customer development - todd hooper
TRANSCRIPT
About me
• Early case of the entrepreneur bug• Four startups– Momentum - CEO and Founder
• Acquired 1996– WatchGuard – Vice President
• IPO 1999– Trillium Lane Labs – President and Founder
• Acquired 2005– Napera Networks – CEO and Founder
• Founded 2006
Family, religion,friendship ... these are thethree demons you must slay ifyou wishto succeed inbusiness.-- Monty Burns
Three simple rules
Customer development
• The most critical stage that almost everyone gets wrong
• The only opinions that matter are from users and customers
“All of the answers lie outside the building”Steve Blank
steveblank.com
What is customer development?
• A process to increase the odds of our startup succeeding
• Synchronized, parallel effort to product development
• Develop for the few, not the many• Ideal for startups – the exact opposite to large
corporate product development
Customer Development
Customer Discovery – Achieve Problem/Solution Fit
Customer Validation – Achieve Product/Market Fit
Customer Creation – Drive Demand
Company Building – Scale the Company
Traditional approach
Customer development approach
What kind of startup are we?
• Entering existing markets– iPhone, Google
• Creating new markets– Tivo, Palm
• Resegment existing markets with low price– Clearwire, WatchGuard
• Resegment existing markets with niche– Starbucks, In-n-Out Burger
Market Type CharacteristicsExisting Market Resegmented
MarketNew Market
Customers Exist Exist New
Customer needs Performance 1. Cost2. Perceived need
Simplicity and convenience
Performance Better/faster 1. Good enough at low end
2. Good enough at high end
Improves customers life, ROI or problem/pain
Competition Incumbents Incumbents Apathy/other startups
Risks Incumbents 1. Incumbents2. Niche strategy
fails
Market adoption
Customer discoveryState your hypothesis
1-2 pages on each item
Stop!
• Have you got your– Company incorporated?– Name?– One page website?– Domain?– Business cards with company name and domain?
Customers• Find customers– Personally speak to at least 30 customers– Founders are the first sales people
• Validate them– Are they really a customer? – What do they consider ‘value’? ROI?– Work through your ideas with them– Test your critical assumptions– “User stories”
• Develop them– Get them to engage – prototypes, beta, MVP– Customer champions– Ask for the order. Can you sell these people your product?
Customer discoveryTest “Problem” Hypothesis
First reality check• Entire team• Present all customer data– What problems did they have?– How painful were they?– How is a customers life with and without our
product?– Would they pay for it?
• How well does our product solve their problem?• Prioritize features to customer problems• Review your other hypotheses in light of
customer info
Customer discoveryTest “Product” Hypothesis
Second reality check
• Product reactions– Loved it– Liked it, but they want this or that feature– Not very excited– No need for it
• Remember, you are a startup– Fast to market – v1.0 is just the first step– Don’t get trapped in feature wars
• Is this customer willing to become an advisor?
Customer discoveryVerify
What aren’t we going to do?
• Enumerate needs and wants of all customers • Make a list of all the generic features and
hand that list to developers• Run focus groups to test customer reactions
after we build it
Three rules
• Get out of the building– Listen to customers first, then talk
• Test your hypothesis – Building for a few customers that love or hate
your idea is better than building for the indifferent
• Be open to change – Business and product plans rarely survive first
contact with reality
