Lean Startup Methodologies

November 8th, 2016

Kayla TrautweinDirector & Sr. Portfolio Manager, EvoNexus

EvoNexus is a non-profit technology incubator and hub for Southern

California’s startup community designed to accelerate the growth and success of

entrepreneurial companies.

EvoNexus is community supported and takes zero equity, or fees from incubating

startups.

The Problem with Product-Market FitOne of the biggest challenges for entrepreneurs is finding

product-market fit, and this journey all begins with customer development. The Lean Startup Methodology will teach you best practices in customer development,

which will lead you to determine learn whether to 1) improve the solution you have built, 2) change direction

(pivot) or 3) abandon your product or service and try something new. With the odds of failure so high for

today’s startups, the Lean Startup Methodology offers an essential regimen for failing fast and iterating so that you

have a better chance for success.

Customer Validation: A Must Have!From the video content, you’ve learned that in order to

keep building your product/service you should have some validation from potential customers. In the Lean Startup

Methodologies Session we’re going to walk through some sample customer interview exercises to help you think about ways to get closer to product/market fit and give

you tools to help determine when it’s necessary to make a pivot. If you don’t currently have a startup you’re

working on, no problem. This session will still be beneficial as you think about other applications for

customer interviews, whether it’s in your current job or in a networking scenario.

By the end of this session, you should be able to answer the following questions:

1. What are the do’s and don’ts of customer interviews?2. How do I know if I’m getting close to product/market fit?3. What do I do with the information discovered in my customer interviews?

We’ll be testing the following traits:1. Critical Thinking2. Creativity3. Empathy

Customer Interview Exercises

Misleading Scenario #1You are speaking with a farmer about a fertilizer

you have developed that will increase their yields by 50%. After telling them about your

product, you ask “Would you use a product like this?”

What are the problems with this approach?

Misleading Scenario #1You are speaking with a farmer about a fertilizer

you have developed that will increase their yields by 50%. After telling them about your product, you

ask “Would you use a product like this?”

What types of questions could you ask to understand your potential customer’s real

problem?

Misleading Scenario #2You have developed a new wearable for fitness tracking that is 10X better and more accurate than FitBit, for seated exercises called “SitBit.”

At a family function, you interview your grandmother to see what she thinks about your product. You ask, “How much would you pay for a product that tracks your fitness while you’re

sitting down?

What are the problems with this approach?

Misleading Scenario #2You have developed a new wearable for fitness tracking that is 10X better and more accurate

than FitBit, for seated exercises called “SitBit.” At a family function, you interview your grandmother

to see what she thinks about your product. You ask, “How much would you pay for a product that

tracks your fitness while you’re sitting down?

What type of person would be a better customer interviewee?

Now we have some ground rules…

• Know your audience!• Ex: While friends and family may be your target customer, don’t

only interview those individuals. They are more likely to tell you what you want to hear.

• Don’t talk about your idea (at the beginning).• Ex: I have developed this awesome product. Would you buy it?

• Steer away from Yes/No questions.

• Stay away from future hypotheticals• Ex: How much would you pay for a product that could do X?

• Listen: be genuinely interested in learning what the customer’s problem is. The more questions you ask, the more a customer will open up to you and you’ll get insight into what direction to take your product/service.

Let’s Practice!

You are an architect tasked with building your client’s dream home. Your role is to ask questions that lead you to find out what features the home should have without leading the client to agree to features you propose. Think outside of the box! For example, don’t ask how many bedrooms the client wants in their home, try asking about whether they

want to have a family in the future, what size house they grew up in, etc.

But wait…how do I determine who my customer is and who I should be interviewing?

According to HubSpot…

A buyer persona is a semi-fictional representation of your ideal customer based on market research

and often times real data about your existing customers. When creating your buyer

persona(s), consider including customer demographics, behavior

patterns, motivations, and goals. 

Customer Personas

Can you guess whose customer persona this is?

Our customers:• Do not own a car.• Do not want to drive themselves to a party or function.• Like to travel in style and want to be treated as a VIP.• Want a cost-efficient cab at their doorstep.

Example Customer Persona

Why should my customers care about my product/service?

According to Forbes…

In its simplest terms, a value proposition is a positioning statement that explains

what benefit you provide for who and how you do it uniquely well. It describes your

target buyer, the problem you solve, and why you’re distinctly better than the alternatives

Value Proposition

• Order a driver on demand through your device• No need to wait for a taxi for long times.• Free rides on certain occasions and discounts from time to

time.• Prices lesser than the normal taxi fares.• Tagline says – Your personal driver. It lets customers travel

in style.• Fixed prices for common places like Airport etc.

Uber’s Value Proposition

Being a two-sided marketplace (drivers vs. passengers) Uber had to test demand on both sides. Uber interviewed black car drivers, and the app in its earliest form started out as a service used by the Founder and his friends.

Demand grew and grew until they realized they had a service that solved real pain points for both drivers and passengers, and they were really able to hone in on their customer persona and value proposition.

Uber Didn’t Grow to a $68B Market Cap Overnight

Now, let’s break into groups for some more practice.

First, write a description of your assigned company, create a customer persona and define the company’s value proposition to its customer. Then, develop sample interview questions you

could ask your ideal customer to learn

GROUP 1: Yelp for vegetarians

GROUP 2: Uber for trucks

GROUP 3: Online platform for finding classical music concerts near you

GROUP 4: Postmates for pet supplies

GROUP 5: Kayak for engagement rings

Fictional Companies

So…what do I do with the information discovered in my customer interviews?

Learn…measure…build!

Sometimes in customer interviews, you’ll discover that your product/service is missing a key feature or features that your customer really needs.

Sometimes you’ll discover that your target customer has a different persona than you imagined.

In any case, you should be learning whether your solution is solving a real problem felt by your target customer.

The more you talk to customers, you understand their problem and determine how to build or alter your solution to fit a real need.

Keep learning, measuring and building, and once interviews are complete you can move on to letting customers use your product for even more feedback!