Customer Development Model: A Brief Presentation
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Transcript of Customer Development Model: A Brief Presentation
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Customer Development ModelThe Four Steps to Epiphany07/25/2013
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Product Development Model
Concept/Concept/Seed Seed RoundRound
Product Product Dev.Dev.
Alpha/Alpha/Beta Beta TestTest
Launch/Launch/11stst Ship ShipLaunch/Launch/11stst Ship Ship
Concept/Concept/Seed Seed RoundRound
Concept/Concept/Seed Seed RoundRound
Product Product Dev.Dev.
Product Product Dev.Dev.
Alpha/Alpha/Beta Beta TestTest
Alpha/Alpha/Beta Beta TestTest
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Product Development Model
Concept/Concept/Seed Seed RoundRound
Product Product Dev.Dev.
Alpha/Alpha/Beta Beta TestTest
Launch/Launch/11stst Ship ShipLaunch/Launch/11stst Ship Ship
Concept/Concept/Seed Seed RoundRound
Concept/Concept/Seed Seed RoundRound
Product Product Dev.Dev.
Product Product Dev.Dev.
Alpha/Alpha/Beta Beta TestTest
Alpha/Alpha/Beta Beta TestTest
MarketingMarketing
• Create Marcom Create Marcom MaterialsMaterials
• Create Create PositioningPositioning
• Hire PR Hire PR AgencyAgency
• Early BuzzEarly Buzz
• Create DemandCreate Demand• Launch EventLaunch Event• ““Branding”Branding”
SalesSales• Hire Sales VPHire Sales VP• Hire 1Hire 1stst Sales Sales
StaffStaff
• Build Sales Build Sales OrganizationOrganization
Business Business DevelopmentDevelopment
• Hire 1Hire 1stst Business Business DeveloperDeveloper
• Do deals for Do deals for FCS (1FCS (1stst Customer Customer Shipment)Shipment)
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Build It And They Will Come
• Only true for life and death products• i.e. Biotech Cancer Cure• Issues are development risks and distribution, not customer acceptance
• Not true for most other products• Software, Consumer, Web• Issues are customer acceptance and market adoption
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Chasing The FCS Date
• Sales & Marketing costs are front loaded• focused on execution vs. learning & discovery
• First Customer Shipment becomes the goal• Execution & hiring predicated on business plan hypothesis
• Heavy spending hit if product launch is wrong• Financial projections, assumes all startups are the same
=
You don’t know if you’re wrong until You don’t know if you’re wrong until you’re out of business/moneyyou’re out of business/money
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IfIf
Startups Fail from a Lack of Startups Fail from a Lack of customerscustomers
not Product Development Failure not Product Development Failure
Then why do we haveThen why do we have
process to manage product development
no process to manage customer development
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An Inexpensive FixAn Inexpensive Fix
Focus on Customers Focus on Customers and Markets from Day and Markets from Day
OneOne
How?How?
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Concept/Concept/Seed Seed RoundRound
Product Product Dev.Dev.
Alpha/Alpha/Beta Beta TestTest
Launch/Launch/11stst Ship ShipLaunch/Launch/11stst Ship Ship
Concept/Concept/Seed Seed RoundRound
Concept/Concept/Seed Seed RoundRound
Product Product Dev.Dev.
Product Product Dev.Dev.
Alpha/Alpha/Beta Beta TestTest
Alpha/Alpha/Beta Beta TestTest
Product Development
Customer Development
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Concept/Concept/Seed Seed RoundRound
Product Product Dev.Dev.
Alpha/Alpha/Beta Beta TestTest
Launch/Launch/11stst Ship ShipLaunch/Launch/11stst Ship Ship
Concept/Concept/Seed Seed RoundRound
Concept/Concept/Seed Seed RoundRound
Product Product Dev.Dev.
Product Product Dev.Dev.
Alpha/Alpha/Beta Beta TestTest
Alpha/Alpha/Beta Beta TestTest
Product Development
Customer Development
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Customer Development: Big Ideas
• Parallel process to Product DevelopmentParallel process to Product Development
• Measurable CheckpointsMeasurable Checkpoints
• Not tied to FCS, but to customer milestonesNot tied to FCS, but to customer milestones
• Notion of Market Types to represent realityNotion of Market Types to represent reality
• Emphasis is on learning & discovery before Emphasis is on learning & discovery before executionexecution
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Customer Development Heuristics
• There are no facts inside your building, There are no facts inside your building, so get outsideso get outside
• Develop for the Few, not the ManyDevelop for the Few, not the Many• Earlyvangelists make your companyEarlyvangelists make your company• And are smarter than youAnd are smarter than you
• Focus Groups are for big companies, not Focus Groups are for big companies, not startupsstartups
• The goal for release 1 is the minimum The goal for release 1 is the minimum feature set for earlyvangelistsfeature set for earlyvangelists
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Customer Discovery:
Step 1
• Stop selling, start listeningStop selling, start listening• There are no facts inside your building, so There are no facts inside your building, so get outsideget outside
• Test your hypotheses Test your hypotheses • Two are fundamental: problem and product Two are fundamental: problem and product conceptconcept
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Customer Validation:
Step 2
• Develop a repeatable sales processDevelop a repeatable sales process
• Only earlyvangelists are crazy enough to Only earlyvangelists are crazy enough to buybuy
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Customer Validation:
Step 2
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Customer Creation: Step 3
• Creation comes after proof of salesCreation comes after proof of sales• Creation is where you “cross the chasm”Creation is where you “cross the chasm”• It is a strategy not a tacticIt is a strategy not a tactic
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Company Building: Step 4
• (Re)build your company’s organization & (Re)build your company’s organization & managementmanagement
• Re look at your missionRe look at your mission
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Wrap up
• Parallel process to Product Development
• Hypothesis Testing
• Measurable Checkpoints
• Not tied to FCS, but to customer milestones
• Notion of Market Types to represent reality
• Emphasis is on learning & discovery before execution