NEXT SEA - Cust Dev and Value of Ideas - Week 1

Customer Development & The Value of Ideas

April 2014

Agenda

• Customer Development

• Value of Ideas

• Economics of Ideas

• Value Propositions

• Closing Thoughts @DaveParkerSEA www.UP.co

About Dave

• Serial Entrepreneur - Five Startups, 2 sold, 1 closed, 2 Active.

• Board Member - Mid Market Companies, six exits

• Former VC - $250M Intl Fund

• VP Programs & People at UP Global

• Husband & Dad @DaveParkerSEA www.UP.co

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No campaign plan survives first contact with the enemy Field Marshall Helmuth Graf von Moltke

!

No Plan Survives First Contact With Customers Steve Blank

My Assumptions

• You want to spend the next five weeks answering real questions

• It takes as long to build a small idea as a big idea

• Investors have opinions on every idea - you need facts to overcome opinions

• You want to build something that matters

• Passion is important but not sufficient

Yes?

What is Customer Development?

• Talking to Prospects about your idea

• Maximizing learning

• Showing a demo

• Getting real <hard> feedback

Who is Your Customer?

• Business to Business

• Business to Consumer

• Not both

• What problem are you solving for them

• What’s different at Launch and at Scale?

• You need to survive to get to scale

Customer Development

• Interviews work - surveys don’t - panels, maybe

• Get out of the building - Interview real prospects (they aren’t customers until they pay)

• Ask for referrals & Introductions

• Have a great value prop <below>

Sidebar - Build a List

• Build an email list of prospects

• Ask them to opt-in

• Setup a free Mailchimp account

• Send a two week update (every two weeks)

• What we built, what we’re going to build, where we need help

Tracking Customer Dev

• Business Model Canvas is great… and to start, match:

• Value Prop

• Customer Segment

• Let customers define priorities of your build (not what’s easiest to build)

• If you have a “Fatal Flaw” in your idea when do you want to know - five weeks or five years?

What to Ask?

• Ask them about their biggest problems & how they solve them

• Ask them about tools they use today

• Challenges they have in their work

• Magic wand question - what would you make go away

• Ask the questions to disprove your hypothesis

Test/Learn/Pivot on your MVP

• What is your biggest risk? Take it on first!

• State you hypothesis

• Ask if it’s a problem

• Pivot/change

Value of Ideas

Hard to Build

Low Value

Can’t Build

High Value

Easy to Build

Hard to Build

Low Value

Can’t Build

High Value

Easy to Build

Hard to Build

Low Value

Can’t Build

High Value

Easy to Build

Hard to Build

Low Value

Can’t Build

High Value

Easy to Build

Mobile App for Organic Farmers

On Vashon

Hard to Build

Low Value

Can’t Build

High Value

Easy to Build

Mobile App for Organic Farmers

On Vashon

Cost of Ideas

• Ideas do matter and so does Execution

• Bad Ideas well executed will fail

• Great teams in bad markets will fail

• What’s the Cost of an Idea?

• How do you tell if your idea is a good idea?

Value of Ideas

• What will a customer pay you?

• Does it save or make them $$?

• Pain Pill or Vitamin?

• What’s the value of entertainment?

• Bad Ideas & Bad Markets

Progressive Improvements & Copycats

• Most ideas are a progression

• Adding design to the ugliest thing you know

• There are very view innovations - and customers won’t be looking for it!

• Copycats are fine - if you know the market

Economics of Ideas

Cost of an Idea

• What will it cost to build it?

• Build length, team, “man months”

• Cost to maintain it?

• Support/customer service

• What’s your roadmap

Cost of Customer Acquisition

• How will you acquire customers?

• Direct Sales, channel, web direct, white label, retail?

• What will it cost you to sustain traffic

• Paid search - requires demand

• Organic search - slow

• Excludes PR and one-time efforts

Revenue > Costs

Value Proposition

Defining Your Value Prop

• Products & Services

• Gain Creators

• Pain Relievers

• “Associate Test”

• Use the cohort

Closing Thoughts

Defining Your Value Prop

• Co-Founders

• Team/Culture

• Legal

• Trusting your gut

• Do you match the idea?

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Thanks!

Resources

•Startup Owners Manual - Steve Blank & Bob Dorf •Business Model Canvas - Alex Osterwalder •Business Model Generation •Simon Sinek - Start with Why Video •DKParker.com Blog