Berkeley-Columbia Executive MBA Program (Steve Blank)

Sean EllisBerkeley-Columbia Executive MBA Program (Steve Blank) October 16, 2009

Customer Development

Startup Risk & Upside = Customers

1. Traction is tough2. Acquiring at scale even tougher3. Where do you start?

Hundreds of things you “could do”Most early marketing effort wasted

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Road to IPOs: What Really Mattered?

1. Apply engineering to marketing2. Focus on right metrics & optimize3. Understand users and use cases4. Early execution is most critical

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CriticalZone IPO

sGrowth Stage

startup-marketing.com

My Key Focus Now Critical Zone

Then light advising in growth stage

Customer Development Sequence


Growth

Transition to Growth

Product/Market Fit

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Growth Starts with Right Product

startup-marketing.com 6

Growth


Product/Market Fit

What is Product/Market Fit?

1. People want/need your productAnd they represent large enough market

2. Differentiated from alternatives3. Users will pay for your product

Or you are advertising supported


“Life of any startup can be divided into two

parts -before P/M fit and after P/M fit”


Marc AndreessenFounder Netscape, Opsware, Ning

PayPal’s Quest for P/M Fit

1. $200K seed funding - cryptography“No one really needed it” Max Levchin

2. $4.5M VC funding - PDA paymentsPeople preferred web demo (100X users)

3. $1.5B sale to eBay – web payments


Survey Your Product/Market Fit

• Free template at Survey.io



Key Product/Market Fit Question

“Very Disappointed” My Recommendation

0% – 25% Keep burn low, engage, iterate

26% – 39% Try repositioning, retargeting

40% – 100% Proceed up pyramid

“How would you feel if you could no longer use Product?”

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Growth


Product/Market Fit

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1. Track/report right metrics

2. Positioning (based on perceived value)

3. Start recruiting head of marketing4. Viable economics (business model)5. Scalable growth strategy


Hiring/Managing VP Marketing

1. Hire marketer with founder DNA2. CEO & VP Marketing form

partnershipCEO shouldn’t abdicate startup’s fateGoal = Scalable, profitable channelsInsist on perfect execution


Optimize Before Growing

1. Landing pages

2. Funnel (acquisition through transaction)


8% 12% 13%

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…

Scalable Growth Now Possible


Growth


Product/Market Fit

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Test from Free to Paid Channels


Channel Cost/user Scalability Viral/referral Free High Email (internal) Free Organic Blog Free Organic SEO Free or Paid Organic Widget Free or Paid Organic Biz Dev/Partners Free or Paid High Domains Paid (low) Low PR Paid (low) High Email (external) Paid (TBD) High SEM Paid (TBD) Can be High Contest Paid (TBD) Organic Affiliate/lead gen Paid (TBD) High Radio Paid (TBD) High TV Paid (TBD) High

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Driving/Managing Growth

Monitor Growth

• Anything broken?

• Retention

Manage Campaigns

•Optimize and scale campaigns on ROI

Develop New Campaigns

• Test new sources


Budget to maximize positive ROI spend

Improve Lifetime Value

1. Customer retention is critical2. Cross/up sell additional products3. This expands profitable channels


Complete Startup Pyramid

Twitter: @seanellisBlog: startup-marketing.com

Growth

Optimize

Economics

Positioning

Product/Market Fit

Berkeley-Columbia Executive MBA Program (Steve Blank)

Business

Transcript of Berkeley-Columbia Executive MBA Program (Steve Blank)