Killing Your Startup By Listening to Customers « Steve Blank

Customer Development = The pursuit of customer understanding

Part of Customer Development is understanding which customers make sense for your business.  The goal of listening to customers is not please every one of them.  It’s to figure out which customer segment served his needs – both short and long term. And giving your product away, as he was discovering, is often a going out of business strategy.

The work he had done acquiring and activating customers were just one part of the entire buisness model.

via Killing Your Startup By Listening to Customers « Steve Blank.

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A simple way to develop and pitch your next company (the CVFB method)

I work on lots of new ideas for companies. I’ve developed the following tool that helps me (and it seems many others) to quickly develop and evaluate these ideas.

In the simplest form, it helps create an elevator pitch, (e.g. for – We focus on relationship-centric professionals (sales, PR and recruiters) (Customer) and, save them time (Value Prop) as they prepare for meetings, by creating dynamic full-contact dossiers (Feature Set) and charge them a monthly service fee (Business model).

To get started on finding the “MVC” (minimum viable company), you need to start with the “smallest idea that is big enough” (a few customers, 1 value, 1 key feature and a clear biz model).  You can always expand over time, but most ideas become too complex (lots of customer types, lots of features, varied business models…) and are therefore too complex to get off the ground.

You need to identify real people you know (we built Gist for me and 2 sales guys, thx Kendall and Brandt) who can validate the idea, value, key features and their willingness to pay (which should be very high).  As you find representative people, you can abstract key attributes of them to start to generalize into “personas” which becomes your real target customer.  And from here you can start looking for the best beta users (more on that here). Finding real people is, in my opinion, the single most important activity of a startup!

You can then compare different parts of the model to see how well the idea works.  A few examples;

  • C–V – does your target customer value what you are doing (e.g. saving time, qualifying leads, increasing revenue…) and how much (scale of 1-10)?  Is the value a real pain or just nice to have?  How do they solve this pain now?  How would they quantify value? As you are doing customer interviews, asking questions like this and comparing the answers will help you in prioritization as well as more efficient communication.
  • V–B – is the value you’re delivering correlated to the business model, meaning the more value you deliver, the more you can/should charge? Work hard to correlate these things by changing one of the other.  This ends up relating to ROI (return on investment).
  • F–B – are the features you are building organized to support the different price points? You can imagine your “pricing page” from this exercise.  Really great post on personas and pricing from Patrick Campbell (@Patticus) and Price Intelligently here
  • C–B – does your customer usually buy in the model you are proposing?  What other services/products do they buy that are similar to yours and is the model similar for these products?  How much do they pay for related services? And, is your target user accustomed to buying in the way you propose (e.g. per user) or are you trying to educate them on a “new” business model at the same time as you are introducing a new product offering?  The latter might slow down the sales process, especially for enterprise buyers.

If you can’t make an idea work on a just a few users, just a few features, a pretty clear value prop and a clear business value, it’s probably not such a good idea.  I know one tool does not solve all the issues in considering a new idea, but this is the best one I have found.

One key area that is not considered in the above is around competitive solutions.  Most people who say they have a need, have spent no real time or money on a finding a solution.  Red flag on them as early adopters and potentially red flag on the overall idea.  But, as you identify a core need, and solid interest (yes I would pay to have that solved), look hard/ask lots of questions about competitive solutions.  In fact, I usually suggest my target users test/evaluate the competitive solutions I know about.  I would much rather they find out about them before I build my thing vs. after, and they usually appreciate the information.  If, after doing a good competitive eval and passing that through your early target base, you might find a good place to start!

Please suggest others and/or other ways this could be improved.  Good luck on your next idea.

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6 steps to finding the right beta users

Finding the right early users can make or break a startup. If you find the wrong people, they will either waste your time with irrelevant suggestions or could easily send you off in the wrong direction. Here are a few … Continue reading

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Corum group presentation – trends and predictions for 2012

Today I participated in an annual call with The Corum Group, a Seattle based M&A group focused on trends and opportunities for 2012 across the broad software, internet and mobile spaces. I was part of a panel that included some friends and people I really respect, including;

  • Dan Shapiro, Google — Social Domination
  • Chris Bray, IBM — The Year Ahead
  • T.A. McCann, RIM — Revolution in Mobile
  • Peter Coffee, Salesforce — Cloud Strategies
  • Steve Singh, CEO, Concur — SaaS in 2012
  • Reese Jones — the Berkeley Lab Sage
  • John Heyman, Actuate Partners — “Selling for a Billion”

I made the following key points about “revolutions in mobileRead more

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Building your tribe – regular and efficient updates

To create a great and successful company, marking and communicating your progress to yourself, your team and your supporters is critical. Here are a few things that have worked well for me;

communicate every 2 weeks – this allows you to make meaningful progress, is a good frequency for your supporters to digest and sets you in a rythym towards monthly board meetings

– send your updates on Sunday afternoon – gives you an opportunity to finish out the week, have some time to put your thoughts down and will give your supporters a chance to read and comment before their busy week starts

– develop a specific format – I like to use the following: Read more
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