berkeley-columbia executive mba program (steve blank)

Sean EllisBerkeley-Columbia Executive MBA Program (Steve Blank) October 16, 2009

Customer Development

Startup Risk & Upside = Customers

1. Traction is tough2. Acquiring at scale even tougher3. Where do you start?

Hundreds of things you “could do”Most early marketing effort wasted

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Road to IPOs: What Really Mattered?

1. Apply engineering to marketing2. Focus on right metrics & optimize3. Understand users and use cases4. Early execution is most critical

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CriticalZone IPO

sGrowth Stage

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My Key Focus Now Critical Zone

Then light advising in growth stage

Customer Development Sequence

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Growth

Transition to Growth

Product/Market Fit

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Growth Starts with Right Product

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Growth

Transition to Growth

Product/Market Fit

What is Product/Market Fit?

1. People want/need your productAnd they represent large enough market

2. Differentiated from alternatives3. Users will pay for your product

Or you are advertising supported

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“Life of any startup can be divided into two

parts -before P/M fit and after P/M fit”

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Marc AndreessenFounder Netscape, Opsware, Ning

PayPal’s Quest for P/M Fit

1. $200K seed funding - cryptography“No one really needed it” Max Levchin

2. $4.5M VC funding - PDA paymentsPeople preferred web demo (100X users)

3. $1.5B sale to eBay – web payments

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Survey Your Product/Market Fit

• Free template at Survey.io

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Key Product/Market Fit Question

“Very Disappointed” My Recommendation

0% – 25% Keep burn low, engage, iterate

26% – 39% Try repositioning, retargeting

40% – 100% Proceed up pyramid

“How would you feel if you could no longer use Product?”

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Transition to Growth

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Growth

Transition to Growth

Product/Market Fit

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Transition to Growth

1. Track/report right metrics

2. Positioning (based on perceived value)

3. Start recruiting head of marketing4. Viable economics (business model)5. Scalable growth strategy

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Hiring/Managing VP Marketing

1. Hire marketer with founder DNA2. CEO & VP Marketing form

partnershipCEO shouldn’t abdicate startup’s fateGoal = Scalable, profitable channelsInsist on perfect execution

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Optimize Before Growing

1. Landing pages

2. Funnel (acquisition through transaction)

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8% 12% 13%

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…

Scalable Growth Now Possible

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Growth

Transition to Growth

Product/Market Fit

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Test from Free to Paid Channels

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  Channel Cost/user Scalability  Viral/referral Free High  Email (internal) Free Organic  Blog Free Organic  SEO Free or Paid Organic  Widget Free or Paid Organic  Biz Dev/Partners Free or Paid High  Domains Paid (low) Low  PR Paid (low) High  Email (external) Paid (TBD) High  SEM Paid (TBD) Can be High  Contest Paid (TBD) Organic  Affiliate/lead gen Paid (TBD) High  Radio Paid (TBD) High  TV Paid (TBD) High

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Driving/Managing Growth

Monitor Growth

• Anything broken?

• Retention

Manage Campaigns

•Optimize and scale campaigns on ROI

Develop New Campaigns

• Test new sources

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Budget to maximize positive ROI spend

Improve Lifetime Value

1. Customer retention is critical2. Cross/up sell additional products3. This expands profitable channels

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Complete Startup Pyramid

Twitter: @seanellisBlog: startup-marketing.com

Growth

Optimize

Economics

Positioning

Product/Market Fit