startup customer development (seedcamp, london)
DESCRIPTION
This is the first major update to my slides on Slideshare in almost a year. My thinking has evolved significantly after helping take an additional 8 startups to market.TRANSCRIPT
Startup Customer Development
Sean Ellis
Seedcamp 2009 (London)Sept 22, 2009
#1 Startup Risk = Customers
1. Huge challenge to acquire & convert
2. Little useful guidance available3. Hard to know where to start
(hundreds of things you “could do”)
2startup-marketing.com
What Really Mattered on Road to IPOs?
1. Understand users and use cases2. Focus on right metrics & optimize3. Apply engineering to marketing4. Early execution is most critical
3startup-marketing.com
4
CriticalZone IPO
sGrowth Stage
startup-marketing.com
Primary Focus Now Critical Zone
Then light advising in growth stage
Customer Development Framework
startup-marketing.com
Growth
Transition to Growth
Product/Market Fit
5
Growth Starts with the Product
startup-marketing.com 6
Growth
Transition to Growth
Product/Market Fit
What is Product/Market Fit?
1. People want/need your productAnd they represent large enough market
2. Differentiated from alternatives3. Users will pay for your product
Or you are advertising supported
startup-marketing.com 7
“Life of any startup can be divided into two
parts -before P/M fit and after P/M fit”
startup-marketing.com 8
Marc AndreessenFounder Netscape, Opsware, Ning
PayPal’s Quest for P/M Fit
1. $200K seed funding - cryptography“No one really needed it” Max Levchin
2. $4.5M VC funding - PDA paymentsPeople preferred web demo (100X users)
3. $1.5B sale to eBay – web payments
startup-marketing.com 9
Survey Your Product/Market Fit
• Free template at Survey.io
startup-marketing.com 10
startup-marketing.com
Key Product/Market Fit Question
“Very Disappointed” My Recommendation
0% – 25% Keep burn low, engage, iterate
26% – 39% Try repositioning, filtering
40% – 100% Proceed up pyramid
“How would you feel if you could no longer use Product?”
11
Transition to Growth
startup-marketing.com
Transition to Growth
Product/Market Fit
12
Transition to Growth
1. Track/report right metrics
2. Positioning (based on perceived value)
3. Viable economics (business model)
startup-marketing.com 13
Optimize Before Growing
1. Landing pages
2. Funnel (acquisition through transaction)
startup-marketing.com
8% 12% 13%
14
…
Scalable Growth Now Possible
startup-marketing.com
Transition to Growth
Product/Market Fit
15
Test from Free to Paid Channels
startup-marketing.com
Channel Cost/user Scalability Viral/referral Free High Email (internal) Free Organic Blog Free Organic SEO Free or Paid Organic Widget Free or Paid Organic Biz Dev/Partners Free or Paid High Domains Paid (low) Low PR Paid (low) High Email (external) Paid (TBD) High SEM Paid (TBD) Can be High Contest Paid (TBD) Organic Affiliate/lead gen Paid (TBD) High Radio Paid (TBD) High TV Paid (TBD) High
16
Driving/Managing Growth
Monitor Growth
• Anything broken?
• Retention
Manage Campaigns
•Optimize and scale campaigns on ROI
Develop New Campaigns
• Test new sources
startup-marketing.com 17
Budget to maximize positive ROI spend
Improve Lifetime Value
1. Customer retention is critical2. Cross/up sell additional products3. This expands profitable channels
startup-marketing.com 18
Complete Startup Pyramid
Twitter: @seanellisBlog: startup-marketing.com
Growth
Optimize
Economics
Positioning
Product/Market Fit