Customer Discovery - Startup Academy workshop

transcript

CUSTOMER DISCOVERYOr: How I learned to get out of the building and start making what customers desire

Steven Sherman – info@customerdiscovery.ninja

Startup Academy

October 29, 2014

INTRODUCTION

IntroductionWHAT

CUSTOMER DISCOVERY

Or: How I learned to get out of the building and start making what customers desire

Fundamentals of customer discovery as a market research and validation tool for early stage start-ups

IntroductionHOW

Awesome collaboration between multiple UM entrepreneurial programs

Academic and real-world experience from Customer Discovery Ninja team

Thank you:

Startup Academy

Master of Entrepreneurship program

IntroductionWHY

Teach Startup Academy participants, MsE students, and other attendees the fundamentals of Customer Discovery to better validate their idea and build things people actually want.

IntroductionWHO

Steven Sherman

Co-Founder of Customer Discovery Ninja

Master of Entrepreneurship – 2013

Master’s in Energy Systems Engineering – 2012

Bachelor’s in Chemical Engineering – 2011

IntroductionWHO

Jack Dean

Co-Founder of Customer Discovery Ninja

Bachelor’s in Business Administration – 2011

@jackp_dean

IntroductionWHO

…the heck are you?

- One-line pitch

- One thing you want to learn tonight

IntroductionWHO

…the heck else is here?

- Make a new friend

- Take a picture together

- Tweet at each other

- Include: @jackp_dean and #customerdiscovery

INNOVATION + CUSTOMER DISCOVERY

What is Innovation?

“The process of translating an idea or invention into a product or service that creates value or for which customers will pay”

- businessdictionary.com

What is Innovation?

“The process of translating an idea or invention into a product or service that creates value or for which customers will pay”

- businessdictionary.com

Simply put:

The intersection of feasibility, viability, and desirability

Desirability

ViabilityFeasibility

Innovation

Desirability

ViabilityFeasibility

Desirability

Viability(Hustlers)

Feasibility

Desirability

Viability(Hustlers)

Feasibility

(Hackers)

Desirability

(Entrepreneurs)

Viability(Hustlers)

Feasibility

(Hackers)

Desirability

(Entrepreneurs)

Viability(Hustlers)

Feasibility

(Hackers)

What is Customer Discovery?

A process used to discover, test, and validate one of your most important business assumptions – you have a specific product that solves a known problem for an identifiable group of customers

Simply put:

Finding out if people care about what you’re working on before you spend lots of time and money building it.

Steve Blank

“Get out of the building!”

Steve Blank

Father of Customer Discovery methodologies

Silicon Valley serial-entrepreneur and academic

Wrote the books on Customer Discovery and Development

University of Michigan student! (for one semester)

“Get out of the building!”

WHY CUSTOMER DISCOVERY IS SO IMPORTANT

Why Customer Discovery is so important

Why do new ideas and inventions fail?

“The number one reason start-ups fail is not because they fail to build what they set out to build, but because they spend too much time, money, and effort building the wrong product.”

- Ash Maurya, Author of Running Lean

“The number one reason start-ups fail is not because they fail to build what they set out to build, but because they spend too much time, money, and effort building the wrong product.”

- Ash Maurya, Author of Running Lean

Simply put:

Most new products and services fail because not enough people desired them

The team wasn’t able to empathize with their customers

An example: Webvan

- Online grocery delivery business founded in 1999

- One of the most electrifying new start-ups with an idea that would potentially touch every household in US

- Raised over $800 M, backed by experienced venture capitalists

An example: Webvan

- Went bankrupt in 2001

- Largest dot-com flop in history

An example: Webvan

- Went bankrupt in 2001

- Largest dot-com flop in history

- What happened?

- Not a failure of execution – failure of customer understanding and empathy

“Build it and they will come”

Only true for life and death products – cure for cancer, nuclear fusion, transistor computer, etc.

Much more risk in feasibility and some in viability, not customer desirability

Only true for life and death products – cure for cancer, nuclear fusion, transistor computer, etc.

Much more risk in feasibility and some in viability, not customer desirability

Not true for most other products – software, consumer, web, etc.

Issues are customer acceptance and market adoption

HOW TO GET THE MOST OUT OF CUSTOMER DISCOVERY

How to get the most out of it

How do you “do Customer Discovery”?

Best practice:

In-depth one-on-one in-person interviews with your potential customers to understand their problems, motives, desires, dialect, purchasing power, etc.

Emphasis on learning and discovery before execution

Best practice:

In-depth one-on-one in-person interviews with your potential customers to understand their problems, motives, desires, dialect, purchasing power, etc.

Emphasis on learning and discovery before execution

A special kind of torture:

- Talking to strangers

- People are already busy and hate being sold things

- It’s very likely they will destroy your vision for a company

Bad practice:

Most entrepreneurs substitute this primary research with easier alternatives that aren’t nearly as effective: market reports, friends and family, pitching solution, surveys, etc.

Bad practice:

Most entrepreneurs substitute this primary research with easier alternatives that aren’t nearly as effective: market reports, friends and family, pitching solution, surveys, etc.

Trying to avoid

A special kind of torture:

- Talking to strangers

- People are already busy and hate being sold things

- It’s very likely they will destroy your vision for a company

Let’s try it!

Who is brave enough to interview me, Customer Discovery style?

(This will likely be very awkward)

Observations?

Learn anything?

Proper interview techniques are an art, not a science.

The best way to get better at Customer Discovery is to practice.

You can also read up on ethnography and many resources online

One of our favorites: www.customerdevlabs.com

1st Rule:

Do not talk about your idea

2nd Rule:

You want to have a conversation where your potential customer does most of the talking

3rd Rule:

Minimize questions about future behaviors

4th Rule:

The more real examples and stories you can hear about, the better

5th Rule:

Always ask “WHY?”

6th Rule:

Understand how they’re currently solving their problems

Let’s try it again!

I’ll give a quick demonstration

Who is brave enough to interview me, Customer Discovery style?

(This should be slightly less awkward)

WHAT ARE SOME OTHER BEST PRACTICES

Best Practices

In-person is ideal

Do it with two people – one to guide the interview, the other to take notes

Founders must do it!

Founder reporting bad news = pivot

Someone else reporting bad news = firing

Best Practices

Avoid friends and family – naturally biased

No surveys – good for scaling findings but too narrow for initial discovery

Best Practices

Avoid friends and family – naturally biased

No surveys – good for scaling findings but too narrow for initial discovery

No market reports – good to find large trends to leverage but not a replacement for in-depth interviews

Not a focus group – good for fine-tuning a product, not for initial discovery

Best Practices

Customer Discovery interviews give you the best marketing copy –the words of your customer

“WHY?” answers are especially good for framing your unique value proposition

Best Practices

Customer Discovery interviews give you the best marketing copy –the words of your customer

“WHY?” answers are especially good for framing your unique value proposition

Findings can destroy your vision – be humble, pivot when necessary

Much less expensive (time and money) than building something that doesn’t solve a real problem

Use lessons learned with investors – build traction with real world data; help prove your vision isn’t a hallucination

Best Practices

Audience Customer Discovery stories

Questions and Answers

SHORT BREAK

CUSTOMER DISCOVERY NINJA:A TOOL FOR CUSTOMER DISCOVERY BUILT USING CUSTOMER DISCOVERY

Customer Discovery Ninja

Our Story:

Working on a few ‘start-up’ projects

Knew importance of Customer Discovery

Bugged all of our friends and family enough

A problem!

Needed more people to talk to

Our Story:

A hack!

Interview 100 customers in 4 hours

High quality, unbiased interviews for Customer Discovery

Big learning curve and rough user experience using the hack

Pieced together solutions that could be done better

Our Story:

An idea!

Live, on-demand customer discovery interviews for start-ups built on the hack but with a much better UX and value-add tools

But do other people have this problem?

Would we be building a desirable product?

Customer Discovery about…Customer Discovery!

Our Story:

Before we built anything, reached out to our network of entrepreneurs and start-up founders to better understand their market and customer research problems

Our Story:

Before we built anything, reached out to our network of entrepreneurs and start-up founders to better understand their market and customer research problems

Heard things like:

- “I’m stopping people at the mall and it’s awkward.”

- “Customer Discovery is time intensive and there is a limited window for it during the week.”

- “I spend a good chunk of time trying to interview more people.”

Heard enough evidence to build an MVP

Our Story:

Used the MVP to conduct more Customer Discovery interviews about market / customer research and associated problems

Recruited early adopters from the interviews

Some people were begging to start using it

Worked closely with early adopters and used this early feedback to refine the product further

Focused on “nailing it” then “scaling it”

Demonstration: Customer Discovery Ninja

The deal for you:

Just moved from alpha to beta, still private invite

Provide email address Early access

Get 5 others to sign-up 50 free interview credits with early access

www.customerdiscovery.ninja

CUSTOMER DISCOVERY STORIES

Customer Discovery Stories

Status Owl

www.statusowl.com

The Overdose

Change of Mind

Jack Dean

GET OUT OF THE BUILDING!

Get out of the building!

Innovation = Desirability x Viability x Feasibility

Customer Discovery = “Get out of the building” and understand your customer and their problems before you waste time building something nobody wants

For most start-ups, market risks are much greater than technology risks

Customer Discovery Rules

1 – Do not talk about your idea

2 - You want to have a conversation where your potential customer does most of the talking

3 - Minimize questions about future behaviors

4 - The more real examples and stories you can hear about, the better

5 - Always ask “WHY?”

6 - Understand how they’re currently solving their problems

Customer Discovery - Startup Academy workshop

Small Business & Entrepreneurship