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Bob Dorf at the NJ Tech Meetup, January 2013 www.NJTechMeetup / www.kandsrach.com / http://amzn.to/WHgGY6
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Business Models and Customer Development:
How to FAIL Less(hint: it’s not just a method for startups!)
Bob Dorfallegedly retired serial entrepreneur, educator
Partner, K&S Ranch Inc.
ME: 7 startups, >20 investments, 3 vests…
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7 IPOs, 6 disasters, Columbia B-School Prof.
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608 pages….500+ startup misteaks
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More startups fail from a lack of customers than from a failure of product
development
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Why Most Startups Fail…
Assume Customer Problem: known
Assume Product Features: known
Concept/Seed
Round
Product Dev.
Alpha/Beta Test
Launch/1st Ship
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Startup Enemy #1:
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No Business Plan survives first contact with customers!
…ask Groupon!
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When you’re done…9 best GUESSES
…ask Webvan!
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Where Discovery Begins:Minimum Viable Product
• Google without ads (two years+)• Zappos without any shoes• Diapers.com without diapers
…Fewest possible features to make the point!…When did a powerpoint last get YOU excited?…YOU can use this process to test new ideas
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• Stop selling, start listening• Test your hypotheses• Continuous Discovery• …execute while running your current
business• …isolate the “startup” within your
business
Customer Discovery
CustomerDiscovery
CustomerValidation
CompanyBuilding
CustomerCreation
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The Pivot
• The heart of Customer Development
• Iteration without crisis
• Fast, agile and opportunistic
Customer
Discovery
Customer
ValidationPivot
Search
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Just a few(of many) Historic Pivots
• Steve Blank: “Page 6”• Perimeter: “there are 9000 of us”• Groupon: the $12billion pivot• Ning
• …and thousands more!23
Pivot Cycle Time Matters
• MVP speeds up cycle time
• Speed of cycle minimizes cash needs
•Customer feedback drives the product!
CustomerDiscovery
CustomerValidation
CompanyBuilding
CustomerCreation
ExecutionSearch
Pivot
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How do you know when Discovery is “done?”
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Key PartnersWho are our key partners/ suppliers
Key ActivitiesWhich key activities does the biz model require
Value PropositionWhat value do we deliver to the customer
Customer RelationshipsWhat type of relationship does each segment require of us
Customer SegmentsFor whom are we creating value
ChannelsThrough which channel does each segment want to be reached
Revenue StreamsHow much is each segment willing to pay and how would they like to pay us this amount
Cost StructureWhat are our cost drivers
Key ResourcesWhich key resources does the biz model require
identify key market segments (geography/application) and customer segments (e.g. operator versus owner)
how many customers in each segment and estimated potential volume for each customer
how do customers make money … key customer pain/gain points in each segment
how are buying decisions made in each segment - id process, hurdles, decision makers
what does an Earlyvangelist look like in each segment
who influences purchases in each segment (trade groups, key resellers, trend watchers)
key distinctive product features & benefits for the target customer segment
total cost of ownership for segment versus alternatives
why will segment buy Durathon versus alternatives (i.e. value proposition)
minimum feature set (i.e. our launch configuration) and ultimate feature set
opportunities to claim IP or trademark / is there freedom to practice
what regulatory/ certification/ transportation/ customs requirements should be met or could be differentiator
which segments can only or best be reached through a channel partner
which channel partners are important to optimize sales in each segment
what are channel partners' requirements and cost to become a proactive sales channel
initial channel partner response to value proposition & customer segments
What are price /performance characteristics of competing technology What is the 2013 price target for 1 MM cells What is the 2015 price target for 10 MM cells what is optimum sales method for each segment (asset sale, lease, pay for performance, etc.)
product positioning/elevator pitch for each segment
Prospect roadmap: how to get face-to-face with right person at prospects in each segment
key competitors in each segment and their market share
key competitors' characteristics & dynamics What outbound marketing/ advertising/
promotion activities are needed support tools required by segment (white
papers, TCO calc., tradeshow) pipeline of leads
x
x
x
X = number of in depth customer data points / data sources used to validate hypothesis
red = low hypothesis confidence yellow = medium hypothesis confidence green = high hypothesis confidence
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4 50
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Complete regional overview
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Populate life cycle data for performance guarantees
Educate market on metric: $/kWh-day delivered over life of asset
Establish strong partnerships with channel partners
Integrated power system engineering – compatibility for retrofit and optimized system solutions
Financing options for Power services operators
Launch reliability
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Customer Validation
Customer
Discovery
CustomerValidatio
n
Customer Creation
CompanyBuilding
• Repeatable and scalable business model?
• Passionate earlyvangelists?
• Pivot back to Discovery if no customers
Pivot Execution
Search
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ScalableStartup
Large CompanyTransition
Why Startups Aren’t Run By Accountants
Alfred P. Sloan
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ScalableStartup
Large CompanyTransition
Founder of General Motors
Billy Durant
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ScalableStartup
Large CompanyTransition
FIRED by General Motors Board
Billy Durant
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Durant Versus Sloan
• Dies, rich, honored and famous
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Durant Versus Sloan
• Dies, rich, honored and famous• Dies managing a bowling alley
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Durant Versus Sloan
• Dies, rich, honored and famous• Dies managing a bowling alley
Accountant
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Innovators look out!WE are here
ScalableStartup
Large CompanyTransition
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