In this lecture, Poornima will talk about how the first year goals in a startup need to center around customer creation, and the techniques for customer creation. She will also dig into building a Concierge MVP, and how to go about testing value proposition. You can watch the lecture here: http://youtu.be/vPx_F9oV6JA

1. Duke ECE 490L: How to Start New Ventures in
Electrical and Computer Engineering
Poornima Vijayashanker
poornima@femgineer.com
Jeff Glass
jeff.glass@duke.edu
Akshay Raut
ar118@duke.edu
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2. Review
• Stories to Features
• Usability Testing
• Paper Prototyping
• Interaction Testing
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3. Announcements
• Questions on Lab 2?
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4. Review Session:
Wednesday October 23, 2013
DUHatch
Idea Summary
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5. Agenda
• Customer Creation
• Concierge MVP
• Exercise
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6. Market Research
Customer Discovery
Early Adopter
Pricing
Product
Distribution
Validation
Customer Creation
Business/Company
Formation
Mainstream Adopters
Money for Marketing
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7. Customer Discovery
Validation
Customer Creation
Business/Company
Formation
Early Adopter
Pricing
Product
Distribution
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8. We’ve conducted interviews to test across
various segments and usability tests to test
product.
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9. Figured out market position: new, existing, resegmenting.
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10. Maybe outside factors that will limit growth.
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11. Customer creation marketing activities
necessary for customers to learn about
product and create a desire to buy it.
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12. “Get big fast!”
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13. Demand Creation v. Early Adopter Launch
• Market adoption v. market share
• Education
• Not customer acquisition programs
• Earlyvangelist find product and spread the word
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14. Customer Creation
• Not about marketing department
• Creation events
• Marketing programs depend on market
• Product launch
• Advertising, PR, trade shows
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15. Market Share
Cost of Entry
Entry Strategy
Monopoly
>75%
3x
Resegment/New
Duopoloy
>75%
3x
Resegment/New
Market Leader
>41%
3x
Resegment/New
1.7x
Existing/
Resegment
1.7x
Existing/
Resegment
Unstable Market
Open Market
>26%
<26%
Table 5.2 from Four Steps to Epiphany
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16. Four Building Blocks of Customer Creation
• Year 1 Objectives
• Positioning: both the company and the product
• Launch: both company and product
• Demand creation: advertising, PR, trade shows
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17. What kind of company are we?
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18. How Customer Will Interact with Your Company
• How do customers buy?
• What are their needs?
• What trade shows do they attend?
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19. Describe life to a customer without your product.
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20. Need to set a budget for customer creation.
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21. Company
Positioning
Product
Positioning
Company
Launch
Product
Launch
Demand
Creation
Activities
Year One
Objectives
Existing
Market
Create, drive
Product
Existing basis
Differentiation
Credibility and
demand into
Differentiation
of
Market Share
and credibility
delivery
the sales
(features)
competition
channel
New
Market
Vision and
Defining new
innovation in market, the Credibility and
the new
need, and the innovation
market
solution
Market
Customer
education,
education,
standards
drive early
setting, and adopters into
early adopters sales channel
Market
Adoption
Educate users
Redefining an
Market
about what’s
Resegment Segmentation
existing
Segmentation,
New basis of
reframing and
changed in
delivery &
via Low-End
and
market and
market, drive
competition
new market
innovation
innovation
product
or Niche
demand into
share
differentiation
sales
Table 5.3 from Four Steps to Epiphany
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22. First mover advantage.
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23. Case Study #1: Ford v. GM v. Toyota
• 1921: Ford sold 900,000 Model T’s for 60% market
share v. GM 61,000 Chevys at 6% market share
• 10 year period Ford focused on cost reductions, while
GM diversified and differentiated product line
• 1931: GM had 31% market share v. Ford 28%. GM still
has lead.
• 1964: Toyota...
• Today: Toyota is dominant American car company
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24. Not enough to be 1st to market, need
to understand the type of market your
company is going to enter.
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25. 1st year is all about customer creation.
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26. Serviceable market: subtract customer who
bought competitor’s solution.
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27. They wanted a “whole product” (service,
support, and other infrastructure).
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28. Given our pricing, how many customers can
afford our product in year one?
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29. How many raw leads do you need?
# of qualified prospects to close 1 order?
Paying full price?
Revenue Number for Year One
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30. Where would most qualified leads come from?
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31. External Audit Questionnaire
Recognition
Have you heard of the company? Do you know what they do?
Market Forces
Are there other products int he market that are similar to the company’s?
If so, how are the company’s products different?
Which do you like best? Why?
Customer Focus
Are you familiar with the types of customers the company is calling out?
Product Focus
Do you know that the top three features of the company’s product are?
Are these “must have” features?
Positioning
Have you heard the company describe its positioning? Do you believe it? Is it
right?
Have you heard the company describe its mission? Do you believe it? Is it
right?
Competition
Who do you think the company will compete with in the first year?
Sales and Distribution
Is the company’s distribution strategy the right way to reach customers?
Strength/Weaknesses
What are the strengths of the company?
Trends
Figure 5.5 from
Four Steps to
Epiphany
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What tech/product trends should the company worry about?
Acquisition Information
What do they think is the best way for the company to get product info to
customers?
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32. In customer validation phase you should
have understood needs and who buys or
influences markets.
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33. Messengers.
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34. Messengers: reach a few experts, evangelists,
and connectors.
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35. Experts
• Know
industry and product in detail.
• Others rely on their opinions.
• Some may not proselytize product and will charge for
advice or consulting.
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36. Evangelists
• Cheerleaders
and salespeople.
• Typically paying customers
• Some may not proselytize product and will charge for
advice or consulting.
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37. Connectors
• Maybe
bloggers or write for magazine or newspaper
column.
• “Thought leaders” because of their ability to bridge
across multiple worlds.
• Need to have already established a relationship with
them.
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38. Messages need to be memorable and sticky.
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39. Media Checklist
Which media did my earlyvangelists tell me
they rely on?
Which media do I believe my potential
mainstream customers rely on? Are they
the same as the media that reach
earlyvangelists?
Which media do others in the influence
map rely on?
Table 5.7 from
Four Steps to
Epiphany
Which medium offer the best return on
investment?
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40. May have trouble getting traction.
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41. “Our app has been downloaded 10,000 times!”
“We have 1M users!”
“We were featured on TechCrunch.”
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42. Some time passes...
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43. Duke ECE 490L
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44. Keep building!
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45. Duke ECE 490L
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46. What happened?
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47. Validate early adopters and value proposition.
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48. MVP Fails
1. Don’t know who you’re early adopter is?
2. Don’t have a simple value proposition.
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49. Duke ECE 490L
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50. Resist the urge to build before you validate!
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51. Concierge MVP.
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52. Concierge MVP
experience is a product
• Questions
• Do consumers recognize they have the problem you
are trying to solve?
• If there was a solution, would they buy it?
• Would they buy it from you?
• Can you build the solution for that problem?
• How can you build a simple version?
• An
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53. Concierge MVP validates value proposition.
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54. Case Study #2: Food on the Table
• Creates
weekly meal plans and grocery lists, and hooks
into grocery stores to find best deals for ingredients
• Began with a single customer!
• Interviewed customers are local super markets.
• Signed up 1st customer and dropped off groceries
weekly.
• Collected $9.95 on each visit!
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55. Case Study #3: Dropbox
• Built
a prototype: no one believed it.
• Validated concept through a video.
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56. Not the time to focus on growth!
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57. Customers care about a product solving
their problems or servicing their needs.
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58. Who are your customers?
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59. Not just product, but entire experience!
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60. Can you bounce back?
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61. Case Study #4: BizeeBee
•
Initially a tool for ALL small business owners
•
100+ email signups - no one came back!
•
I called EVERYONE
•
No clear early adopter or value proposition
•
Focused on yoga studios first
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62. Will I grow?
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63. Eventually!
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64. Case Study #5: Femgineer
• Blog
that became a business
• Bootstrapped through customers
• Concierge MVP
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65. Case Study #6: Zappos
• e-commerce
platform
• Started with brick and mortar stores
• Focused on one market: shoes
• Simple site with same inventory that was in stores
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66. Case Study #7: AirBnB
• Marketplace
• Started
with concierge MVP
• Early adopters were people who crashed with friends &
family
• Simple value proposition to rent a bed, room, or apt for
a short stay
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67. What about quality?
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68. Customers care about a product solving
their problems or servicing their needs.
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69. If design is an issue that will be revealed in
testing on early adopters.
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70. Throw away your work!
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71. Exercise!
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72. Review
• Customer Creation
• Concierge MVP
• Exercise
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