INtro to Learn Startup

customer developmentCustomer Discovery Customer Validation Company Creation Company Building @ryanmaccarrigan Four Steps…... customer developmentFocus on customer behavior to reveal und

Intro to lean startup

Ryan MacCarrigan

• Chief Experimenter @ LeanStudio

• Partner & VP @ Lean Startup Machine

• Organizer - LSC: Corporate Intrapreneurship Meetup

• Past Co-Organizer - NYC Lean Startup Meetup & SF LSC

• Head of Marketing - Several tech startups in NYC & SF

@ryanmaccarrigan

1 Intro to Lean Startup

2 Exercise 1: Identifying Risky Assumptions

3 Exercise 2: Risk Prioritization and Testing

4 Exercise 3: Customer Personas

5 Exercise 4: Mock Interview Prep

6 Scheduled Interviews + Critique

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special requests

1 Please speak English during exercises so

that we can listen in and assist you as needed

2 Use English and ALL CAPS when writing on

something is

fundamentally

wrong

@ryanmaccarrigan

why do

startups

fail?

big idea #1

The vast majority of startups fail not because they couldn’t

build their product…

But because nobody WANTED their product.

big idea #1

By the time the founders figure out their idea isn’t good enough

it’s too late to make it better.

Source: www.cbinsights.com/blog/startup-failure-post-mortem

why do

startups succeed?

big idea #2

“The vast majority of [successful] startups abandoned their initial plans and learned what did and did not

work in the market.”

Clayton Christensen, The Innovator’s Dilemma

successful pivots

background

& core concepts

customer development

@ryanmaccarrigan

customer development

Customer Discovery

Customer Validation

Company Creation

Company Building

@ryanmaccarrigan

Four Steps…

customer development

“Get out of the building!”

Learning activity focused on gaining deeper insight into the

PROBLEM your solution is solving for

“No business plan survives first contact with customers.”

- Steve Blank

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customer development

Focus on customer behavior

to reveal underlying motivations:

Attitudes, Needs, & Goals

@ryanmaccarrigan

customer development

Founders often fear talking to customers…

Fear that their idea is embarrassingly bad

Fear that their ego will become tarnished

Fear that they don’t possess innate wisdom

@ryanmaccarrigan

customer development

Customer Discovery

Customer Validation

Company Creation

Company Building

@ryanmaccarrigan

talk to people

customer development

Customer Discovery

Customer Validation

Company Creation

Company Building

Today’s Primary Focus

@ryanmaccarrigan

Lean startup

@ryanmaccarrigan

Build Learn

Measure

validated learning

If [ we do this ], then [ # or % ] will [ exhibit behavior ]

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Lea( R )n

Build Learn

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reduce risk

1 Building the wrong thing

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2 Premature optimization

customer development

Customer Discovery

Customer Validation

Company Creation

Company Building

@ryanmaccarrigan

product-market fit

Customer Discovery

Customer Validation

Company Creation

Company Building

Product-Market Fit

@ryanmaccarrigan

definition 1

Product-Market Fit

“The point at which you have captured sufficient customer demand

in a defined market for a given solution — such that the business model delivering the solution can sustain itself economically

through customer demand alone.”

- Tristan Kromer, Lean Startup Circle

@ryanmaccarrigan

$

definition 2

Product-Market Fit

The point at which a company can begin investing resources into

scaling marketing, because at least 40% of surveyed customers

would be “very disappointed” if they could no longer use the product or service; your product is a “must have” for those users.

- Sean Ellis, GrowthHacker.com

@ryanmaccarrigan

Customer Development is NOT Scalable

It’s a valuable learning process that helps you reach

customer validation as quickly as possible

Exception: Direct Sales Businesses (e.g., Avon)

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learn faster…

@ryanmaccarrigan

Do NOT Confuse “Problem-Solution Fit”

w/ Product-Market Fit

If someone is excited that a solution exists for the problem you are

validating, it does NOT mean you have product-market fit.

@ryanmaccarrigan

customer discovery

Customer Discovery

Customer Validation

Company Creation

Company Building

Pivot Around

Problem-Solution Fit PRE Product-Market Fit POST Product-Market Fit

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pivot!

types of pivots

@ryanmaccarrigan

Customer Segment Pivot

Customer Need Pivot

Zoom-In Pivot Zoom-Out Pivot Technology Stack Pivot Customer Channel Pivot

Platform Pivot

customer validation

Customer Discovery

Customer Validation

Company Creation

Company Building

PRE Product-Market Fit POST Product-Market Fit

Look for Currency

& Traction

@ryanmaccarrigan

customer validation

What is “Currency”?

How much time or attention is an earlyvangelist willing to spend to

obtain or learn more about your product or service?

How much money is an earlyvangelist willing to spend on your

product or service?

Time, Attention, Money

@ryanmaccarrigan

customer validation

Do I Have Product-Market Fit??

• Begin pitching your solution Clearly define your value proposition, and design experiments that test customer demand

• Pitch a hypothetical solution Look for currency

• Are they foaming at the mouth? Look for a clear signal

• Could you scale the business model based solely on the economics

of customer demand? If not, pivot back to Customer Discovery.

@ryanmaccarrigan

foaming at the mouth?

customer validation

No Customer Validation?

• Properly identified customer needs and goals?

• Understand current behaviors?

• Targeting the correct customer segment?

• Effectively positioning product benefits?

• Mentioning the correct set of features?

• Too few features? Too many?

• Not priced correctly?

• Et al

@ryanmaccarrigan

customer development

Customer Discovery

Customer Validation

Company Creation

Company Building

Scale Sales &

Marketing ($$$)

PRE Product-Market Fit POST Product-Market Fit

Customer

@ryanmaccarrigan

customer discovery

Start Here…

@ryanmaccarrigan

customer discovery

Define Objectives and Learning Goals

Before getting out of the building and talking to people,

identify the riskiest assumptions about your

target customer and business model

Prioritize which assumptions are most urgent to

validate or invalidate Test those FIRST.

@ryanmaccarrigan

risky assumptions?

unknown

known

High Impact low impact

riskiest

@ryanmaccarrigan

customer discovery

Who Does Customer Discovery?

Never outsource to agencies, market research analysts,

UX contractors, etc

The founders need to test their own vision against reality.

@ryanmaccarrigan

customer discovery

Remember…

@ryanmaccarrigan

@ryanmaccarrigan

Do people use it?

Which is better?

Did we do the right thing?

Are these results good?

Are we making progress?

CLOSED-ENDED QUESTIONS

How should I design the new one?

Do people use it?

What’s wrong with this?

How could I make this better?

Why do people do that?

What do people love about it?

How can I improve conversion?

Why is there dropoff?

What do they think this should do?

learning goals

1 WHO do we want to learn from?

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2 What do we need to validate or invalidate first? (Risk)

learning goals

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3 How will we find the right people to interview?

learning goals

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4 How do we ensure quality control throughout the process?

learning goals

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5 How do we draw conclusions based on our data?

learning goals

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Who are they?

Think about your solution hypothesis and envision

all possible use-cases

Who are the target customers for what you believe

is the most viable use-case?

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Who are they?

Example:

We’re going to build a wearable, hands-free camera that allows

people to capture high-quality video effortlessly and spontaneously

Use-Cases:

Security Officers and Policemen

Athletes in Training Socially-Connected Millennials Parents with Young Children

Search and Rescue Dogs and Cats

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Who are they?

B2C Example:

We’re going to build a wearable, hands-free camera that allows

people to capture high-quality video effortlessly and spontaneously

Use-Cases:

Security Officers and Policemen

Athletes in Training Socially-Connected Millennials

Parents with Young Children

Search and Rescue Dogs and Cats

@ryanmaccarrigan

Who are they?

Who in this target segment is foaming at the mouth to

buy our product before anyone else can get their hands on it?

i.e., who is your early adopter ?

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1 Has the problem

2 Aware he/she has the problem

3 Has previously searched for a solution

4 Has tried to hack together own solution

5 Willing/able to pay for a solution

early adopter

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early adopter

Total Addressable Market

Customer Segment 1Customer Segment 2

Customer Segment 3Customer Segment 4

Early Adopters

…Not yet

Start small

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Who are they?

@ryanmaccarrigan

Who are they?

@ryanmaccarrigan

…Learn another time

Outline Core Assumptions

1 work with your team


2 discuss each prompt

3 write your answer (3 mins)

1 Our target customer is…

Describe current customer hypothesis in one sentence.

assumptions exercise

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2 The problem our customer needs to solve is…

What (observable) problem are they currently struggling with?

assumptions exercise

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3 The customer’s needs can be solved with…

What’s the simplest pitch you can write for your

current solution hypothesis?

assumptions exercise

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4 Why can’t the customer solve this today?

What is lacking in the current market, or what hurdles are making it

hard for customers to find a solution?

assumptions exercise

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5 What outcome does the customer want to achieve?

What specific and measurable changes in the customer’s

life/behavior will make them loyal to your product?

assumptions exercise

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6 What is the primary channel for customer acquisition?

Eventually there will be multiple channels…what is your best guess

for what will be the biggest acquisition channel?

assumptions exercise

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7 Who is the early adopter in my target customer segment?

We can’t “cross the chasm” until we’ve validated an early version of

the product What are the key traits of early adopters in

our current target customer segment?

assumptions exercise

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8 What’s the revenue model?

How will customers pay for our solution?

assumptions exercise

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9 Who are our primary competitors?

Think about both direct and indirect competition

assumptions exercise

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10 How will we beat the competition?

What are the true differentiators between us and them?

What clear advantages do we currently possess?

assumptions exercise

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11 What is the biggest risk to financial viability?

What factor(s) might prevent the business from breaking even?

assumptions exercise

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12 What is the biggest technical or engineering risk?

What is the biggest technical challenge that might hinder the product from meeting customer expectations, competitive

pricing pressures, or window of market opportunity?

assumptions exercise

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13 What other risky assumptions are there?

What things, if proven untrue, would fatally break the business?

assumptions exercise

@ryanmaccarrigan

1 create 4x4 grid on table


2 arrange post-it notes

according to risk (10 mins)

3 prioritize testing (5 MINS)

known

high impact low impact

[ 10 min ]

exercise 3: evaluate risk

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exercise 3: evaluate risk

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KNOWN VS UNKNOWN

How much research have you done? What is your level of

confidence?

HIGH VS LOW IMPACT

What things, if proven untrue, would fatally break the business?

not urgent

low cost high cost

prioritize testing

@ryanmaccarrigan

[ 5 min ]

not urgent

low cost high cost

test first

prioritize testing

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lunch

B2B Customer Discovery Requires Tenacity

You need to do your homework and truly understand the company before reaching out to them This is the only way you’ll know the

right questions to ask

Leverage your personal network, LinkedIn, and industry events or meetups, to find someone at the target company who can make

a strategic introduction for you

b2b Customer discovery

@ryanmaccarrigan

Target Company Research

• Read all relevant about pages on the prospect company’s website

• Search for all positive and negative media coverage over the past

3 years that can give you a better sense of where things stand

• Research LinkedIn to discover the backgrounds and connections

of senior management, or the people on the team you will meet

• Read social media posts on Twitter, Facebook, YouTube, etc to understand how the company wishes to position itself.

b2b Customer discovery

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Strategic Point of Entry

Who is incentivized to champion your cause inside the company?

Who gets bonus points or a promotion if they champion something

new that turns out to be successful?

Director of Marketing? Product Owner? VP Sales?

b2b Customer discovery

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Getting Intros from Sales People

Sales Account Managers are some of the most sympathetic people

you can talk to for introductions to decision makers

Sales people do what you’re trying to do for a living They know how difficult it is to reach decision makers, and with a little bit of luck

and tenacity you might be able to get them on your side…

b2b Customer discovery

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Tell a Compelling Story

Remember — in B2B Customer Discovery, there is a possibility you

could also sell an early version of your product

Explain to the point-of-entry person that you are building something that will help their company improve sales, streamline

operations, reduce costs, reduce internal or external risk,

increase overall revenue…etc

b2b Customer discovery

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Leveraging the Power of LinkedIn

This platform has revolutionized B2B customer discovery and sales

• Search for current and past employees of the company in search

of a point-of-entry

• Contact partners of the target for advice on dealing with them

• Find sellers of complimentary products & services for advice on how they gained entry

b2b Customer discovery

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Once You’ve Got the Meeting Scheduled…

“Customer Development is the complex discovery-driven sale In real B2B sales you sell by asking questions and paying careful attention to the answers — not only their content but their

implications and what’s left unsaid.”

- Sean Murphy

b2b Customer discovery

@ryanmaccarrigan

Include These Open-Ended Questions*

1 Could you describe the problem you’re having in your own words?

2 Could you describe on a high-level your current work flow?

3 What are you primary constraints?

4 What’s the end result you hope to achieve by finding a solution?

5 What have you previously tried to do to solve the problem?

6 What are the key metrics you’d like to use to evaluate a new

solution?

b2b Customer discovery

*Questions developed by Sean Murphy

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