Why Talk to Customers? Nick Kolobutin
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1 Why Talk to Customers? Nick Kolobutin
2
3 Why Talk to Customers?
4 What is a Startup? A temporary organization in search of a scalable, repeatable, profitable business model Startups are Risky Greater than 90% of products fail today Goal of startup is to validate its business model hypotheses (iterate and pivot until it does)
5 Approaches to Building a Product Maximize Chances of Success Robust product with all features Problem: Feedback at the end Release early, and often Get as much feedback early, and as much as possible Problem: Chase what customers think they want
6 Need More Than One Customer Eric Tribe, CEO
7 If you are not embarrassed by the first version of your product, you've launched too late Reid Hoffman, CEO
8 Types of Risk with our Clients Customer/Market Risk Product fit Invention Risk Technology feasibility
9 Traditional Product Development
10 Winners vs Losers Winners Comfortable with ambiguity, uncertainty, doubt, fear Throw out traditional product management Combine Agile Engineering and Customer Development Search for a business model, turn unknowns into knowns Recognize their startup vision as a series of untested hypotheses in need of customer proof Get in front of customers early and often Losers Execute rigid Product Management methodology
11 Process to organize the search for the business model
12
13 Getting the answers is easy. Asking the right questions is hard.
14 Who should develop the Business Model? Founders, not employees No room for idea people
15 How do I Find a Successful Business Hint: It s not in the office Model? The best way to search is for the founders themselves to get out of the building to gain a deep, personal, firsthand understanding of their potential customers needs before locking into a specific path and precise product spec.
16 Webvan Case Study Goal to revolutionize $450 Billion grocery industry Online ordering, same-day, delivery Dream Team: Over $800 million in financial startup funds Backed by experienced VCs Founder with track record Hired Seasoned CEO First mover advantage Get big fast IPO with market capitalization of $8.5 billion Executed Business Plan to a tee
17 Webvan Case Study Hired experienced executives from nations large grocery stores Marketing builds sales demo, sales materials (websites, presentations, data sheets), hires PR Agency Engineering builds product based on defined feature set Automated warehouses built with conveyers and carousels integrated with an orderfulfillment software
18 7 Months After IPO Bankrupt No failure in execution of business plan Did not listen to customers or discover customer needs Revenues did not match forecast No Pivot
19 The 9 Deadly Sins of Product Development Assuming I know what the customer wants A startup is a faith-based initiative built on guesses The I know what features to build flaw Focus on a Launch Date Emphasis on Execution vs Hypotheses Traditional Business Plans Presume no Trial and No Errors Confusing Traditional Job Titles with What a Startup Needs to Accomplish Sales and Marketing Execute to a Plan Presumption of Success Leads to Premature Scaling Management by Crisis Leads to a Death Spiral Webvan VP of Sales example
20 Business Plans are Obsolete No business plan survives first contact with customers Only used to obtain funding Failure is an integral part of the search for a business model
21 Process to organize the search for the business model
22 A problem well stated is a problem half solved. Charles Kettering, Inventor Electric Engine Starter
23 Customer Discovery State Your Hypothesis Problem-Solution Fit Test customer perception of problem Identify customer s need to solve it Minimum Viable Product (MVP) Show customers product Incomplete products are okay! A PIVOT is NOT a FAILURE
24 How to Hypothesize
25 How it Works
26 Put Yourself in Your Customer s Shoes A day in the life...
27 Market Research Broadly Defined The systematic, objective, process of gathering, analyzing and interpreting information about a market, product or service to be offered for sale, and about the past, present and potential customers for the product or service; research into the characteristics, spending habits, location and needs of your business's target market, the industry as a whole, and the particular competitors you face. Small Business Encyclopedia, Entrepreneur.com
28 Why Market Research? Lack of a well-developed business model, including insufficient research on the business before starting it: 78% failure rate 84% of small businesses claim money well spent on market research 58% claimed they integrated findings into product development Koester, E. (2009). What every engineer should know about starting a high-tech business venture. Boca Raton: CRC Press, p.44
29 Market Research
30
31 Market Intelligence Resources ICE PRACTICE LIFE SCIENCES CLEANTECH Pg 31
32 Tools Social media dashboard to track competitors A repository to get teams on the same page with competitive info, partners, market trends Download competitors profitable keywords from AdWords campaigns
33 Primary Research Test market with landing page and Google AdWords Set up a web page in minutes, to test and validate your customer problem and willingness to pay
34 Case Study Wanted to build his own Jelly Fish tank but would cost $25,000 worth of parts Had a hunch others might want one Created test website and spent $100 on Google Adwords Sold a $25,000 jellyfish tank Now sells units for $500
35 Blogging Blog around topic, build followers, find early adopters Put market research to use, become SME
36 Polling Post Product Launch Too!
37 Punchbeta Real-time website analytics tool to see where customers are leaving your site
38 Who is an Ideal First Customer? Earlyvangelist Visionary customers who buy unfinished/untested products, fall in love with idea of product Happy to pay for early access Early or eager aceclerators of viral growth Why?
39 Earlyvangelist Characteristics
40 Where do I meet these Earlyvangelists? They are closer than you think! Network! Tradeshows LinkedIn Via co-workers Past colleagues
41 How to Win Support for your Idea? Make it imperfect Makes it less likely someone else will run with it and be comfortable presenting Customers feel a part of the process Perfect solutions inspire critique
42 Minimum Viable Product (MVP) Perfection by Subtraction Build the smallest possible feature set Agile Engineering, incremental product build
43 Remember this? Eric Tribe, CEO
44
45 Value Proposition
46 Cold Calling Use social media to turn cold into warm Use industry associations Find relevant and timely news they appeared in Use relevant market research and stats WIIFM Ego Boost Other s Credibility - Media
47 Lessons The search for a business model is at the front of the startup process Goal is to find a repeatable/scalable business model and execute it No customers, no business Interact with customers early and often to save time and money Ask questions!
48 Questions to Ask Why customers don t buy Why did customers buy It s difficult when caught up to follow these principles, leverage outside organizations or people to hold you to milestones and these concepts
49 What the Innovation Centre can Do Help identify the problem Assist identifying customers Provide outside assistance and fresh, honest perspective Advisory Board Program
50 Additional Resources Steve Blank
51 Upcoming Events Social Media Strategy May 15th
52 Nick Kolobutin Commercialization Specialist 96 High Street, Suite 300 Thunder Bay, ON P7A 5R3 Phone: Twitter: noic_innovate facebook.com/nwoinnovation Supported By:
53
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