customer, market and business validation for early-stage startups
TRANSCRIPT
![Page 1: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/1.jpg)
Customer, market and business validationFor early stage startups
+ case study: TransferWise ~ the mission-driven startup
![Page 2: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/2.jpg)
Hi, I’m Jeff!
Integral Designs Bell Canada ING
Bank Skype → Microsoft TransferWise
MSc - Info
ScienceBachelors - Business
![Page 3: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/3.jpg)
4 steps to world domination
Your customer
Your Business
Scale your
startup
Your Market
Valid
ate
Case StudyGrow
![Page 4: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/4.jpg)
Validate Your Customer
Proposition
![Page 5: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/5.jpg)
How many startups START.
Intuitive understanding of user needPassion for particular technologyPropose solution
= Successful startup?
![Page 6: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/6.jpg)
How many startups STOP.
Intuitive understanding of user needPassion for particular technologyPropose solution
= Successful startup?
← Not tested. ← Customer’s don’t care.
← Not based on actual. customer needs.
← Not as likely.
![Page 7: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/7.jpg)
Jobs to be done (JTBD)Understand Customer + Situation“Your customers have a job and they’re hiring your app to solve it”
JTBD: weather apps, iPhone apps, SaaS/Services
![Page 8: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/8.jpg)
Learn by focusing on JTBDHow valuable is getting that job done for this type of person?How many people have this job?How often do they have this job?How is this job currently being done?
JTBD: more info/exercises
← Willingness to pay.
← Market size.← Usage frequency/pattern.← Actual competition.. (usually status quo).
![Page 9: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/9.jpg)
Problem interviewsYour goal is to learn, not sellStart before you build anything15 mins per interview Do 20-60 of them
Learn more: Jeff’s highlights, from this book
Demographics - who are they?Tell a story - that covers several problems they might haveProblem ranking - which problem is most painful?Explore problems - go in depth into each problem they haveHook & Ask - keep them engagedDocument - take 5 mins, write down
![Page 10: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/10.jpg)
Structure: intro, demographics, story Demo, as real as possible, iterateTest price, don’t ask priceRaise friction, don’t lower it. Find early adopters. Be the prize.
Solution interviewsYour startup goal is to build the simplest product that. solves a real problem.Validate your understanding of (1) customer, (2) product, (3) market propositionVisual demo of an MVP for early adopters20-60 interviews neededThe best blog post on pricing
![Page 11: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/11.jpg)
...but...You know what customers need
It takes too long
It’s a waste of time
![Page 12: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/12.jpg)
...but...You know what customers need
It takes too long
It’s a waste of time
← No you don’t, unless you’ve. talked to enough of them, in a. structured way.
← it’s nothing compared to.building. something for 6 months and discover. nobody will buy it.
← not if you learn what to build. and who will buy it.
![Page 13: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/13.jpg)
Validate Your Business Idea
![Page 14: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/14.jpg)
Learn More: Wiki, Book
![Page 15: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/15.jpg)
Increase probability of success by understanding your key risks
Start with the big boxesValue proposition, customer segments, key partnersStart with whatever is most risky, and figure out what you need to learn to remove that risk.
Ask the hardest questions first Who’s this for? Why do they need it?How much money do you need to make to break even? Will anyone actually pay for that?How much will it cost you?
![Page 16: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/16.jpg)
✅ ✅ ✅
✅
❓ ❓
❓ ❓
![Page 17: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/17.jpg)
Collect high quality data & validate it
Make it easy for potential customers to tell you what they want:
Currency “wishlist”
![Page 18: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/18.jpg)
Research & exploreUse data where you can… but not as your only source
Ask “so what” and find the insights - who can we help?
![Page 19: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/19.jpg)
Validate Your Market
![Page 20: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/20.jpg)
Launching your MVPMinimum Viable Product
![Page 21: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/21.jpg)
Be an order of magnitude better
You need to be way better than the alternative. Aim for 10X
10X faster10X cheaper10X more convenient10X easier to useor a combination
![Page 22: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/22.jpg)
MVP Learning CycleMVP - does not mean “minimum viable piece of crap”
You need to understand who your customers are and what they want.
Can your customers use your product?
Can you do for the customer what you actually promise?
![Page 23: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/23.jpg)
Is your MVP Successful?You need to understand your metrics and set realistic targets!This will help you define success and start iterating. For instance:
New usersNPSCancellationsConversion
See appendix for more KPI examples
![Page 24: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/24.jpg)
Learn more about NPS, Product/Market fit
Achieving Market FitNPS! (Net Promoter Score)
ViralityComments
Work on the detractorsThen neutralsThen profit
![Page 25: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/25.jpg)
Early startup KPIsDo Not Focus OnVanity metrics i.e. total registered users, total volume transferred
Getting statistical significance, split testing (A/B testing)More than a handful of metrics
Focus onThe 3 or 4 most important metrics (KPIs) that indicate your progress. Perhaps:Growth & conversionHow you’re adding valueHow much runway you haveHelpful to work backwards from
some target state (i.e. 10K new users) and validate how you get there
Learn more about KPIs in the appendix
![Page 26: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/26.jpg)
Incubation & Achieving Market Fit
![Page 27: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/27.jpg)
Listen to customersThey are usually your best critics and advisors!SurveysPhonecallsMeetings
The trick is not to give them what they want but what they need.
![Page 28: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/28.jpg)
IterateUsually the one that iterates fastest wins!
Prioritising is they key hereMake sure you know what
you effect and measure it!
A/B testing
![Page 29: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/29.jpg)
Scaling Your Startup
![Page 30: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/30.jpg)
Your startup grows at. the rate. you learn.
![Page 31: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/31.jpg)
You are here
You want
to get here
What is scaling?You have a mountain to climb to
achieve your vision - KPIs are your guideposts
Validation: It’s proof that you’re moving forward
Investors/valuations
![Page 32: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/32.jpg)
You have a hard job
You have a limited opportunity to become successful
Your success depends on how quickly you learn.
Specifically, how quickly you learn how to deliver:
A product customers valueA sustainable business at scale
![Page 33: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/33.jpg)
Practical tips for scaling
![Page 34: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/34.jpg)
Marketing: Find scalable channels
Always be testingMassive differences between channels
Stand for something
![Page 35: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/35.jpg)
Keep your growth sustainable
Return the savings to your customers or to growth
Setup backups
Renegotiate as you scale
![Page 36: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/36.jpg)
Do less.
Time is your most limited resource. Make the hard choices.
![Page 37: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/37.jpg)
Get the basics right
Full report here
Know your.Customers. and focus on the. customer job. Don’t die.
Set up your team correctly. (didn’t speak about but book recommendation . at the end).
![Page 38: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/38.jpg)
The mission-driven startup
![Page 39: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/39.jpg)
What is TransferWise today?
![Page 40: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/40.jpg)
TRANSFERWISE WAS STARTED. TO SOLVE A PROBLEM.
![Page 41: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/41.jpg)
WHY DO PEOPLE RECOMMEND OUR PRODUCT?
![Page 42: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/42.jpg)
RATIONAL EMOTIONAL
![Page 43: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/43.jpg)
PRODUCT BRAND
![Page 44: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/44.jpg)
TO ACHIEVE ADVOCACY YOUR PRODUCT. NEEDS TO BE AN ORDER OF MAGNITUDE.
BETTER THAN THE ALTERNATIVE.
![Page 45: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/45.jpg)
PRICESPEEDCOVERAGECONVENIENCE
BRAND
![Page 46: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/46.jpg)
A BANK COULD HAVE STARTED TRANSFERWISE AT ANY POINT
IN THE LAST 100 YEARS
![Page 47: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/47.jpg)
PRICESPEEDCOVERAGECONVENIENCE
A MOVEMENT
![Page 48: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/48.jpg)
PEOPLE DON’T TALK ABOUT MONEY TRANSFER IN THE
PUB
![Page 49: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/49.jpg)
GIVE YOUR CUSTOMERS. STORIES TO TELL.
![Page 50: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/50.jpg)
PRICESPEEDCOVERAGECONVENIENCE
OWNERSHIPPRIDE
![Page 51: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/51.jpg)
WHAT’S OUR MISSION?
![Page 52: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/52.jpg)
![Page 53: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/53.jpg)
EVANGELICAL CUSTOMERS.
![Page 54: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/54.jpg)
INSPIRE PEOPLE WITH YOUR CAUSE AND YOU WILL CREATE
A MOVEMENT.
BIGGERTHAN YOUR STARTUP
![Page 55: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/55.jpg)
AND WHAT’S THE RESULT?
![Page 56: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/56.jpg)
EXPLOSIVE GROWTH
![Page 57: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/57.jpg)
DRIVEN BY EVANGELICALCUSTOMERS
![Page 58: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/58.jpg)
€1 BILLION IN TRANSFERS PER MONTH
![Page 59: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/59.jpg)
€45 MILLION OF CUSTOMERS MONEY SAVED EVERY MONTH
![Page 60: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/60.jpg)
TALLINNLONDON
TAMPA
NEW YORK
REVOLUTION SUPPORTED FROM
BUDAPEST
SINGAPORE
TOKYO
CHERKASY
SYDNEY
join us
![Page 61: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/61.jpg)
Wrap up
![Page 62: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/62.jpg)
Recap
Startups = learning: your job is to learnFocus on customer jobs to be done (JTBD)Problem interview → solution interview → build MVPDe-risk with business model canvasBe 10X better, focus on KPIs, and listen to your customers
From TransferWise: Cultivate a mission bigger than yourself
![Page 63: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/63.jpg)
Learn more
Get in [email protected]: jrmcclelLinkedIn
Useful books you haven’t read yet
Lean startup, theoretical
Lean startup, practical
Bootstrapping (starting without
investors)
Founder equity that makes sense
These slides:
![Page 64: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/64.jpg)
Questions?
![Page 65: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/65.jpg)
APPENDIX: KPIsA/B Testing
![Page 66: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/66.jpg)
What are well-defined KPIs?
![Page 67: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/67.jpg)
You’ll learn faster with good KPIsUsing well-defined KPI’s help you learn faster:
Which products/features customers value
How effectively you’re scaling:marketing channels costsoperations
Which activities you should focus on
![Page 68: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/68.jpg)
5 principles of well-defined KPIs
Directional & Not Ambiguous
IntuitiveImportant Reflects reality
In control of the group it’s measured against
if performance is good, it's good for the user and for the company
Can be explained why it's important for the user and to the company
Proportional to reality, dynamic enough to raise attention (not flat day-after-day), but not so jumpy that you can’t discern signal from the noise
higher or lower is always better all other things being equal
so that the team can commit to and be accountable for improvement (for targets in particular)
![Page 69: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/69.jpg)
The best metric/KPI
We did another thing!
time
the bestmetric
We did a thing!
Metric is stable and flat when you’re not influencing it
![Page 70: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/70.jpg)
KPI ExamplesGrowth - Signups, Downloads, New users, Active Users, Revenue, ProfitEngagement/conversion - feature use, frequency of use, # featuresQuality - Net Promoter Score (NPS), Customer Satisfaction (CSAT)Profitability/Sustainability/cost per user (marketing and/or OPEX)Churn - users stop using your product/service, downgradeVirality/network effects - spreading the word, building the network, market shareSpeed/Efficiency/Backlog/Queues/Time to X - efficiency of your machineRisk/Exposure - Leverage, FX Exposure, Value at Risk, SLA, cash/runway
![Page 71: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/71.jpg)
Where does A/B testing fit in?
![Page 72: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/72.jpg)
What are A/B tests?Everyone believes they know what’s right...but they’re often don’t. Everyone has biasesScientific experimentsA/B Tests can help you learnIf done well they give you unbiased “proof” of whether A is better than B
![Page 73: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/73.jpg)
When should you use A/B testing?Work well for optimisation problems - small iterative learning
Product, pricing, messaging, support all possible
But even if you could, you sometimes shouldn’t as they can be expensive. Learning is expensive.
![Page 74: Customer, market and business validation for early-stage startups](https://reader035.vdocuments.mx/reader035/viewer/2022062523/58ec1a871a28ab70538b45b5/html5/thumbnails/74.jpg)
Get high volumes and be patient waiting on results
Don’t corrupt with other overlapping tests
Know basic statistics
AB testing 101
Are your results significant? tl;dr: no
It’s difficult to achieve statistical significanceYou need to:Plan/design in advancePick the right KPI(s) & scopeRandom or pseudo-random
allocation