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After 20 years of working in startups, I decided to take a step back and look at the productdevelopment model I had been following and see why it usually failed to provide useful guidance in activities outside the building – sales, marketing and business development. So what’s wrong the productdevelopment model?
Chasing funding versus chasing customers and a repeatable and scalable business model, is one reason startups fail. ProductDevelopment – Getting Funded as The Goal In a traditional productdevelopment model, entrepreneurs come up with an idea or concept, write a business plan and try to get funding to bring that idea to fruition.
Finally, I’ll write about how Eric Ries and the Lean Startup concept provided the equivalent model for productdevelopment activities inside the building and neatly integrates customer and agile development. Part 4 of the CustomerDevelopment Manifesto to follow.
Customer/Market Risk Versus Invention Risk One day I was having lunch with a VC sharing what I learned from my students. Customer/Market Risk Versus Invention Risk One day I was having lunch with a VC sharing what I learned from my students. Steve,&# he said, “you’re missing the most interesting part of vertical markets.
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. The CustomerDevelopment process (and the Lean Startup) is one way to do that.
New strategic direction in companies with loyal customers have different consequences then when you had no customers Acquiring new customers are a lot more expensive that converting existing ones.
They couldn’t keep up with the fast productdevelopment times that were enabled by using standard microprocessors. So their management teams were insisting that they OEM (buy from someone else) these products. The answer depends on your answer to two questions: which step in the CustomerDevelopment process are you on?
Next, you have to deal with the daily crisis of productdevelopment and acquiring early customers. And here’s where life gets really interesting, as the reality of productdevelopment and customer input collide, the facts change so rapidly that the original well-thought-out business plan becomes irrelevant.
I was between my 7th and 8th and final startup; licking my wounds from Rocket Science, the company I had cratered as my first and last attempt as a startup CEO. We’ve managed startups like this forever; there is no other way to manage them.”
This post describes a solution – the CustomerDevelopment Model. In future posts I’ll describe how Eric Ries and the Lean Startup concept provide the equivalent model for productdevelopment activities inside the building and neatly integrates customer and agile development.
This post describes how the traditional productdevelopment model distorts startup sales, marketing and business development. The meaning of alpha test , beta test, and first customer ship are pretty obvious to most engineers. Here’s what the productdevelopment diagram looks like from a sales perspective.
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Unfortunately most startups learn this by going through the “Fire the first Sales VP&# drill: You start your company with a list of potential customers reading like a “who’s who&# of whatever vertical market you’re in (or the Fortune 1000 list.) Your board nods sagely at your target customer list.
In future posts I’ll describe how Eric Ries and the Lean Startup concept provided the equivalent model for productdevelopment activities inside the building and neatly integrates customer and agile development. As a result, the standard productdevelopment model is not only useless, it is dangerous.
This productdevelopment diagram had become part of the DNA of Silicon Valley. That’s in stark contrast to the traditional ProductDevelopment Model where it’s expected a customer is already there and waiting and it’s simply a matter of [.] familiar with CustomerDevelopment you should be.
My two cents is that a business plan is the single place to collect your thinking about about your: business model, distribution channel, demand creation plan, financial assumptions, and customer and productdevelopment plan. If you’re text averse like i am, try to diagram these key items and then write-up the diagrams.
In this scheme, all of the data related to a specific feature of a product are stored on the same machines. For example, Friendster was famously vertically partitioned at one time in its growth curve. This type of vertical partitioning sharding scheme wont work in most cases. Key-based partitioning. to store it.
It could be fixed by refactoring the code itself, or by partitioning the data horizontally or vertically, or by adding additional capacity at the point of the bottleneck, or by shaping end-user demand, or even by removing the feature itself. The Entrepreneur’s Guide to CustomerDevelopment ► June (3) What is a startup?
In the last three posts, we drew the relationship of market risk and invention risk with vertical markets and pointed out verticals where customerdevelopment would be useful. In contrast to simply executing your business plan, the CustomerDevelopment process is built on low-cost and continuous learning and iterating.
Nick Kim , Crosscut’s Head of Platform, in his presentation at the 4th Annual VC Platform Summit, shared their Platform development methodology, which he viewed as an exercise in productdevelopment. For example, recruiting writ large is useful at all stages of development. Organize events in your vertical.
Lean Methodology consists of three tools designed for entrepreneurs building new ventures: The Business Model Canvas – to write down all the hypotheses about a new business; CustomerDevelopment – a process for testing those hypotheses outside the building; Agile Engineering – to rapidly build minimal viable products to test product/market fit.
When I reviewed a recent productdevelopment book, it immediately shot up to Amazon sales rank 300. The Entrepreneur’s Guide to CustomerDevelopment ► June (3) What is a startup? My blog has over 14000 subscribers, for example. Is that a lot? Is that good? August 24, 2009 2:17 PM Norbert Mocsnik said.
This series of posts is a brief explanation of how we’ve evolved from ProductDevelopment to CustomerDevelopment to the Lean Startup. The ProductDevelopment Diagram Emerging early in the twentieth century, this product-centric model described a process that evolved in manufacturing industries.
Unintended Lessons « Steve Blank steveblank.com/2009/09/28/unintended-lessons – view page – cached + CustomerDevelopment Manifesto: The Path of Warriors and Winners (part 5) + Can You Trust Any VC’s Under 40?
Eighty some pages later I realized that a) I had some great war stories as a good marketeer and failed CEO, b) I’d have to pay my wife and kids to read them, c) the three of them were probably the entire total available market, and d) when I looked at what I had done and what other entrepreneurs had done at their startups, that there was a pattern.
Durant Versus Sloan – Part 1 « Steve Blank steveblank.com/2009/10/01/durant-versus-sloan-part-1 – view page – cached + CustomerDevelopment Manifesto: The Path of Warriors and Winners (part 5) + Can You Trust Any VC’s Under 40?
Through trial and error, hiring and firing, successful startups all invented a parallel process to productdevelopment. In particular, the winners invent and live by a process of customer learning and discovery. It’s a process that doesn’t exist in large companies with existing customers and markets.
In an early stage startup, instead of sales being up front, the point departments are likely to be productdevelopment and customerdevelopment. Later on in this same company’s life, sales will become the pointy end and productdevelopment moves to a supporting role. Who’s on the Sharp End?
is a tool that helps you edge into customerdevelopment. It’s a free tool put together by Sean Ellis and Hiten Shah as a way for product owners to easily survey their customers using pre-written questions. This is great news not only for the future of our marketing, but for our productdevelopment.
AgileZen – project management visually see and interact with your work Kanbanery – Simple online team or personal kanban board LeanKit Kanban – Great for visualizing work of productdevelopment Kanban Pad – “Nice and lean” and free online Kanban tool Banana Scrum – A tool simple as Scrum itself.
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