The Entrepreneur's Guide to Customer Development: A cheat sheet to The Four Steps to the Epiphany

84 Pages·2010·7.87 MB·English

by  Brant Cooper

The
OWMTI
„ Guide
Customer
A"cheat sheet" to The Four Steps to the Epiphany
Customer Customer
Discovery Validation
r pivot
by Brant Cooper &Patrick Vlaskovits
Foreword by Steven Gary Blank
Disclaimer
© 2010 Brant Cooper and Patrick Vlaskovits
"CustomerDevelopment" isa term usedtodescribe business processes defined in
TheFourSteps to the Epiphany, bySteven GaryBlank.
The FourSteps totheEpiphanyused bypermission fromSteven GaryBlank.
"Lean Startup" isa term trademarked byEric Riesand represents a combination
of Customer Development, Agiledevelopment methodologies, and open source or
lowcost development platforms.
Product &MarketDevelopment, Inc.claims atrademark for"MinimumViable
Product."
All other trademarks and copyrights are the property oftheir respective owners.
ISBN-10: 0982743602
ISBN-13: 978-0-9827436-0-7
Fonts include Trade Gothic and ITC Officina Serif. Design byGarth Humbert and
the May team.
Foreword
Alothas happened withthe CustomerDevelopment process since Ipublished
The FourSteps tothe Epiphany. When Ifirstconceived ofthe concept, Iwas
attempting to articulate a common pattern Irecognized insuccessful startups.
Idid this because Iwanted to change the waystartups were built-without
completely depending on serendipity and at a much lowercost.
Today, thousands ofstudents haveheard mylectures and morethan twenty
thousand haveread mybookonCustomerDevelopment. Hundreds, ifnot
thousands, ofstartups are practicing some elements ofCustomer Development
today. Many inthe venturecapital communityhavecometoembrace the
concepts,encourage and, insomecases, require theirportfolio companiesto
adhere to the Customer Development principles.
In additiontogrowing adoption ofCustomer Development, isitsadvancement.A
formerstudent of mineand intrepidentrepreneur, EricRies,combined Customer
Development with Agile development methodologies toform the powerful concept
ofa "Lean Startup." In littlemore thanayear's time,thereare now over 3,500
membersinLean Startup Groups in27 citiesand 9 countries. Dave McClure's
AARRR metrics represent the quintessential methodformeasuring progress
through Customer Development for web startups. In aseriesofdeeply insightful
blog posts, Ash Maurya extended my work by building aWeb Startup version of
Customer Development.
Before Ibegan writing andspeaking aboutthe Customer Development model, I
thoughtitparadoxical that these methods were employed by successfulstartups,
yetarticulatedby noone. Itsbasicpropositions were the antithesisofcommon
wisdom yet they werefollowed bythose whosucceeded.
"It isthe path that is hidden in plain sight."
No longer is ithidden. Clearly, Customer Development has lita fire.
WhatIfindperhaps mostgratifying isthis: CustomerDevelopment continues to
be advanced bypractitioners, mentors, entrepreneurs and investors whoendeavor
to buildsuccessful startups intoscalable businesses. CustomerDevelopment is
notone book. It'snota religion. Itisa malleable, customizable,and bespoke
methodology fordealingwith the chaosofthe real-world. And Iam proud to note,
it isgrowing and evolving.
Thisbook, The Entrepreneur's Guide toCustomerDevelopmentrepresents another
milestone. Not only isitthefirst"thirdparty" book aboutCustomer Development,
itraises thebar. Authors Brant Cooperand Patrick Vlaskovits have integrated the
thinking ofleading Customer Development practitioners andevangelists soany
entrepreneur can apply them to hisor herstartup. Theyhavedistilled Customer
Discovery intoaseriesofsteps illustrated with clearexamples, concreteaction
items, and traps to avoid.
This isa must read forallstartups and their stakeholders.
- Steven GaryBlank
Menlo Park, CA
April 2010
Acknowledgements
Without Steve Blank and his book, TheFourSteps to the Epiphany,this book
would have been, of course, impossible. Steve's shared "epiphany" of Customer
Development practices and processes has inspired countless entrepreneurs,
investors and other business leaders to take a hard lookat the waythey build new
businesses. Notonlydo wewant to thank Steve forthe generous insights he has
providedthrough his books,on his blogand inhisclassroom, but also forthe
support and encouragement he has offeredus inourendeavor to writethis book.
Wewould liketo acknowledge the leadingthinkers and supporters ofCustomer
Development and its like-minded principles,specificallyEric Ries,Sean Ellis,
Dave McClure and Andrew Chen. Wewould also like to thank those big-brained
entrepreneurs and practitionerswhocontinuetodiscuss and debate these
ideas on Rich Collins' Lean Startup CircleGooglegroup and elsewhere. Most
importantly, these individuals puttheir ideasintoaction,sharetheirexperiences,
and advance the Customer Development discipline vigorously:Ash Maurya,
BabakNivi, Cindy Alvarez, Dan Martell, David Binetti,Giff Constable, KentBeck,
Kevin DeWalt, RichCollinsand Sean Murphy. Discussingthe day-to-daytactics
withthese peopleas they implementCustomer Development practices has been
instrumental to our own thinking reflected inthis book.
Further, thanks to the following individualsforparticipating inourCustomer
Development efforts onthe book andfor providingvaluable feedback: Adam Harris,
AnnMiura-Ko, Anne Rozinat, Ash,Giff, Bill Earner,DaveConcannon, Jeff Widman,
Kevin Donaldson, Kyle Matthews, Matthew Gratt,and Pete Mannix.
We would liketo single out HitenShah forinspiringus to undertake this task and
forproviding usa constant stream ofencouragement, contacts, and wisdom.
Finally, wewould liketothank FabriceGrinda,BruceMoeller, Ranjith Kumaran
and Jeff Smith for sharing their stories with us.
- BrantCooperand Patrick Vlaskovits
Table of Contents
Introduction
Whythis book?
Who Should Read This
© Customer Development
What Customer Development Is
What Customer Development Is Not
Three Levels of Learning
Getting Started
O Case Study: Naive Thinking
O Concept Definitions
EarlyAdopters/Early Evangelists
Segmentation
Market Type
"Non-Traditional" Business Model
Positioning
Product-Market Fit
Minimum Viable Product (MVP)
Lean Startup
Pivot
Getting Out of the Building
© Case Study: Multiple Pivots
© Know Thy Business
To the Whiteboard
An Example
KnowThyself
© Case Study: On Customer-Centric Cultures
© 8 Steps to Customer Discovery
Overview
Step 1. Document C-P-S Hypotheses
Step 2. Brainstorm Business Model Hypotheses
Step 3. Find prospects to talk to
Step 4. Reach out to prospects
Step 5. Engaging Prospects
Step 6. Phase Gate ICompileIMeasureITest
Step 7. Problem Solving Fit/MVP
Step 8. Phase Gate II CompileIMeasure ITest
© Case Study: Testing Towards a Scalable
Business Model
© Conclusion
Summary
Resources
About the Authors
Introduction
Why this book?
Steve Blank's book, TheFourSteps to the Epiphany,changes the game. Ina
business worldfull of marketing "fluff," "get-rich-quick", self-help guides and
analytical tomes that predict historywith undeniable accuracy, Blank's booklays
out an actionable framework forstartingand building newstartups, based on the
insightthat moststartups fail becausetheydidn't develop theirmarket,notbecause
they didn't develop their product.
Steve Blank published The FourSteps totheEpiphanyin2005 not as a
"traditional" business book, but as a compilation of lecture notes for the
business school classes he taught at Stanford Universityand UC Berkeley.Tens
ofthousands of people havepurchased this "non-marketed" book. Itsdog-eared
pages,highlighter-marked paragraphs and note-filled margins prove itsvaluelike
fewother books because itdoesn't get put away- it remains on the desk, never
quite reaching the bookshelf.
The FourStepstotheEpiphany(referred toas The FourStepsthroughoutthis
book) is nota grand, conquer-the-world strategy,ora set of"tried and true"
tactics, orcollectionofcatchy business aphorisms. Itisa malleable processof
testing, learningand iterating upon thefundamental businessassumptionsyou hold
about yourproduct, customersand market.
So,then, whythis book? Theobjectiveofthis "non-fictionnovella" isto remove
the barriersto understanding and implementingCustomer Development(referred
toas CustDev throughoutthis book) and take The FourStepsto another level. We
hope to provide the following insights:
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1. "Boil the content down" to an even simpler, morestraightforward, actionable
guide to CustDev practices.
2. Summarize and unite the ideas of modern CustDev"thought leaders" who have
emerged since The FourSteps was published.
3. Put a "stake inthe ground" to create standardswith respect to common
CustDev terms and concepts.
4. Demonstrate the flexibilityofCustDevwhenapplied to any business model.
5. Make the CustDev process available inan ebook format.
We havemade itourgoaltogettothe point, butalsonotgettothe wrongpoint.
Whiledebate is healthy, and wecan onlyhopethat people will discuss this
book, wehopeto minimize"paralysis byanalysis." Participation indebates over
terminology, semantics, or history- particularlyin high-tech culture -often isan
excuse fornottakingaction. We feel CustomerDevelopment does not need to be
at the center ofsuch a debate. You can, ofcourse, take itor leave it. But more to
the point, you canfurtherit,changeit,andeven mold ittoyour business,your
vision, and your values.
AsSteve Blanksays, "CustomerDevelopment isnotjust one idea, but the sum of
Customer Development itself. It'smore thanonesmartguy sittingonthe beachin
Hawaii writinga business book. Itiswhat it preaches."
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Introduction
Who Should Read This
The Customer Development framework is not tied to a particular business type,
market segment, or product category. Companysize, revenues, or location are im
material, as long as the company is planning on launching a new product.
Anyone can benefitfromCustomerDevelopment thinking. The philosophyapplies
to all entrepreneurs even though specific Customer Development processes are
typically associated withthose businesses just "starting up."
Althoughour background isworkingwithhigh-tech companies and that has
formedour primary frameofreference,the CustomerDevelopment model isbroad
and flexible,and can be applied tovariousindustries and markets. This book
focuses onthe firststep ofCustomer Development, namelyCustomer Discovery.
Therefore, we will focus on startups.
Thereality isthat Customer Development methodsbecomemore difficultto
implement the "furtheralong" your businesshasbeenestablished.Thefurther
along you are,the more difficult itistoquestion andtest fundamental busi
ness assumptions uponwhich you may have already builtan organization. If, for
example, you mustreport revenue growth toyour investors nextmonth, itmay be
a difficult proposition tostopwhatyou'redoinginordertoquestionyour funda
mental business assumptions. Even thoughtakinga "time-out" to gothrough a
set ofprocessesthat might explain why yourgrowth isslower than projected might
be exactlywhat youneed, yourboard islikely to think youtookthe wrongturn at
Albuquerque and ended up inTaos! Sucha drasticstep typically requiresa little
bitofdesperation and a lotofsympathetic Directors. Itmighteven besaid, that
The Four Steps was born out of just such a predicament.
Regardless ofthe stage your business isin,thoseofyou mostlikely to pickupthis
book are significantlyinvolved ina startup technologycompany,either as a devel
oper, product manager,orfounder. Fundamentally, this isa bookforentrepreneurs
whoare willing and able to question their mosttightly-held business assumptions;
it isfor this group of people this bookwillbenefit the most.
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