
84. The Pivot
Search
Customer Customer
Discovery Validation
Pivot
•The heart of Customer Development
•Iteration without crisis
•Fast, agile and opportunistic
85. Pivot Cycle Time Matters
Search Execution
Customer Customer Customer Company
Discovery Validation Creation Building
Pivot
•Speed of cycle minimizes cash needs
•Minimum feature set speeds up cycle time
• Near instantaneous customer feedback
drives feature set
86. Web/Mobile Versus Physical
Customer Customer
Discovery Validation
Pivot
•Web/Mobile startups run faster
•Different process steps for web vs. physical
•Customer Relationships are radically different
102. 20 interviews, 6 site visits…
We got OUR Boots dirty
Mowing
Interviewed:
• Golf: Stanford Golf course
• Parks: Stanford Grounds Supervisor, head of maintenance and
lead operator (has crew of 6)
• Toro dealer (large mower manufacturer)
• User of back-yard mowing system
• Maintenance Services for City of Los Altos
• Colony Landscaping (Mowing service for stadiums)
Weeding
Visited two farms in Salinas Valley to better understand problem
Interviewed:
• Bolthouse Farms, Large Agri-Industry in Bakersfield
• White Farms, Large Peanut farmer in Georgia
• REFCO Farms, large grower in Salinas Valley
• Rincon Farms, large grower in Salinas Valley
• Small Organic Corn/Soy grower in Nebraska
• Heirloom Organics, small owner/operator, Santa Cruz Mts
• Two small organic farmers at farmers market
• Ag Services of Salinas, Fertilizer applicator
103. Business Plan
Autonomous Vehicles for Mowing & Weeding
- Innovation Dealers Mowing
- Dealers - Customer We reduce sell, installs and - Owners of
(Mowing and Education operating cost supports public or
Ag) - Dealer training - Labor reduction customer commercially
- Vehicle OEMs - Better used green
(John utilization of Co. trains spaces (e.g. golf
Deere, Toro, Jac assets (eg mow dealers, supports courses)
obsen, etc) or weed at dealers - Landscaping
Engineers on nights) - Mowing
service provider
- Research labs Autonomous - Improved Dealers
vehicles, GPS, performance - Ag Dealers Weeding
path-planning (less - Farmers with
rework, food manual weeding
safety) operations
Dealer discount Asset sale
COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the
Heavy R&D investment equipment
104. Found weeding in organic crops is HUGE
problem; 50 - 75% of costs
Crews of 100s-1000
Back-breaking task
(Ilegal) labor harder to get
1-5 weedings per year/field
$250-3,500 per acre and
increasing
Food contamination risk
105. Decision to make – mowing vs weeding
Application If ROI is < 1 Labor costs Autonomous TAM
yr they will significant? would solve
buy problem?
Mowing of Yes. Yes Yes Adjusted up to
Professionally xxx
large fields run
organizations
Weeding in Agri Industry: YES! for TAM increased
YES! organic crops Not necessarily to $2.6 B (Total
Agriculture organic)
Large They are Key need is
Growers: Yes spending weed vs. crop Target Market
$500/ac! differentiation (organic
Small specialty)
Growers: No 162 M/yr
18%/yr growth
106. Autonomous vehiclesWEEDING
- Innovation Dealers - Low density
- Ag Dealers - Customer We reduce sell, installs and vegetable
- Ag Service Education operating cost supports growers
providers - Dealer training - Labor reduction customer - High density
(100 to 1) vegetable
- Research labs - Reduced risk of Co. trains growers
contamination dealers, supports - Thinning
- Mitigate labor dealers operations
Engineers on availability - Ag Dealers
- Conventional
Machine Vision concerns - Ag Service
vegetables
Two problems: providers
- Identification
- Elimination
Dealer discount Asset sale
COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the
Heavy R&D investment equipment
108. CarrotBot
• Machine Vision data
collection platform
– Monochrome & Color
Cameras
– Laser-line sweep (depth
measurement)
– Encoders
CarrotBot 1.0
(position/velocity)
– Onboard data acquisition
& power
109. The Business Plan Canvas Updated
•Technology •Farming
Design conventions.
•Marketing •Demo, demo, a
•Demo and nd demo!!
customer •Cost •Proximity is •Organic
•Research Labs feedback paramount Farmers
Reduction
•Equipment •Weeding
•Remove labor
Manufacturers Service
force pains
•Distribution Providers
•Eliminate bio-
Network •Conventional
waste hazards
•Service •IP – Patents Farmers
Providers •Video •Dealers
Classifier Files •Direct Service
•Robust •Indirect Service
Technology • … then Dealers
•Asset Sale
Value-Driven •Direct Service with
equipment rental
•… then Asset Sale
110. Visit Highlights
Carrot vs. Weeds
Due to small root systems, carrots have no chance against weeds
113. Customer Hypothesis
Pre-Test
Large
Growers
Us Dealer
Industrial
Growers
Hypothesis Confirmed
• Growers interested in own
Industrial equipment
Growers • Industrial (10,000s of acres)
Post-Test • Large (1,000s of acres)
Large • Willing to pay $100k for one unit
Growers
Us Dealer • Smaller growers (100s of acres)
Service usually subcontract the labor
Providers services or rent equipment
Equipment • All purchases through local dealers
Rental •Customer service is essential
114. Customer Map #1 – Industrial Growers
Example: Bolthouse Farms – Large Industrial Carrot Producer – 8K acres/yr
End User • Equipment Operator
Influencer • Local Farm Mgr
• Cliff Kirkpatrick, visited
Recommender • Director, Ag Equipment Operator
Technology
• Justin
Grove, interviewed
Decision
• VP, Growing
Maker
Operations
Approver • CFO, CEO (Jeff Dunn)
Cliff, Farm Mgr
115. Customer Map #2 – Service Providers
Example: Ag Services – Service Provider, Salinas Valley
End User • Equipment Operator
Influencer • Grower
Recommender • Service Mgr
Me (left), Marty (middle, Service Mgr), Doug
(right, Grower)
Decision Maker • ?? (service mgr’s
& Approver boss)
116. The Business Plan Canvas Updated
•Technology •Farming
Design conventions.
•Marketing •Demo, demo, a •Mid/Large
•Demo and nd demo!! Organic Farmers
customer •Cost •Proximity is •Agricultural
•Research Labs feedback paramount
Reduction corporations
•Equipment
•Remove labor •Weeding Service
Manufacturers
force pains Providers
•Distribution
•Eliminate bio-
Network
•Service •IP – Patents
waste hazards •Mid/Large
Providers •Video •Direct Service Conventional
Classifier Files •Indirect Service Farmers
•Robust • … then Dealers
Technology
•Direct Service with
equipment rental
Value-Driven •($1,500/d; 120d/yr )
•Low density: $1,500/d
•High density: $6,000/d
117. World Ag Expo interviews:
the need is real and wide spread
• 10+ interviews at show
– Everyone confirmed the need
– Robocrop, UK based, crude
competitor sells for $171 K
• Revenue Stream
– Mid to small growers prefer a
service
– Large growers prefer to buy, but
OK with service until technology
is proven
– Charging for labor cost saved is
OK, as we provide other benefits
(food safety, labor availability)
Confidential
118. The Business Plan Canvas Updated
•Technology •Farming
Design conventions.
•Marketing •Demo, demo, a •Mid/Large
•Research Labs •Demo and nd demo!! Organic Farmers
•Equipment customer •Cost •Proximity is •Agricultural
Manufacturer feedback Reduction paramount corporations
•Distribution •Remove labor •Weeding Service
Network force pains Providers
•Service •Eliminate bio-
Providers
•IP – Patents
waste hazards •Mid/Large
•2 or 3 Key
•Video •Direct Service Conventional
Farms
Classifier Files •Indirect Service Farmers
•Robust • … then Dealers
Technology
Value-Driven •Direct Service with
• R&D equipment rental
• Bill of Materials •Low density: $1,500/d
• Training & Service •High density: $6,000/d
• Sales
119. Autonomous weeding - Final
- Innovation Direct - Low density
- Ag Service - Customer We reduce - Provide high vegetable
providers Education operating cost quality service at growers
- Dealer training - Labor reduction competitive price - High density
- Research (100 to 1) vegetable
Institutes (eg - Reduced risk of growers
UC Davis, Laser contamination - Thinning
Zentrum - Mitigate labor operations
Hannover) Engineers on availability Direct
- Conventional
Machine Vision concerns - Alliance with
vegetables
- 3-4 key farms Two problems: service
- Identification providers
- Elimination - Eventually sell
through dealers
Costs for service provision Service provision
COGS seek a 50-60% Gross Margin - Charge by the acre with modifier according to
Heavy R&D investment weed density
- Eventually move to asset sale
120. Pivot Example
Autonomous Robot
Talked 75 Customers in 8 Weeks
122. Business Plan
Autonomous Vehicles for Mowing
- Innovation Dealers Mowing
- Dealers (Mowing - Customer We reduce sell, installs and - Owners of
and Ag) Education operating cost supports customer public or
- Vehicle OEMs - Dealer training - Labor reduction commercially
(John - Better Co. trains used green
Deere, Toro, Jacob utilization of dealers, supports spaces (e.g. golf
sen, etc) assets (eg mow dealers courses)
or weed at - Landscaping
- Research labs Engineers on nights) - Mowing
service provider
Autonomous - Improved Dealers
vehicles, GPS, performance - Ag Dealers Weeding
path-planning (less - Farmers with
rework, food manual weeding
safety) operations
Dealer discount Asset sale
COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the
Heavy R&D investment equipment
123. 20 interviews, 6 site visits…
We got OUR Boots dirty
Mowing
Interviewed:
• Golf: Stanford Golf course
• Parks: Stanford Grounds Supervisor, head of maintenance and
lead operator (has crew of 6)
• Toro dealer (large mower manufacturer)
• User of back-yard mowing system
• Maintenance Services for City of Los Altos
• Colony Landscaping (Mowing service for stadiums)
Weeding
Visited two farms in Salinas Valley to better understand problem
Interviewed:
• Bolthouse Farms, Large Agri-Industry in Bakersfield
• White Farms, Large Peanut farmer in Georgia
• REFCO Farms, large grower in Salinas Valley
• Rincon Farms, large grower in Salinas Valley
• Small Organic Corn/Soy grower in Nebraska
• Heirloom Organics, small owner/operator, Santa Cruz Mts
• Two small organic farmers at farmers market
• Ag Services of Salinas, Fertilizer applicator
124. Decision to make – mowing vs weeding
Application If ROI is < 1 Labor costs Autonomous TAM
yr they will significant? would solve
buy problem?
Mowing of Yes. Yes Yes Adjusted up to
Professionally xxx
large fields run
organizations
Weeding in Agri Industry: YES! for TAM increased
YES! organic crops Not necessarily to $2.6 B (Total
Agriculture organic)
Large They are Key need is
Growers: Yes spending weed vs. crop Target Market
$500/ac! differentiation (organic
Small specialty)
Growers: No 162 M/yr
18%/yr growth
125. Autonomous vehiclesWEEDING
- Innovation Dealers - Low density
- Ag Dealers - Customer We reduce sell, installs and vegetable
- Ag Service Education operating cost supports customer growers
providers - Dealer training - Labor reduction - High density
(100 to 1) Co. trains vegetable
- Research labs - Reduced risk of dealers, supports growers
contamination dealers - Thinning
- Mitigate labor operations
Engineers on availability - Ag Dealers
- Conventional
Machine Vision concerns - Ag Service
vegetables
Two problems: providers
- Identification
- Elimination
Dealer discount Asset sale
COGS seek a 50-60% Gross Margin Our revenue stream derives from selling the
Heavy R&D investment equipment
130. The Business Plan Canvas Updated
•Technology •Farming
Design conventions.
•Marketing •Demo, demo, a
•Demo and nd demo!!
customer •Cost •Proximity is •Organic
•Research Labs feedback paramount Farmers
Reduction
•Equipment •Weeding
•Remove labor
Manufacturers Service
force pains
•Distribution Providers
•Eliminate bio-
Network •Conventional
waste hazards
•Service •IP – Patents Farmers
Providers •Video •Dealers
Classifier Files •Direct Service
•Robust •Indirect Service
Technology • … then Dealers
•Asset Sale
Value-Driven •Direct Service with
equipment rental
•… then Asset Sale
131. Customer Hypothesis
Pre-Test
Large
Growers
Us Dealer
Industrial
Growers
Hypothesis Confirmed
• Growers interested in own
Industrial equipment
Growers • Industrial (10,000s of acres)
Post-Test • Large (1,000s of acres)
Large • Willing to pay $100k for one unit
Growers
Us Dealer • Smaller growers (100s of acres)
Service usually subcontract the labor
Providers services or rent equipment
Equipment • All purchases through local dealers
Rental •Customer service is essential
132. Customer Map #1 – Industrial Growers
Example: Bolthouse Farms – Large Industrial Carrot Producer – 8K acres/yr
End User • Equipment Operator
Influencer • Local Farm Mgr
• Cliff Kirkpatrick, visited
Recommender • Director, Ag Equipment Operator
Technology
• Justin
Grove, interviewed
Decision
• VP, Growing
Maker
Operations
Approver • CFO, CEO (Jeff Dunn)
Cliff, Farm Mgr
133. Customer Map #2 – Service Providers
Example: Ag Services – Service Provider, Salinas Valley
End User • Equipment Operator
Influencer • Grower
Recommender • Service Mgr
Me (left), Marty (middle, Service Mgr), Doug
(right, Grower)
Decision Maker • ?? (service mgr’s
& Approver boss)
134. The Business Plan Canvas Updated
•Technology •Farming
Design conventions.
•Marketing •Demo, demo, a •Mid/Large
•Demo and nd demo!! Organic Farmers
customer •Cost •Proximity is •Agricultural
•Research Labs feedback paramount
Reduction corporations
•Equipment
•Remove labor •Weeding Service
Manufacturers
force pains Providers
•Distribution
•Eliminate bio-
Network
•Service •IP – Patents
waste hazards •Mid/Large
Providers •Video •Direct Service Conventional
Classifier Files •Indirect Service Farmers
•Robust • … then Dealers
Technology
•Direct Service with
equipment rental
Value-Driven •($1,500/d; 120d/yr )
•Low density: $1,500/d
•High density: $6,000/d
135. World Ag Expo interviews:
the need is real and wide spread
• 10+ interviews at show
– Everyone confirmed the need
– Robocrop, UK based, crude
competitor sells for $171 K
• Revenue Stream
– Mid to small growers prefer a
service
– Large growers prefer to buy, but
OK with service until technology
is proven
– Charging for labor cost saved is
OK, as we provide other benefits
(food safety, labor availability)
136. The Business Plan Canvas Updated
•Technology •Farming
Design conventions.
•Marketing •Demo, demo, a •Mid/Large
•Research Labs •Demo and nd demo!! Organic Farmers
•Equipment customer •Cost •Proximity is •Agricultural
Manufacturer feedback Reduction paramount corporations
•Distribution •Remove labor •Weeding Service
Network force pains Providers
•Service •Eliminate bio-
Providers
•IP – Patents
waste hazards •Mid/Large
•2 or 3 Key
•Video •Direct Service Conventional
Farms
Classifier Files •Indirect Service Farmers
•Robust • … then Dealers
Technology
Value-Driven •Direct Service with
• R&D equipment rental
• Bill of Materials •Low density: $1,500/d
• Training & Service •High density: $6,000/d
• Sales
137. Autonomous weeding - Final
- Innovation Direct - Low density
- Ag Service - Customer We reduce - Provide high vegetable
providers Education operating cost quality service at growers
- Dealer training - Labor reduction competitive price - High density
- Research (100 to 1) vegetable
Institutes (eg - Reduced risk of growers
UC Davis, Laser contamination - Thinning
Zentrum - Mitigate labor operations
Hannover) Engineers on availability Direct
- Conventional
Machine Vision concerns - Alliance with
vegetables
- 3-4 key farms Two problems: service
- Identification providers
- Elimination - Eventually sell
through dealers
Costs for service provision Service provision
COGS seek a 50-60% Gross Margin - Charge by the acre with modifier according to
Heavy R&D investment weed density
- Eventually move to asset sale
141. Assumption of Customer Pain
200+ People were
Parking is a pain! customers People DO want Bigger Pain even more
People want a a guaranteed frustrated with
guaranteed spot & would parking at big
parking spot. reserve online. events.
80% positive response
143. Assumption of Customer Pain
200+ People were
Parking is a pain! customers People DO want Bigger Pain even more
People want a a guaranteed frustrated with
guaranteed spot & would parking at big
parking spot. reserve online. events.
People will pay Surveyed 75+
extra to have a Customers People will not
great, only pay
more, they will Validated!
guaranteed
parking spot. pay a lot more!
($9+)
145. Customer Survey/Validation
• How much more would you be willing to pay
to have a guaranteed close parking spot in the
arena's lot or near the arena?
– On average- $9.33
– Max of $27.00
145
146. Assumption of Pain
200+ People were
Parking is a pain! customers People DO want Bigger Pain even more
People want a a guaranteed frustrated with
guaranteed spot & would parking at big
parking spot. reserve online. events.
People will pay Surveyed 75+
extra to have a Customers People will not
great, guarantee only pay
more, they will Validated!
d parking spot.
pay a lot more!
($9+)
30+ People It is difficult to
People who have
get a mass We needed to
extra spaces will
number of find a new
post spots and
people to post solution.
make money.
enough parking
spots.
147. Expert Validation
• Tom Lombardi and Greg Bessoni
– Online parking reservation experts
Partnered
with me and
put up
capital.
149. New Assumptions
30+ Parking
Parking lots will Lots Yes! Lots have Bigger Pain
post spots online been looking for
so that people ways to increase
can reserve revenue and fill
them. up lots.
75% positive response
20% of cash
goes missing.
Electronic 30+ Parking
payments in Lots
advance through Loved it! Would
an online pay about 15% of Validated!
reservation posted price.
system.
153. MVP Validation
All Pro
Parking 30+ person
Started with a Easier ways to Search process
very basic (30 lots) focus group
post parking & was too hard.
reservation track Wanted mobile
system. reservations. site as well.
All Pro
Parking’s
Customers
With no
marketing- Made it even Fixed
50 reservations easier to post search, cleaned
in just a few and track up site, mobile
months. parking. site in the works.
156. Our Model
15% of Price
$5 Reservation Paid
Fee XoomPark
We estimate being able to collect about $8 per reservation
157. Go to Market Strategy & Validation
25+ years
Talked to Tom
Lombardi, indust experience
ry expert.
Over 250 lots throughout Lots located all over West
Eastern US. Coast and Texas
Lots located throughout
Parking lots in all 50 states
Florida and in Dallas,TX
158. Go to Market Strategy & Validation
Tom and Greg’s
Affilate Networks
3,000 Affiliates
159. Go to Market Strategy & Validation
Focus
group of
30+ people
Customer’s
recommendations
for the future
160. Market Size
$8.2 Billion USA Parking Industry
TAM
SAM $4.5 Billion Parking
Facility/Management
Target
Market $1.4 Billion Event Parking
Apex $240,000 Buffalo and
Atlanta
161. Competitors
High
ParkingCarma
ClickandPark
Usability GottaPark
Parkwhiz
Low
Low High
Reliability
162. Revenue Projections
Revenue
$20
$18
$16
$14
$12
Revenue in
$10
Millions
$8
$6
$4
$2
$0
Year 1 Year 2 Year 3 Year 4
70% Gross Profit Margin