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Chasing funding versus chasing customers and a repeatable and scalable business model, is one reason startups fail. Product Development – Getting Funded as The Goal In a traditional product development model, entrepreneurs come up with an idea or concept, write a business plan and try to get funding to bring that idea to fruition.
The book has been shepherded and edited by a great Japanese VC at Mitsui Sumitomo Insurance Venture Capital, Takashi Tsutsumi, with help from Masato Iino. I asked Tsutsumi-san to write a guest post for my blog to describe his experience with CustomerDevelopment in Japan. But customers didn’t agree.
CustomerDevelopment is a technique startups use to quickly iterate and test each part of their business model. How you execute CustomerDevelopment varies, depending on your type of business. In my book, “ The Four Steps to the Epiphany ” I use enterprise software as the business model example.
I was in New York last week with my class at Columbia University and several events made me realize that the CustomerDevelopment model needs to better describe its fit with web-based businesses. In it, I got asked a question I often hear: “What if we have a web-based business that doesn’t have revenue or paying customers?
CustomerDevelopment is all about gathering a list of what features customers want by talking to them, surveying them, or running “focus groups.” As the engineers were busy rearchitecting the original Stanford MIPS chip into a commercial product, one of my jobs was to find out what features customers wanted.
This post describes how following the traditional product development can lead to a “startup death spiral.&# In the next posts that follow, I’ll describe how this model’s failures led to the CustomerDevelopment Model – offering a new way to approach startup sales and marketing activities.
I think customer feedback comes in a very unstructured manner, hence it is difficult to apply an algorithm on it. to make sense of the unstructured feedback received from customers. The relevant part starts about 4:30 into the video (wait for it to download.) This is where it becomes an art as it requires skill (entrepreneurial?)
Book of Five Rings. I was driving home from the BIO conference in San Diego last month and had lots of time for a phone call with Dave, an ex student and now a founder who wanted to update me on his Customer Discovery progress. Customer Discovery. Filed under: CustomerDevelopment , Technology.
Therefore we needed them to think and learn about two parts of a startup; 1) ideation - how to create new ideas and 2) customerdevelopment – how do they test the validity of their idea (is it the right product, customer, channel, pricing, etc.). Customer Discovery in the Real World. That’s when everything changed.
This should be an iterative process with advisors and customers providing feedback on the product. Conversations with a technical advisors or possible developers should be iterative. CustomerDevelopment Notes I'm assuming founders are having customerdevelopment conversations. Don't stress over format.
It was not only my secret weapon in thinking about new startup strategies, it also gave me a view of the management issues my customers were dealing with. To fill this gap I wrote The Four Steps to the Epiphany , a book about the CustomerDevelopment process and how it changes the way startups are built.
Pattern Recognition One of the great things about being an entrepreneur is that you are constantly running a pattern recognition algorithm against a continual collection of customer and market data. Let’s Fire Our Customers Part of the DNA of great entrepreneurs is a bias towards decisive and immediate action. Get it done, now.
Each sale requires us to handhold the customer and takes way too long to close. He took a deep breath, looked around the boardroom table and then proceeded to outline a radical reconfiguration of the product line (repackaging the products rather than reengineering them) and a change in sales strategy, focusing on a different customer segment.
Berkeley Haas Business School was courageous enough to give me a forum teach the CustomerDevelopment Methodology. These were inspiring stories, but I realized that, no surprise, the popular press were writing books that had mass appeal. Where were the books explaining why were all these chip and computer companies started here?
For those of you who have been following the discussion, a Lean Startup is Eric Ries ’s description of the intersection of CustomerDevelopment , Agile Development and if available, open platforms and open source. And most startup code and features end up on the floor as customers never really wanted them.
Book of Five Rings. One of the principles of CustomerDevelopment is to get out of the building and understand the smallest feature-set customers will pay for in the first release.). (One I can’t get more than one of ten potential customers to think that this is something they’d buy.” Steve, you’re wrong.
Oh, and we had no installed customer base. Entrepreneurs are Relentless Jim’s goal was to get other companies to put their software on an unfinished, buggy computer with no customers. PS2- Is there any way I can buy your book in PDF format? How much progress have we made to that goal?” “Not much,” he admitted.
CustomerDevelopment We were starting Epiphany, my last company. I was out and about in Silicon Valley doing what I would now call Customer Discovery trying to understand how marketing departments in large corporations worked. He continued: “I’d like to convince my boss so our company can be your first customer.”
The company loses customers, then revenues and profits decline and it eventually gets acquired or goes out of business. How large companies can stay innovative and entrepreneurial has been the Holy Grail for authors of business books, business schools, consulting firms, etc. valued by their existing customers – fairly well.
It was not only my secret weapon in thinking about new startup strategies, it also gave me a view of the management issues my customers were dealing with. To fill this gap I wrote The Four Steps to the Epiphany , a book about the CustomerDevelopment process and how it changes the way startups are built.
While the last post was titled “ You Know You’re Getting Close to Your Customers When They Offer You a Job “, this post should probably be titled, “You Know You’re Getting Close to Your Customers When You Offer Them a Job.&# Context here.)
I just spent a few weeks in Japan and China on a book tour for the Japanese and Chinese versions of the Startup Owners Manual. Filed under: China , CustomerDevelopment , Technology , Venture Capital. China CustomerDevelopment Technology Venture Capital' All the usual caveats apply.
Since every situation is unique, there is no perfect solution to any engineering, customer or competitor problem, and you shouldn’t agonize over trying to find one. An example of a reversible decision could be adding a product feature, a new algorithm in the code, targeting a specific set of customers, etc.
Customer/Market Risk Versus Invention Risk One day I was having lunch with a VC sharing what I learned from my students. Our firm has a portfolio of companies across a broad range of markets and the way we look at it is pretty simple – the deals fall into two types: those with customer/market risk and those with invention risk.”
We’re here for Greycroft’s CEO Summit – a gathering of the CEO’s of their portfolio companies with guest speakers covering topics including how to build your team, PR, customerdevelopment, etc. It is the key to “customerdevelopment” that Steve Blank talks about. I’m going to save that for a future blog post.
In this time, building a successful business meant building a company that had paying customers quarter after quarter. It did not mean building a startup into a company to flip or hype on the market with no earnings or revenue, but building a company that had paying customers. They taught you about customers, markets and profits.
When Bob Dorf and I wrote the Startup Owners Manual we listed a series of CustomerDevelopment principles. Pair CustomerDevelopment with Agile Development. No Business Plan Survives First Contact with Customers. So by popular demand, here’s a poster of the CustomerDevelopment Manifesto.
Rather than a traditional VC pitch I suggested that they do something unconventional and tell the story of their journey in Customer Discovery and Validation. The heart of the Cafepress presentation is the “ Lessons Learned from our Customers ” section. Your “CustomerDevelopment Process&# has really resonated for me.
Our first question was, did the total number of customers that had already bought products from our competitors and us represent a saturated market or the tip of the iceberg? Since I was heading a marketing department, not acting as an individual contributor, I needed to teach all of marketing the importance of customer data.
But underlying the company’s existence was a fundamental hypothesis we refused to see or test - customers would care if we did. Our potential customers didn’t seem to be calling for Hollywood stories, characters and narrative. Our customers wanted to kill, shoot or hunt for something. That’s OK, because we knew better.
It’s the combination of Business Model Design and CustomerDevelopment. Their book “ Business Model Generation ,” is the definitive text on the subject. (And Business Model Design Gets Dynamic, CustomerDevelopment Gets Strategic. Business Model Design meets CustomerDevelopment.
As an early employee I worked all hours of the day, never hesitated to jump on a “ red-eye ” plane to see a customer at the drop of a hat, and did what was necessary to make the company a winner. The other thing it helps clarify is that even at work, it’s the relationships that matter most (collegues, customers, partners, etc).
Over 44 classes have embedded the business model canvas and/or Customer Discovery including a year-long course taken by every single one of its bioengineering majors. We didn’t know it at the time, but with that investment we had paid for front-row VIP seats to witness the origins of CustomerDevelopment and the Lean Startup.
They sold to a set of customers I knew nothing about. After talking to its resellers and customers I realized that SuperMac was the only company that could be described as “fifth in a group of three.” They had an existing distribution channel and their dealers and customers thought they knew who the company was and what it stood for.
A common initiative I hear from business owners today is their effort to improve the customer experience. To achieve real growth, business leaders need to improve both employee as well as customer experiences. Flexible – listen to allow flex hours and customization. Proactive – timely communication to build trust.
Five Easy Pieces – The Marketing Mission After a few months of talking to customers , talking to our channel and working with sales we defined the marketing Mission (our job) was to: Help Sales deliver $25 million in sales with a 45% gross margin. Two paragraphs, Five bullets. It didn’t take more.
Twenty eight years ago I was the bright, young, eager product marketing manager called out to the field to support sales by explaining the technical details of Convergent Technologies products to potential customers. These companies would take our computers and put their name on them and resell them to their customers.
And I got to experience a type of customer buying behavior I had never seen before – the Novelty Effect. Present at the Creation It was early 1991 and Apple’s software development team was hard at work on QuickTime , the first multimedia framework for a computer. If we’re smart we’ll cross-sell them one of our other products.
No internet, no blogs, no books on startups, no entrepreneurship departments in universities, etc. CustomerDevelopment/Lean Startups In hindsight startups and the venture capital community left out the most important first step any startup ought to be doing – hypothesis testing in front of customers- from day one.
Or offer some real insights into our customers? It wasn’t a lack of competence or skill in her job; it was just that as far as she was concerned, her job had no connection to the rest of marketing, our customers or our ultimate success as a company. “We Was she going to propose a coherent communications strategy?
Filed under: CustomerDevelopment , ESL , Technology | Tagged: Steve Blank , Entrepreneurs , ESL « Convergent Technologies: War Story 1 – Selling with Sports Scores A Wilderness of Mirrors » 17 Responses Michael F. No internet, no blogs, no books [.] Thanks Steve, Great insight. Great read.
TLDR: Brant Cooper and Patrick Vlaskovits , authors of The Entrepreneur's Guide to CustomerDevelopment are back with a new book called The Lean Entrepreneur. It took the idea of CustomerDevelopment and made it accessible to a whole new audience. Illustrations by FAKEGRIMLOCK. You can pre-order it starting today.
Luckily while I was teaching classes at headquarters, Zilog’s field application engineers (the technical engineers working alongside our salesmen) would work side-by-side with our large customers as they designed their systems with our chips. Customers The irony is that Zilog had no idea who would eventually become its largest customers.
Passionate – is the company/product/customers the most important thing in your life? However, you will be dealing with almost daily change, (new customer feedback/insights from a CustomerDevelopment process and technical roadblocks ,) as the company searches for a repeatable and scalable business model.
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