ENG491 Technology Entrepreneurship

ENG491 Technology Entrepreneurship Fall 2011 – Fall 2012 Emre Oto Building a Lean, Scalable Startup www.eng491bu.org Follow on Twitter: @eng491

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Today’sAgenda • IdeaPresentations – Customer Development project K/O • TALC Review • CustomerDiscovery • The Value Proposition

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryOverview and Objectives • “Getting outside the building” • Learning what the high-value customer problems are • What it is about our product that solves these problems? • Who specifically are your customer and user?

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer Discoveryis not about.. • Collecting feature lists from prospects / Running focus groups • Founders and Product Development define the first product • Customer Development searches and tries to discover customers and a market for that vision • The initial product spec comes from the founders vision

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer Discoveryis not about..(cont.) • understanding the needs and wants of all customers • Making a list of all the features customers want before they buy your product • Handing Product Dev. a features list of the sum of all customer requests

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer Discoveryis about.. Product / Market Fit

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer Discoveryis about.. Developingforthe few, not forthemany

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryEarlyvangelists • Very small group of early customers who • are Early Adopters • Evangelists • buy unfinished and untested products and also spread the news about them • have a budget to purchase, see the potential of the product to solve a critical and immediate problem

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryScale of Customer Pain Earlyvangesits

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryStart Dev. Based on Vision • Initial MVP feature list is driven by the vision and experience of company’s founders • Initial purpose of talking to customers is not to gather feature requests • Feature request is by exception rather than rule • First MVP should be “good enough for first paying customers”

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryPurpose • Identify key visionary customers • Understand their needs • Verify that their product solves a problem that they are willing to pay to be solved • Start development based on initial vision, use visionary customers to test whether the vision has a market

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryStages Validation

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryStages Validation We will progressively study how to do this throughout the semester

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryPhase 2: Test Problem Hypotheses

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryProblem Presentation List of your hypotheses Not designed to convince, but to elicit information from customers

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryCustomer Understanding • Understand a day in the life of the customer • What would make customers change the current way they do things? Price? Features? A new standard? • Check if they will pay for solution: • “If you had a product like this [in concept], what percentage of your time could be spent using the product? • How mission critical is it? • Would it solve the pain you mentioned earlier? • What are the barriers for adoption?

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryCustomer Understanding • Find out how they learn about new products • You’ll have to create demand to reach these customers one day • Goal is to stand up in front of your company and say: • “Here were our hypotheses about our customers, their problems, and how they worked. Now here’s what they are saying their issues really are, and this is how they really spend their day” In-depth customer understanding

Customer DiscoveryMarket Knowledge • Meet key industry influencers, people from adjacent markets etc. • Key questions: • What are industry trends? • What are key unresolved customer needs? • Who are the key players in this market? • What should I read? • Who should I know? What should I ask? • What customers should I call on? • Attend industry conferences and tradeshows

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryPhase 3: Testing Product Concept

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryPhase 2 to Phase 3 • Phase 2 was about testing hypothesis briefs about customer problems, while making sure we had a complete understanding of customer needs • In phase 3, we move to testing product hypotheses on potential customers in our potential market • The objective is not to sell, but to get feedback

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryFirst Reality Check • Build customer workflow map from customer data • Matching product features to customer problems • Prioritizing features • The goal is not to be adding features but finding out the minimum feature set for the first release, based on input from visionary customers • Verify which of the three market types you are in • Answer key questions: • Why are you different? • What is your basis for competition?

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryProduct Presentation • Goal is to test your revised assumptions about the product itself • Goal 1: Reconfirm your product will solve a serious customer problem • Goal 2: Validate your product and its features • Develop a solution oriented presentation that describes the product in terms of solving the customer’s problem • If it’s too early for a real product demo, cover the few key product feuatres in slides

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryProduct Presentation • Include a story about “life before your product” and “life after your product” • Draw the customer’s workflow/day with and without your product • You are still not selling • You are trying to figure out if you have a salable product • Gather enough info, so that when you try to sell, there will be buyers

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryMore Customer Visits • Ask about your features: • Do they match the customers’ needs? • What features must you have on day one? • What features could wait until later? • What features are simply missing? • What is a “Whole Product” in the customer’s mind?

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryMore Customer Visits • Check other assumptions: • Pricing? What do they think are comparable prices for your product? • Test pricing boundaries: • Would the customer deploy your solution if it were free? • Ask again, if they were interested in such a product, how would they find out about it? Through which channels would they buy it? • If you need to use an indirect channel you need to meet channel partners • Ask about the product approval / procurement process

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryMore Customer Visits • After hearing your product presentation: • Do customers think the product is different? • Do they think you are creating a new market? / Do they think the product is a better version of an existing product? • Do they think your product changes the game, or are they indifferent?

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoverySecond Reality Check • Assessing customer interest • Product feature prioritization for first release: • First release is not the ultimate product • Fast to market: Learning to make money from day one • Spot technology packaging issues

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer Discovery1st Advisory Board

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Customer DiscoveryPhase 4: Verify

ENG491 Technology Entrepreneurship Week #4 «CustomerDiscovery» Today’sAgenda • IdeaPresentations – Customer Development project K/O • TALC Review • CustomerDiscovery • The Value Proposition

ENG491 Technology Entrepreneurship