SFFI March 29 Customer Development II: Javid

8/18/2019 SFFI March 29 Customer Development II: Javid

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Customer

Development Strategies

Javid JamaeCEO / Founder - Octetra / Cardswap

Presented at The Founders InstituteMarch 29, 2016



ABOUT ME



I’m a programmer

But I’m also an advisor, author, coach,

consultant, event organizer, founder,

growth hacker, and trainer



I’ve worked and consulted for a lot ofenterprise companies



I’ve worked for a couple startups



I’ve worked for a couple startups

Horrible failure Great success



I’ve built 2 startups doing NO customer development



Horrible failure Failure




Horrible failure Failure


B A D I D E

A



I ran customer developmentfor three startup ideas

Dripita



I ran customer developmentfor three startup ideas

Dripita

Didn’t pursue My first funded startup

Shut down



I’m now doing consulting and working

on my next startup project

Octetra Cardswap



I’m now doing consulting and working

on my next startup project

Octetra Cardswap

Consulting Startup



CUSTOMER DEVELOPMENT



The dot-com bubble



Idea / SeedRound

Product

Development

Alpha / BetaTest

Launch!

Dot-com-era product launch strategy.

PRODUCT-FOCUSED LAUNCH



Idea / SeedRound

Product

Development

Alpha / BetaTest

Launch!

Dot-com-era product launch strategy.

PRODUCT-FOCUSED LAUNCH

Start building salesand marketing

organizations



Lots of money was poured into buildingsales, marketing, engineeringorganizations before launch.



Most of the focus was on product development.



Didn’t answer the riskiest question: Docustomers want my product?



All real learning from the customerhappened after the launch.



After the dot-com bubble, people startedlooking at more customer centric ways

to build companies



Customers and users aren’t always thesame people



‘‘Customer Development is about questioning your

core business assumptions … rather than assume

your beliefs about your business to be true, youshould … validate the ideas.

~BRANT COOPER



‘‘The goal of a Lean Startup is to inform our riskiest

business model assumptions through empirical

testing with customers – not rhetorical reasoning ona white board.

~ ASH MAURYA



ASSUMPTIONS

HYPOTHESIS

EXPERIMENT DESIGN

EXPERIMENTATION

MEASUREMENT

ScientificProcess=

THE PROCESS



Customer development is a four step process



CustomerDiscovery



CustomerDiscovery

Construct your hypothesis, get out of thebuilding and test your assumptions



CustomerDiscovery

CustomerValidation

Test if your proposed solution matches what thecustomer problem was (product/market fit)



CustomerDiscovery

CustomerValidation

SEARCH

pivot



CustomerDiscovery

CustomerValidation

CustomerCreation

CompanyBuilding

pivot

SEARCH EXECUTION

Execution is about building end-user demandand scale, and then building the organization.



The search phase is meant to beperformed by the founders



We’re only going to talk about thesearch phase



I’m going to challenge some of theconventional wisdom



LEAN INTERVIEWS



2010



2006-2009 2010-2012



Problem: I wanted to release content

under consumer-friendly licenses but stillwanted to profit



Solution: A crowdfunding platform where

people could pay content creators torelease content under Creative

Commons



RUNNING LEAN PROCESS



RUNNING LEAN PROCESS

• 1. Lean Canvas

• 2. Problem Interviews

•3. Solution Interviews

• 4. Build MVP

• 5. MVP Interviews (and "the sell")

• 6. Validate customer lifecycle

• 7. Launch

•8 Measure Product / Market Fit



‘‘I’d like to stress that we don’t have a finished product

yet, and our objective is to learn from you, not to sellor pitch anything to you.

~ASH MAURYA - RUNNING LEAN



I interviewed over 75 musicians, authors,

filmmakers, and content creators andcontent fans.



I started building an MVP, but decided to

postpone the project to focus onanother startup idea.

BENEFITS



BENEFITS

• Don’t have to write a lot of documentation

• Low/no-pressure sales (for those who hate sales)

• Prioritizes learning and de-risking product, market,and solution risks over building a product

• Can learn about problem / solution without a techteam

DRAWBACKS



DRAWBACKS

• Lots of interviews before asking for a sale

• Favors learning about user needs over customerneeds (YMMV)

• B2B - interviews with multiple people in anorganization (user vs. customer)

•Positioning as a startup who is unsure about buildinga product can hurt you in some industries

• Have to invest in building technology before havingpaying customers

THE NUMBERS



THE NUMBERS

• You want 10 early adopter customers

• 25 Problem interviews (narrow in)

• 25 Solution interviews (3 people from last round,

22 new people, narrow in)

• 30 MVP interview (10 people from previousrounds, 20 new people)

• 80 Interviews @ 5-10/week

• 8-16 weeks of interviewing

• 2-3 weeks of engineering



LEAN SALES



2012



Consumer problem: Signing up forsummer camps sucks!



Provider problem: It’s hard to fill campsup to capacity and to market online



Solution: A consolidated marketplace forsummer camps.

"LEAN SALES" PROCESS



LEAN SALES PROCESS

• 1. Lean Canvas

• 2. Problem Interviews

• 3. Create sales script, define funnel

•4. Sell

• 5. Customer Solution Interviews

• 6. Build MVP

• 7. Customer MVP Interviews

• 8. Validate customer lifecycle

• 9. Launch

• 10. Measure Product / Market Fit



We got signed contracts from over 350

summer camp providers (customers) in6 cities.



We got hundreds of parents (users) tosign up for accounts before launch.

BENEFITS



BENEFITS

• People disqualify themselves faster

• You narrow in on your UVP faster (YMMV)

•Don’t have to meet with the same people

multiple times before the ask

• Solution and MVP interviews are done withpaying customers

• Can have paying customers before youneed a tech team

•Focuses on customers before users

DRAWBACKS



DRAWBACKS

• Many people hate sales / selling

•Many people don’t like the idea of "selling

vaporware"

• In some saturated markets, it’s really hardto sell before having a product

• You learn about customer needs earlier, butspecific user needs learned a little later

THE NUMBERS



THE NUMBERS

• Your mileage WILL vary

• You want 10 early adopter customers

•20 sales calls to narrow in on your UVP and targetmarket

• 50 more sales calls to get 10 signups

• 70 Sales calls @ 20/week

• 3-4 weeks of sales calls

• 0 engineering hours



One outcome of the dot-com bubble

was the people became extremely averseto doing any sales during the searchphase



But if done right, founders (not sales

people) can use Lean Sales to findproduct/market fit.



LEAN DEVELOPMENT



Dripita

2011



Problem: I wanted to automate the way Iwas posting content to Twitter



Solution: A drip-campaign managementtool



The project was initially just for personal

use, but people started asking me to letthem use it too

THE PROCESS



THE PROCESS

• 1. Lean Canvas*

• 2. Problem Interviews*

• 3. Build rapid MVP

• 4. Launch

• 5. MVP Interviews (and "the sell")

• 6. Validate customer lifecycle• 7. Measure Product / Market Fit

* I didn’t do this, because I initially had no intention to build it asa company



I got several hundred users throughorganic, word-of-mouth growth

BENEFITS



BENEFITS

• A real product is significantly morecompelling than vaporware or mockups

• Can be as fast as interviewing + mockups

• Delaying de-risking market in favor ofexperimenting with user/customer needs

•Depending on onboarding process, can

learn about user and customer early on

• Start building useful engineering assets andskills earlier: experimentation, analytics, etc.

DRAWBACKS



DRAWBACKS

•Need an engineer or two to even consider thisoption

• Slippery slope of building too much



OTHER STRATEGIES

TRAINING / CONSULTING




• Problem phase

• Learn about problems in depth

• Help structure custom solutions

• Solution phase

• Help 1-2 companies implement customsolutions

• Put together training courses to teachpeople how to implement the solutionthemselves





• MVP phase

• Joint ventures

•Consulting-ware

LEAN MARKETING



LEAN MARKETING

• Landing page experiments

• Videos

• Content marketing

• Invitation schemes and incentive-based signups



TAKE AWAYS



Never skip problem interviews

COMFORT / SKILLS



COMFORT / SKILLS

• Do you know how to write code?

• Do you like to sell?

• Are you good at content marketing?

• Are you comfortable interviewing?

• Play to your strengths, but be willing to goout of your comfort zone

PERCEPTION



P RC PTION

• Do your customers even use products

created by startups, much less commit tononexistent products?

• What happens if you interview someone 3times and then tell them you decided notto build the product?

MARKET TYPE



• Existing markets

• Use known strategy

•Are they using existing products?

• New markets

• Explore several strategies

• Resegmenting a market

• Start with known strategy, but explorenew ones as well

BUSINESS MODEL



After problem interviews, consider:

• Ecommerce - Build, Marketing

• SaaS - Interview, Sales, Build

• Free mobile app - Sales, Marketing

•Media site - Content Marketing

• User Generated Content - Build

• Two Sided Marketplace - Sales, Marketing



Customers and users aren’t always thesame people



Never ask people what they want, youshould present them with something



QUESTIONS ?

SFFI March 29 Customer Development II: Javid

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