ENG491 Technology Entrepreneurship

ENG491 Technology

Entrepreneurship

Building a Lean, Scalable StartupFall 2011 – Fall 2012

Emre Oto

www.eng491bu.orgFollow on Twitter: @eng491

http://www.eng491bu.org/

Today’s Agenda Idea Presentations – Customer Development

project K/O

TALC Review

Customer Discovery

The Value Proposition

ENG491 Technology Entrepreneurship Week #4 «Customer Discovery»


project K/O

TALC Review

Customer Discovery



Customer DiscoveryOverview and Objectives “Getting outside the building”

Learning what the high-value customer problems are

What it is about our product that solves these problems?

Who specifically are your customer and user?


Customer Discoveryis not about..

Collecting feature lists from prospects / Running focus groups

Founders and Product Development define the first product

Customer Development searches and tries to discover customers and a market for that vision

The initial product spec comes from the founders vision


Customer Discoveryis not about..(cont.)

understanding the needs and wants of all customers

Making a list of all the features customers want before they buy your product

Handing Product Dev. a features list of the sum of all customer requests


Customer Discoveryis about..


Product / Market Fit

Customer Discoveryis about..


Developing for thefew, not for the many

Customer DiscoveryEarlyvangelists Very small group of early customers who

are Early Adopters Evangelists

buy unfinished and untested products and also spread the news about them

have a budget to purchase, see the potential of the product to solve a critical and immediate problem


Customer DiscoveryScale of Customer Pain

Has or Can Acquire a Budget

Has Put Together a Solution out of Piece Parts

Has Been Actively Looking for a Solution

Is Aware of Having a Problem

Has a Problem

Earlyvangesits


Customer DiscoveryStart Dev. Based on Vision

Initial MVP feature list is driven by the vision and experience of company’s founders

Initial purpose of talking to customers is not to gather feature requests

Feature request is by exception rather than rule

First MVP should be “good enough for first paying customers”


Customer DiscoveryPurpose

Identify key visionary customers

Understand their needs

Verify that their product solves a problem that they are willing to pay to be solved

Start development based on initial vision, use visionary customers to test whether the vision has a market


Customer DiscoveryStages

Verify

State Hypothese

s

Test Problem

Hypotheses

Test Product Concept

Validation


Customer DiscoveryStages

Verify

State Hypothes

esTest

Problem Hypothese

s

Test Product Concept

Validation


We will progressivelystudy how to do this throughout the semester

Friendly First Contacts

“Problem Presentation”

Customer Understandin

gMarket

Knowledge

Customer DiscoveryPhase 2: Test Problem Hypotheses


Customer DiscoveryProblem Presentation

List of Problems

Prob 1

Prob 2

Today’s Solution

TS1

TS2

Your Company’s

Solution

YCS1

YCS2

Not designed to convince, but to elicit information from customers

List ofyourhypotheses


Customer DiscoveryCustomer Understanding

Understand a day in the life of the customer

What would make customers change the current way they do things? Price? Features? A new standard?

Check if they will pay for solution: “If you had a product like this [in concept], what

percentage of your time could be spent using the product?

How mission critical is it? Would it solve the pain you mentioned earlier? What are the barriers for adoption?


Customer DiscoveryCustomer Understanding Find out how they learn about new products

You’ll have to create demand to reach these customers one day

Goal is to stand up in front of your company and say: “Here were our hypotheses about our customers,

their problems, and how they worked. Now here’s what they are saying their issues really are, and this is how they really spend their day”


In-depth customer understanding

Customer DiscoveryMarket Knowledge

Meet key industry influencers, people from adjacent markets etc.

Key questions: What are industry trends? What are key unresolved customer needs? Who are the key players in this market? What should I read? Who should I know? What should I ask? What customers should I call on?

Attend industry conferences and tradeshows

Customer DiscoveryPhase 3: Testing Product Concept


First Reality Check

Product Presentatio

n

More Customer

Visits

Second Reality Check

1st Advisors

Customer DiscoveryPhase 2 to Phase 3

Phase 2 was about testing hypothesis briefs about customer problems, while making sure we had a complete understanding of customer needs

In phase 3, we move to testing product hypotheses on potential customers in our potential market

The objective is not to sell, but to get feedback


Customer DiscoveryFirst Reality Check

Build customer workflow map from customer data

Matching product features to customer problems Prioritizing features The goal is not to be adding features but finding out the

minimum feature set for the first release, based on input from visionary customers

Verify which of the three market types you are in

Answer key questions: Why are you different? What is your basis for competition?


Customer DiscoveryProduct Presentation Goal is to test your revised assumptions about the

product itself Goal 1: Reconfirm your product will solve a serious

customer problem Goal 2: Validate your product and its features

Develop a solution oriented presentation that describes the product in terms of solving the customer’s problem

If it’s too early for a real product demo, cover the few key product feuatres in slides


Customer DiscoveryProduct Presentation

Include a story about “life before your product” and “life after your product” Draw the customer’s workflow/day with and

without your product

You are still not selling You are trying to figure out if you have a salable

product Gather enough info, so that when you try to sell,

there will be buyers


Customer DiscoveryMore Customer Visits

Ask about your features: Do they match the customers’ needs?

What features must you have on day one?

What features could wait until later?

What features are simply missing?

What is a “Whole Product” in the customer’s mind?



Check other assumptions:

Pricing? What do they think are comparable prices for your product?

Test pricing boundaries: Would the customer deploy your solution if it were free?

Ask again, if they were interested in such a product, how would they find out about it? Through which channels would they buy it? If you need to use an indirect channel you need to meet channel

partners

Ask about the product approval / procurement process



After hearing your product presentation:

Do customers think the product is different?

Do they think you are creating a new market? / Do they think the product is a better version of an existing product?

Do they think your product changes the game, or are they indifferent?


Customer DiscoverySecond Reality Check

Assessing customer interest

Product feature prioritization for first release: First release is not the ultimate product Fast to market: Learning to make money from

day one

Spot technology packaging issues


Customer DiscoverySecond Reality Check

Assessing customer interest

Product feature prioritization for first release: First release is not the ultimate product Fast to market: Learning to make money from

day one

Spot technology packaging issues


Customer Discovery1st Advisory Board


First Reality Check

Product Presentatio

n

More Customer

Visits

Second Reality Check

1st Advisors

Customer DiscoveryPhase 4: Verify


Verify the Problem

Verify the Product

Verify the Business

ModelIterate or

Exit


project K/O

TALC Review

Customer Discovery



Documents

ENG491 Technology Entrepreneurship