sffi march 29 customer development ii: javid
TRANSCRIPT
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Customer
Development Strategies
Javid JamaeCEO / Founder - Octetra / Cardswap
Presented at The Founders InstituteMarch 29, 2016
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ABOUT ME
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I’m a programmer
But I’m also an advisor, author, coach,
consultant, event organizer, founder,
growth hacker, and trainer
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I’ve worked and consulted for a lot ofenterprise companies
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I’ve worked for a couple startups
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I’ve worked for a couple startups
Horrible failure Great success
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I’ve built 2 startups doing NO customer development
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Horrible failure Failure
I’ve built 2 startups doing NO customer development
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Horrible failure Failure
I’ve built 2 startups doing NO customer development
B A D I D E
A
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I ran customer developmentfor three startup ideas
Dripita
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I ran customer developmentfor three startup ideas
Dripita
Didn’t pursue My first funded startup
Shut down
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I’m now doing consulting and working
on my next startup project
Octetra Cardswap
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I’m now doing consulting and working
on my next startup project
Octetra Cardswap
Consulting Startup
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CUSTOMER DEVELOPMENT
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The dot-com bubble
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Idea / SeedRound
Product
Development
Alpha / BetaTest
Launch!
Dot-com-era product launch strategy.
PRODUCT-FOCUSED LAUNCH
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Idea / SeedRound
Product
Development
Alpha / BetaTest
Launch!
Dot-com-era product launch strategy.
PRODUCT-FOCUSED LAUNCH
Start building salesand marketing
organizations
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Lots of money was poured into buildingsales, marketing, engineeringorganizations before launch.
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Most of the focus was on product development.
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Didn’t answer the riskiest question: Docustomers want my product?
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All real learning from the customerhappened after the launch.
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After the dot-com bubble, people startedlooking at more customer centric ways
to build companies
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Customers and users aren’t always thesame people
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‘‘Customer Development is about questioning your
core business assumptions … rather than assume
your beliefs about your business to be true, youshould … validate the ideas.
~BRANT COOPER
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‘‘The goal of a Lean Startup is to inform our riskiest
business model assumptions through empirical
testing with customers – not rhetorical reasoning ona white board.
~ ASH MAURYA
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ASSUMPTIONS
HYPOTHESIS
EXPERIMENT DESIGN
EXPERIMENTATION
MEASUREMENT
ScientificProcess=
THE PROCESS
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Customer development is a four step process
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CustomerDiscovery
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CustomerDiscovery
Construct your hypothesis, get out of thebuilding and test your assumptions
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CustomerDiscovery
CustomerValidation
Test if your proposed solution matches what thecustomer problem was (product/market fit)
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CustomerDiscovery
CustomerValidation
SEARCH
pivot
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CustomerDiscovery
CustomerValidation
CustomerCreation
CompanyBuilding
pivot
SEARCH EXECUTION
Execution is about building end-user demandand scale, and then building the organization.
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The search phase is meant to beperformed by the founders
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We’re only going to talk about thesearch phase
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I’m going to challenge some of theconventional wisdom
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LEAN INTERVIEWS
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2010
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2006-2009 2010-2012
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Problem: I wanted to release content
under consumer-friendly licenses but stillwanted to profit
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Solution: A crowdfunding platform where
people could pay content creators torelease content under Creative
Commons
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RUNNING LEAN PROCESS
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RUNNING LEAN PROCESS
• 1. Lean Canvas
• 2. Problem Interviews
•3. Solution Interviews
• 4. Build MVP
• 5. MVP Interviews (and "the sell")
• 6. Validate customer lifecycle
• 7. Launch
•8 Measure Product / Market Fit
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‘‘I’d like to stress that we don’t have a finished product
yet, and our objective is to learn from you, not to sellor pitch anything to you.
~ASH MAURYA - RUNNING LEAN
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I interviewed over 75 musicians, authors,
filmmakers, and content creators andcontent fans.
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I started building an MVP, but decided to
postpone the project to focus onanother startup idea.
BENEFITS
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BENEFITS
• Don’t have to write a lot of documentation
• Low/no-pressure sales (for those who hate sales)
• Prioritizes learning and de-risking product, market,and solution risks over building a product
• Can learn about problem / solution without a techteam
DRAWBACKS
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DRAWBACKS
• Lots of interviews before asking for a sale
• Favors learning about user needs over customerneeds (YMMV)
• B2B - interviews with multiple people in anorganization (user vs. customer)
•Positioning as a startup who is unsure about buildinga product can hurt you in some industries
• Have to invest in building technology before havingpaying customers
THE NUMBERS
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THE NUMBERS
• You want 10 early adopter customers
• 25 Problem interviews (narrow in)
• 25 Solution interviews (3 people from last round,
22 new people, narrow in)
• 30 MVP interview (10 people from previousrounds, 20 new people)
• 80 Interviews @ 5-10/week
• 8-16 weeks of interviewing
• 2-3 weeks of engineering
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LEAN SALES
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2012
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Consumer problem: Signing up forsummer camps sucks!
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Provider problem: It’s hard to fill campsup to capacity and to market online
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Solution: A consolidated marketplace forsummer camps.
"LEAN SALES" PROCESS
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LEAN SALES PROCESS
• 1. Lean Canvas
• 2. Problem Interviews
• 3. Create sales script, define funnel
•4. Sell
• 5. Customer Solution Interviews
• 6. Build MVP
• 7. Customer MVP Interviews
• 8. Validate customer lifecycle
• 9. Launch
• 10. Measure Product / Market Fit
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We got signed contracts from over 350
summer camp providers (customers) in6 cities.
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We got hundreds of parents (users) tosign up for accounts before launch.
BENEFITS
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BENEFITS
• People disqualify themselves faster
• You narrow in on your UVP faster (YMMV)
•Don’t have to meet with the same people
multiple times before the ask
• Solution and MVP interviews are done withpaying customers
• Can have paying customers before youneed a tech team
•Focuses on customers before users
DRAWBACKS
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DRAWBACKS
• Many people hate sales / selling
•Many people don’t like the idea of "selling
vaporware"
• In some saturated markets, it’s really hardto sell before having a product
• You learn about customer needs earlier, butspecific user needs learned a little later
THE NUMBERS
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THE NUMBERS
• Your mileage WILL vary
• You want 10 early adopter customers
•20 sales calls to narrow in on your UVP and targetmarket
• 50 more sales calls to get 10 signups
• 70 Sales calls @ 20/week
• 3-4 weeks of sales calls
• 0 engineering hours
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One outcome of the dot-com bubble
was the people became extremely averseto doing any sales during the searchphase
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But if done right, founders (not sales
people) can use Lean Sales to findproduct/market fit.
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LEAN DEVELOPMENT
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Dripita
2011
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Problem: I wanted to automate the way Iwas posting content to Twitter
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Solution: A drip-campaign managementtool
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The project was initially just for personal
use, but people started asking me to letthem use it too
THE PROCESS
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THE PROCESS
• 1. Lean Canvas*
• 2. Problem Interviews*
• 3. Build rapid MVP
• 4. Launch
• 5. MVP Interviews (and "the sell")
• 6. Validate customer lifecycle• 7. Measure Product / Market Fit
* I didn’t do this, because I initially had no intention to build it asa company
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I got several hundred users throughorganic, word-of-mouth growth
BENEFITS
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BENEFITS
• A real product is significantly morecompelling than vaporware or mockups
• Can be as fast as interviewing + mockups
• Delaying de-risking market in favor ofexperimenting with user/customer needs
•Depending on onboarding process, can
learn about user and customer early on
• Start building useful engineering assets andskills earlier: experimentation, analytics, etc.
DRAWBACKS
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DRAWBACKS
•Need an engineer or two to even consider thisoption
• Slippery slope of building too much
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OTHER STRATEGIES
TRAINING / CONSULTING
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TRAINING / CONSULTING
• Problem phase
• Learn about problems in depth
• Help structure custom solutions
• Solution phase
• Help 1-2 companies implement customsolutions
• Put together training courses to teachpeople how to implement the solutionthemselves
TRAINING / CONSULTING
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TRAINING / CONSULTING
• MVP phase
• Joint ventures
•Consulting-ware
LEAN MARKETING
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LEAN MARKETING
• Landing page experiments
• Videos
• Content marketing
• Invitation schemes and incentive-based signups
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TAKE AWAYS
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Never skip problem interviews
COMFORT / SKILLS
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COMFORT / SKILLS
• Do you know how to write code?
• Do you like to sell?
• Are you good at content marketing?
• Are you comfortable interviewing?
• Play to your strengths, but be willing to goout of your comfort zone
PERCEPTION
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P RC PTION
• Do your customers even use products
created by startups, much less commit tononexistent products?
• What happens if you interview someone 3times and then tell them you decided notto build the product?
MARKET TYPE
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• Existing markets
• Use known strategy
•Are they using existing products?
• New markets
• Explore several strategies
• Resegmenting a market
• Start with known strategy, but explorenew ones as well
BUSINESS MODEL
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After problem interviews, consider:
• Ecommerce - Build, Marketing
• SaaS - Interview, Sales, Build
• Free mobile app - Sales, Marketing
•Media site - Content Marketing
• User Generated Content - Build
• Two Sided Marketplace - Sales, Marketing
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Customers and users aren’t always thesame people
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Never ask people what they want, youshould present them with something
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QUESTIONS ?