1. Customer Development Steve Blank www.steveblank.com Twitter: sgblank

2. Five Short Stories

3. Not All Startups Are Equal

7. 99.7% of all companies

8. ~ 50% of total U.S. workershttp://www.sba.gov/advo/stats/sbfaq.pdf

9. Scalable Startup Large Company >$100M/year Scalable Startup Goal is to solve for: unknown customer and unknown features

11. Can grow to $100m/year

12. Business model found

13. Focused on execution and processScalable Startup

15. Can grow to $100m/year

16. Business model found

17. Focused on execution and process

19. Typically needs risk capital

21. i.e. Product/Market fit- Repeatable sales model - Managers hired What’s A Startup? Search Execute A Startup is a temporary organizationused tosearch for a scalable business model

23. Professional Mgmt

24. Process

27. New tech / Unknown product features

30. Repeatable sales model- Managers hired

32. Product/Market fit- Repeatable sales model - Managers hired

34. Cash Flow Statement

36. Viral coefficient

37. Customer Lifetime Value

38. Average Selling Price/Order Size

39. Monthly burn rate

41. Cash Flow Statement

43. Scalable

44. Price List/Data Sheets

46. Pricing/Feature unstable

47. Not yet repeatable

48. “One-off’s”

50. Scalable

51. Price List/Data Sheets

53. Feature Spec’s

54. Competitive Analysis

56. Feature Spec’s

58. Minimum Feature Set

59. Pivots

61. Waterfall Development

62. QA

64. Waterfall Development

65. QA

67. Continuous Learning

68. Self Organizing Teams

69. Minimum Feature Set

71. Known features for line extensions

72. Known customers/markets

74. Unknown feature set

75. Unknown business model

76. Model found by iteration

77. Plan describes “knowns”

78. Known features for line extensions

79. Known customers/markets

81. Always looking at something different

83. Finds your next market

84. Pains in the butt

85. Always looking at something different

87. Product/Market fit- Repeatable sales model - Managers hired You failif you remain a startup!

88. Plan versus Model

90. Customers

91. Channel

92. Demand Creation

93. Revenue/Expenses/ProfitThe template to look like everyone else when you present to VC’s/Management

94. No Business Plan survives first contact with customers

95. So Search for a Business Model

96. What Is a Business Model? Diagram of flows between company and customers Scorecard of hypotheses testing Rapid change with each iteration and pivot Product Management-driven * Alex Osterwalder

97. Business Model = Keeping Score in a Startup CUSTOMER RELATIONSHIP PARTNER NETWORK INFRASTRUCTURE CUSTOMER OFFER TARGET CUSTOMER CORE CAPABILITIES portrays the network of cooperative agreements with other companies explains the relationships a company establishes with its customers VALUE PROPOSITION describes the customers a company wants to offer value to outlines the capabilities required to run a company's business model gives an overall view of a company's bundle of products and services DISTRIBUTION CHANNEL VALUE CONFIGURATION describes the channels to communicate and get in touch with customers describes the arrangement of activities and resources sums up the monetary consequences to run a business model describes the revenue streams through which money is earned COST STRUCTURE REVENUE STREAMS FINANCE

98. Any Business Model in 9 Boxes

99. But,Realize They’re Hypotheses

100. 9 Guesses Guess Guess Guess Guess Guess Guess Guess Guess Guess

103. Customer Development

104. Solving For Customer Risk:Customer Development

105. Customer Development The founders Get the Hell Out of the Building ^

106. More startups fail from a lack of customers than from a failure of product development

107. Yet All We Had WasThis… Concept/Seed Round Product Dev. Alpha/Beta Test Launch/ 1st Ship New Product Introduction Model

108. A Critical Assumption… Concept/Seed Round Product Dev. Alpha/Beta Test Launch/ 1st Ship New Product Introduction Model Customer Problem: known

111. Hire Sales VP

112. Hire 1st Sales StaffSales

114. Hire Sales VP

117. Hire Sales VP

120. Waterfall

121. Q/A

123. Product Development Concept/Bus. Plan Product Dev. Alpha/Beta Test Launch/1st Ship + CustomerDevelopment Company Building CustomerDiscovery CustomerValidation Customer Creation Customer Development

124. Customer Discovery CustomerDiscovery CustomerValidation Company Building CustomerCreation Stop selling, start listening Test your hypotheses Continuous Discovery Done by founders

126. Market Type

127. CompetitionTurning Hypotheses to Facts

129. Customer

130. User

132. Customer

133. User

135. Market Type

137. (Customer)

140. Customer

141. User

143. Market Type

145. (Customer)

148. Customer

149. User

151. Market Type

153. (Customer)

156. Customer Discovery Phase 3 Test ProductHypothesis Phase 4Verify, Iterate & Expand CustomerDiscovery To Validation Phase 1Author Hypothesis Phase 2Test ProblemHypothesis

157. Customer Discovery Hypotheses Customer& ProblemHypothesis Distribution & PricingHypothesis Demand CreationHypothesis Market Type Hypothesis Product Hypothesis Competitive Hypothesis Test “Problem” Hypothesis “Problem”Presentation CustomerUnderstanding MarketKnowledge FriendlyFirst Contacts Test “Product” Hypothesis “Product”Presentation Yet MoreCustomerVisits SecondReality Check First RealityCheck Verify Verify theBusiness Model Iterate orExit Verify theProblem Verify the Product

158. Customer Development in the High-Tech Enterprise Fall 2009 Customer Discovery Customer& ProblemHypothesis Distribution & PricingHypothesis Demand CreationHypothesis Market Type Hypothesis Product Hypothesis Competitive Hypothesis “Problem”Presentation CustomerUnderstanding MarketKnowledge FriendlyFirst Contacts “Product”Presentation Yet MoreCustomerVisits SecondReality Check First RealityCheck Verify theProblem Verify theBusiness Model Iterate orExit Verify the Product Inside the Building Hypotheses Test “Problem” Hypothesis Outside the Building Test “Product” Hypothesis Verify

159. Hypothesis Product Customer/Problem Distribution/Pricing Demand Creation Market Type Competition Customer& ProblemHypothesis Distribution & PricingHypothesis Demand CreationHypothesis Market Type Hypothesis Product Hypothesis Competitive Hypothesis

161. PassionateEarlyvangelists?

163. Customer Validation Phase 4Business ModelVerified Phase 3Positioning CustomerValidation From Discovery To Creation Phase 1Get Readyto Sell Phase 2Sell toEarlyVangelists

164. Customer Validation Get Ready to Sell Prelim Sales & Collateral Materials Prelim Distribution Channel Plan Articulate a Value Proposition Prelim SalesRoadmap Hire a “Sales Closer” Align YourExecutives Sell to “EarlyVangelists” Formalize Advisory Board Refine Channel Roadmap Contact VisionaryCustomers Sell to Channel Partners Sell to EarlyCustomers Refine SalesRoadmap Develop Positioning Present toAnalysts &Influencers CompanyPositioning ProductPositioning Verify Verify theSales Roadmap Verify the Channel Roadmap Iterate or Exit Verify theBusiness Model Verify the Product

165. Customer Development in the High-Tech Enterprise Fall 2009 Customer Validation Inside the Building Get Ready to Sell Prelim Sales & Collateral Materials Prelim Distribution Channel Plan Articulate a Value Proposition Prelim SalesRoadmap Hire a “Sales Closer” Align YourExecutives Sell to “EarlyVangelists” Formalize Advisory Board Outside the Building Refine Channel Roadmap Contact VisionaryCustomers Sell to Channel Partners Sell to EarlyCustomers Refine SalesRoadmap Develop Positioning Present toAnalysts &Influencers CompanyPositioning ProductPositioning Verify Verify theSales Roadmap Verify the Channel Roadmap Iterate or Exit Verify theBusiness Model Verify the Product

167. Business Model changes without crisis

169. (Customer)

171. Market Type

173. Customer

174. User

177. Minimum feature set speeds up cycle time

179. New Product Conundrum Product introductions aren’t predictable Why? Is it the people that are different? Is it the product that are different? Are there different “types” of startups?

180. Three Markets Types Market Type changes everything Sales, marketing and business development differ radically by market type

181. Three Types of Markets Existing Market Faster/Better = High end Resegmented Market Niche = marketing/branding driven Cheaper = low end New Market Cheaper/good enough = creates a new class of product/customer Innovative/never existed before

185. Waterfall / Product ManagementExecution on Two “Knowns” Requirements Product Features: known Design Implementation Verification Customer Problem: known Maintenance Source: Eric Rieshttp://startuplessonslearned.blogspot.com

186. Agile - Customer Problem is KnownExisting Company/Market “Product Owner” or in-house customer Unit of progress: a line of working code Problem: Known Solution: Unknown Source: Eric Rieshttp://startuplessonslearned.blogspot.com

187. Lean StartupCustomer Problem + Product Features are Unknown Problem: Unknown Solution: Unknown Source: Eric Rieshttp://startuplessonslearned.blogspot.com

188. Checklists and Synchronization

190. $’s for scale

193. I Write a Blog www.steveblank.com

194. Both Books on Amazon