Lessons: Customer Development / Lean Startup

Lessons:

Mostly around the concept of a Lean Startup

http://www.startuplessonslearned.com/2008/09/lean-startup.html

the key idea is to have a customer focused process which guides the rest of your strategic planning, funding and other types of progress. This is generally meant for technology startups, but some of the customer validation processes look very good for all other types of startups.

1) Focus on the customer

"startup is an organization built to search for a repeatable and scalable business mode" - Steve Blank

Customers care about their problems NOT your solution. - ash maurya paraphrasing Dave McClure

These blog posts reflect Steve Blank's line of thinking:

http://steveblank.com/2009/08/27/the-leading-cause-of-startup-death-the-product-development-diagram/

http://steveblank.com/2009/08/31/the-customer-development-manifesto-reasons-for-the-revolution-part-1/

http://steveblank.com/2009/09/03/the-customer-development-manifesto-reasons-for-the-revolution-part-2/

http://steveblank.com/2009/09/07/the-customer-development-manifesto-the-death-spiral-part-3/

http://steveblank.com/2009/09/10/customer-development-manifesto-part-4/

http://steveblank.com/2009/09/17/the-path-of-warriors-and-winners/

(continues below... the blog posts are quite disjointed though)

Customer Development for Web Startups:

Steve Blank realizes the missing pieces in his advice:

http://steveblank.com/2009/11/16/times-square-strategy-session-web-startups-and-customer-development/

Focusing on the MVP: minimum viable product

http://www.ashmaurya.com/2010/02/customer-development-checklist-for-my-web-startup-part-1/

http://www.ashmaurya.com/2010/02/customer-development-checklist-for-my-web-startup-part-2/

and how to run it

http://www.ashmaurya.com/2009/12/achieving-flow-in-a-lean-startup/

http://www.paulgraham.com/makersschedule.html

talk to people!

http://steveblank.com/2009/12/17/building-a-company-with-customer-data-metrics-are-not-enough/

Ash Maurya's disclaimer: I feel the fundamentals outlined here apply to any type of web startup, with the exception of startups that *primarily* rely on high network effects, like Twitter and Facebook, where initial success metrics are user acquisition versus revenue based.

2) Tempo

Not about perfect information, about speed of decision. I think i have to make faster 'reversible' decisions. Thus far i've spent my time building up resources to make quick decision when it comes to it, but i can't choose if i haven't built up the picture yet.

http://steveblank.com/2009/04/10/good-enough-decision-making/

There's a link to an excellent book-chapter on tempo from the Marine corps, familiar to me from my army days, but i've never thought about it applied like this. It also uncovered the OODA loop, familiar from business theory, but i didn't know it came from an analysis of why US F83s beat N Korean Mig13s in the Korean War.

Observe, Orient, Decide, Act.

however, how do i conduct OODA?

3) Marketing

- screencasting software (ash maurya) use it to practice a concise and sharp pitch and still have a video to show of at the end of it all.

- reaching customers

http://venturehacks.com/articles/sean-ellis-interview

http://steveblank.com/2009/12/17/building-a-company-with-customer-data-metrics-are-not-enough/

Competition and positioning: (bird's eye view by Steve blunt)

My test for how well you understand this “order of battle” is to hand the founder a marker, have them go up to the whiteboard and diagram the players in the market and where they fit. (Try it.)

Product-Market Fit by Marc Andreeson :

Marc Andreeson looks at this problem as a product/market fit, and says market is more important than team or product, its the first and most fundamental thing. I quote from him below:

Let's introduce Rachleff's Corollary of Startup Success:

The only thing that matters is getting to product/market fit.

Product/market fit means being in a good market with a product that can satisfy that market.

You can always feel when product/market fit isn't happening. The customers aren't quite getting value out of the product, word of mouth isn't spreading, usage isn't growing that fast, press reviews are kind of "blah", the sales cycle takes too long, and lots of deals never close.

And you can always feel product/market fit when it's happening. The customers are buying the product just as fast as you can make it -- or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You're hiring sales and customer support staff as fast as you can. Reporters are calling because they've heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house. You could eat free for a year at Buck's.

Lots of startups fail before product/market fit ever happens.

My contention, in fact, is that they fail because they never get to product/market fit.

Carried a step further, I believe that the life of any startup can be divided into two parts: before product/market fit (call this "BPMF") and after product/market fit("APMF").

When you are BPMF, focus obsessively on getting to product/market fit.

Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don't want to, telling customers yes when you don't want to, raising that fourth round of highly dilutive venture capital -- whatever is required.

When you get right down to it, you can ignore almost everything else.

I'm not suggesting that you do ignore everything else -- just that judging from what I've seen in successful startups, you can.

Whenever you see a successful startup, you see one that has reached product/market fit -- and usually along the way screwed up all kinds of other things, from channel model to pipeline development strategy to marketing plan to press relations to compensation policies to the CEO sleeping with the venture capitalist. And the startup is still successful.

Conversely, you see a surprising number of really well-run startups that have all aspects of operations completely buttoned down, HR policies in place, great sales model, thoroughly thought-through marketing plan, great interview processes, outstanding catered food, 30" monitors for all the programmers, top tier VCs on the board -- heading straight off a cliff due to not ever finding product/market fit.

Ironically, once a startup is successful, and you ask the founders what made it successful, they will usually cite all kinds of things that had nothing to do with it. People are terrible at understanding causation. But in almost every case, the cause was actually product/market fit.

Because, really, what else could it possibly be?

4) Personal disciplines:

write down your hypotheses:

http://www.ashmaurya.com/2010/08/businessmodelcanvas/

(idea: write hypotheses so that you can test them later, if you don't write them down, you'll keep changing them to make excuses for yourself. )

5) Mistakes not to make:

http://blog.asmartbear.com/startup-lesson.html

5 lessons from 150 startup pitches

1) http://blog.asmartbear.com/not-competitive-advantage.html

2) http://blog.asmartbear.com/unfair-advantages.html

3) http://blog.asmartbear.com/customer-validation.html

4) http://blog.asmartbear.com/competitive-positioning.html

5) http://blog.asmartbear.com/startup-marketing-ideas.html

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Lessons Learnt:

1) Focus on customers is a key for a business

2) This takes alot of attention and 'getting out there'

3) This requires 'pace', but the idea of 'lean startups' is to match the tempo to the customer development process