nyu startup school: getting to product-market fit part ii (talking to humans)
TRANSCRIPT
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Startup School:Getting to Product-Market Fit - Part II(Talking to Humans)Frank RimalovskiExecutive Director, NYU Entrepreneurial InstituteAdjunct Faculty, Tandon School of EngineeringInstructor, NSF Innovation Corps (I-Corps)September 27, 2016
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Why are we here?Share ideas, tips, tricks and secrets on how to best do customer discovery
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Customer Development
Test assumptions about customer needs/problems & develop MVPs
Seek validationthat people are interested in your product/ solution
Begins to builddemand & improve efficiency of customer acquisition
Drive growth aggressively & execute business model
You are here
@NYUEntrepreneur
Your job is not to validate your product…
Your job is not to validate your product…
It’s to validate the problem, who has it and
then how best to solve it?
@NYUEntrepreneur
“New ideas come from watchingsomething, talk(ing) to people, experimenting, asking questions and getting out of the office!”
@NYUEntrepreneur
The Business Model Canvas
Revenue Streams
Channels
Customer SegmentsValue PropositionsKey ActivitiesKey Partners
Key Resources
Cost Structure
Customer Relationships
Designed by: Date: Version:Designed for:
designed by: Strategyzer AGThe makers of Business Model Generation and Strategyzer
This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit:http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.
strategyzer.com
What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive?
is your business moreCost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing)Value Driven (focused on value creation, premium value proposition)
sample characteristicsFixed Costs (salaries, rents, utilities)Variable costsEconomies of scaleEconomies of scope
Through which Channels do our Customer Segments want to be reached? How are we reaching them now?How are our Channels integrated? Which ones work best?Which ones are most cost-efficient? How are we integrating them with customer routines?
channel phases1. Awareness
How do we raise awareness about our company’s products and services?2. Evaluation
How do we help customers evaluate our organization’s Value Proposition?3. Purchase
How do we allow customers to purchase specific products and services?4. Delivery
How do we deliver a Value Proposition to customers?5. After sales
How do we provide post-purchase customer support?
For what value are our customers really willing to pay?For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues?
For whom are we creating value?Who are our most important customers?
Mass MarketNiche MarketSegmentedDiversifiedMulti-sided Platform
What type of relationship does each of our Customer Segments expect us to establish and maintain with them?Which ones have we established? How are they integrated with the rest of our business model?How costly are they?
examplesPersonal assistanceDedicated Personal AssistanceSelf-ServiceAutomated ServicesCommunitiesCo-creation
What Key Activities do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue streams?
categories ProductionProblem SolvingPlatform/Network
What Key Resources do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue Streams?
types of resourcesPhysicalIntellectual (brand patents, copyrights, data)HumanFinancial
Who are our Key Partners? Who are our key suppliers?Which Key Resources are we acquiring from partners?Which Key Activities do partners perform?
motivations for partnershipsOptimization and economy Reduction of risk and uncertaintyAcquisition of particular resources and activities
What value do we deliver to the customer?Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment?Which customer needs are we satisfying?
characteristicsNewnessPerformanceCustomization“Getting the Job Done”DesignBrand/StatusPriceCost ReductionRisk ReductionAccessibilityConvenience/Usability
typesAsset saleUsage feeSubscription FeesLending/Renting/LeasingLicensingBrokerage feesAdvertising
fixed pricingList PriceProduct feature dependentCustomer segment dependentVolume dependent
dynamic pricingNegotiation (bargaining)Yield ManagementReal-time-Market
Hypotheses & the BMC
Hypothesis
Hypothesis
Hypothesis
Hypothesis
Hypothesis
Hypothesis
Hypothesis
Hypothesis
Hypothesis
Hypothesis
Hypothesis
Hypothesis
Hypothesis
HypothesisHypothesis
Hypothesis
Hypothesis
Hypothesis
Hypothesis
Hypothesis
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Customer DiscoveryuApply the scientific method to
business model development
Modify hypothesis
Observe phenomena
Formulate hypothesis
Test hypothesis via rigorous experiments
Establish theory
based on repeated
validation of results
PIVOT!
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Goals of Customer Discovery
1. (In)validate problem/solution fit
2. (In)validate business model component hypotheses
3. Begin to identify & test Minimum Viable Products (MVPs)
u NOT to get statistical relevance, but pattern recognition to get insight
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Talk to Humans!u GOTB: The #1
lesson of this talk
u In person is best
u You must gaininsight into your customer & market
u You are doing pattern recognition… Must have sufficient data points to see andto test all elements of BMC!
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Customers are Humans!
User Influencer Recommender DecisionMaker
SaboteurEconomicBuyer
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u Who is your “enthusiast”/early adopter initial target customer?
u List 5 characteristics of your early adopter customer (from Ex. 1)
o Job(s), title, industry, demographics, hobbies, sex, age, etc.
u Use LinkedIn or equivalent to identify individuals who share these characteristics
u After: Email asking for intros to 5 people they know who share these characteristics
Think small
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Early Adopter CustomerSegment/Industry
Org Size
Geography
Demographics
Title/Job
Age
Sex
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Early Adopter CustomerSegment/Industry Hospital
Org Size Large (>5,000)
Geography Urban/Surburban
Demographics Research/University
Title/Job Department Chair, Physical Therapy
Age 45-65
Sex M/F
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Finding Interview Subjects
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5A. How Do You Find Your Interview Subjects (Inked)
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Finding Interview Subjectsu At least one degree of separation
u Become a LinkedIn power user
u Make referrals happen
u Get creative…recruiting hacksu Fish where the fish are…
u …In the wild
u Promise to be briefu Enterprise customers are people too!
u Play the student/researcher card
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Example EmailTo: [email protected]: [email protected]
John,
I am participating in a program at NYU and I am studying how small businesses owners are handling their expense report management workflows and the frustrations they are experiencing.
I see from LinkedIn that you know James Smith at Pinto Boats. I understand James has expertise in the area I am researching would love to speak with him.
Would you be willing to make an introduction to James so that I may have a 15-20 minutes conversation to ask him few questions about this?
Many thanks for your time and I look forward to hearing from you,
Jane Doe
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Meet People You Don’t Know
u People you know will be nice and tell you what you want to hear
u Those interviews are possibly harmful
u Let other teams use people you know
u People you don’t know have no relationship to protect…Only they will tell you the truth
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Cold Calling1. Volunteer team
2. Volunteer expert (use earliest adopter)
3. “Cold call” expert
4. Get them to take the call
5. Start questioning them
6. Others offer suggestions
7. Rinse & repeat until successful
8. Discuss
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Pro Tipsu Practice, practice, practiceu NO email, focus groups or surveys
u Don’t start with your dream customeru Being an entrepreneur means being
aggressive & persistentu Leverage your network!
u Flatter subjectsu Be transparentu Follow up/stay in touch
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@NYUEntrepreneur
What do you want to learn?
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The Business Model Canvas
Revenue Streams
Channels
Customer SegmentsValue PropositionsKey ActivitiesKey Partners
Key Resources
Cost Structure
Customer Relationships
Designed by: Date: Version:Designed for:
designed by: Strategyzer AGThe makers of Business Model Generation and Strategyzer
This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit:http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.
strategyzer.com
What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive?
is your business moreCost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing)Value Driven (focused on value creation, premium value proposition)
sample characteristicsFixed Costs (salaries, rents, utilities)Variable costsEconomies of scaleEconomies of scope
Through which Channels do our Customer Segments want to be reached? How are we reaching them now?How are our Channels integrated? Which ones work best?Which ones are most cost-efficient? How are we integrating them with customer routines?
channel phases1. Awareness
How do we raise awareness about our company’s products and services?2. Evaluation
How do we help customers evaluate our organization’s Value Proposition?3. Purchase
How do we allow customers to purchase specific products and services?4. Delivery
How do we deliver a Value Proposition to customers?5. After sales
How do we provide post-purchase customer support?
For what value are our customers really willing to pay?For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues?
For whom are we creating value?Who are our most important customers?
Mass MarketNiche MarketSegmentedDiversifiedMulti-sided Platform
What type of relationship does each of our Customer Segments expect us to establish and maintain with them?Which ones have we established? How are they integrated with the rest of our business model?How costly are they?
examplesPersonal assistanceDedicated Personal AssistanceSelf-ServiceAutomated ServicesCommunitiesCo-creation
What Key Activities do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue streams?
categories ProductionProblem SolvingPlatform/Network
What Key Resources do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue Streams?
types of resourcesPhysicalIntellectual (brand patents, copyrights, data)HumanFinancial
Who are our Key Partners? Who are our key suppliers?Which Key Resources are we acquiring from partners?Which Key Activities do partners perform?
motivations for partnershipsOptimization and economy Reduction of risk and uncertaintyAcquisition of particular resources and activities
What value do we deliver to the customer?Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment?Which customer needs are we satisfying?
characteristicsNewnessPerformanceCustomization“Getting the Job Done”DesignBrand/StatusPriceCost ReductionRisk ReductionAccessibilityConvenience/Usability
typesAsset saleUsage feeSubscription FeesLending/Renting/LeasingLicensingBrokerage feesAdvertising
fixed pricingList PriceProduct feature dependentCustomer segment dependentVolume dependent
dynamic pricingNegotiation (bargaining)Yield ManagementReal-time-Market
@NYUEntrepreneur
Who cares?u Crafting good hypotheses is hard!
u Good hypotheses leads to good experimental design
u Good experimental design is important to properly validate or invalidate
u Key to getting to PMF & a MVP
u Seek help from mentors & coaches!
@NYUEntrepreneur
Design a TestuAll tests start with: get out of the
building and talking to people
uDo not try to be statistically valid, but do seek quantification
uDo not stop once you get an answer
uAvoid premature capitulation
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Do not sell!u No demos! No presentations! No tech talk!
u Get stories, not speculation
u Ask open-ended questions
u Ask how they do their job, about their problems, & how they solve them today
u It’s about them. Not you. Not your product.
u Ask why? Then why? They why again!
u Create a guide (not a script)
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Ensuring Effective Interviews
u Beware of confirmation biasu Do it in person, one at a time
u Get subjects to tell a story
u Look for solution hacksu Understand their priorities
u Follow your nose & drill down
u Listen and shut up!
u Have someone take notes
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Your Last >$100 Purchase1. Write description of item on top of page2. Find a partner next to you & swap pages3. Create interview guide: ~5 questions
o Explain what you bought and why?
o What was the process from desire to acquisition?
o What other options/alternatives did you consider?
o How did you decide to buy it? Who/what did you consult?
o How did you decide where to buy it?
4. 5 minute interview…take notes5. Switch
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Documenting Interviewsu Assign someone to take notes
u Write down key a-ha’s as they happen
u Note questions that worked & use them again!
u Take pictures or videos!
u Write up & share key insights with your team ASAP!
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What About IP?
uNever sign an NDA
uNever ask people to sign an NDA
u If you are describing your tech in
detail, you are doing it wrong
uFocus on the what & not the how
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How do you make sense of what you learn?
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7B. How Do You Make Sense Of What You Learn (Draft)
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@NYUEntrepreneur
Gaining Insightu Facts are interesting…Insights are your goalu Be honest…Don’t be too quick to validate or
too slow to disprove your hypothesis
u Don’t just scratch the surface, dive deep
u Find the hidden motivationsu Ask why? And why? Then why again?
u Don’t fear picking the wrong marketu Depth of understanding always leads to
insight
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in•sight |ˈinˌsīt|nounthe capacity to gain an accurate and deep intuitive understanding of a person or thing
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in•sight |ˈinˌsīt|nounsomething you’re so excited about you tell strangers on the train
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Create an Interview Guideu A guide, not a script
u Helps to keep you organized & on point!
u Appear more professional, & ensure you get most important questions early
u Test your Customer Segment & Value Proposition hypotheses
u List 5-8 questions to test your Value Proposition hypotheses with your initial target Customer Segment(s)
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Sample Questions1. How would you describe your role as a
____________?
2. What does success in your role look like to you?
3. What is the hardest part about achieving that?
4. When was the last time you tried to solve that?
5. Can you tell me about the last time it happened?
6. Why is it a problem for you?
7. How did you find your current solution?
8. What is not ideal about this solution?
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@NYUEntrepreneur
Learning Is Paramountu The knowledge you gain in customer
discovery is critical to the success or failure of your business
u >Half of your assumptions are wrong
u You must not try to validate what you already think or want to be true
u Leverage mentors & coaches to help synthesize insights & identify patterns
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Pro Tipsu Focus on actual behavior, not
speculative or abstract feelingsu If they’ve made an MVP…ask to see it!u Listen, don’t talku Follow your nose & drill downu Parrot back or misrepresent to confirmu Ask for introductionsu Write up your notes ASAPu Avoid premature conclusions
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“It's grueling listening to
customer feedback. And
if it isn't, you're probably doing it wrong."
@NYUEntrepreneur
Your job is not to validate your product…
Your job is not to validate your product…
It’s to validate the problem, who has it and
then how best to solve it?
@NYUEntrepreneur
Required Reading/Viewing
TALKING TO HUMANS
Success starts with understanding your customers
GIFF CONSTABLE
Pre-release edition
with Frank Rimalovskiand illustrations by Tom Fishburne
bit.ly/llpcdvstalkingtohumans.com
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Tuesday 10/4, 4pmSizing Up Your Market & Competition
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1 Attend next week’s Startup School
bit.ly/nyustartupschool
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2 Meet with a Blackstone Launchpad coach
Say you went to Startup School!
entrepreneur.nyu.edu
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3 Apply to the NYU Prototyping Fund
Up to $500 to build your prototype!Deadline is Sep 30!!!
bit.ly/PrototypingFall16
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4 Enter the $300k NYU Entrepreneurs Challenge
Training & coaching for your startup!Deadline to Enter is Oct 6!
bit.ly/NYU300k
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Questions?
[email protected]@nyuentrepreneurentrepreneur.nyu.edu16 Washington Place
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