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@NYUEntrepreneur
Translating
Customer Needs
into MVPs
Frank Rimalovski
Executive Director, NYU Entrepreneurial Institute
M...
@NYUEntrepreneur
What makes for a successful
startup?
@NYUEntrepreneur
Commercialization Myth
Basic &
Applied
Research
Scientific
Discovery/
Invention/
IP Creation
Venture
Form...
@NYUEntrepreneurThe “valley of death”
Basic &
Applied
Research
Scientific
Discovery/
Invention/
IP Creation
Customer
Disco...
@NYUEntrepreneur
(At least) Three Parts to
Building a Successful Startups
1. Advancing the product/technology
2. Beginning...
@NYUEntrepreneur
It’s Bigger Than the Revenue Model
u Testing hypotheses makes substantive changes to
biz model before you...
@NYUEntrepreneur
Need to do this before
finishing the science or
building/designing the product
@NYUEntrepreneur
Evidence-based
Entrepreneurship
(aka the Lean Startup)
8
@NYUEntrepreneur
The Business Model Canvas
Revenue Streams
Channels
Customer SegmentsValue PropositionsKey ActivitiesKey P...
@NYUEntrepreneur
More than half of
your assumptions
are wrong!
10
@NYUEntrepreneur
Customer Development
Test assumptions
about customer
needs/problem
& develop MVPs
Seek validation
that pe...
@NYUEntrepreneur
Customer Discovery
u Apply the scientific method to
business model development
Modify
hypothesis
Observe
...
@NYUEntrepreneur
First test the problem,
then test the solution
Customer Development
13
@NYUEntrepreneur
Value Proposition
What Problem Are You Solving?
@NYUEntrepreneur
Value Proposition
describes the benefits
customers can expect
from a bundle of
products and services
@NYUEntrepreneur
Key Questions for Value Prop
u Problem Statement: What is the problem?
u Technology / Market Insight: Why...
@NYUEntrepreneur
Customer Segment
Who Cares?
@NYUEntrepreneur
Customer Profile
u Who are they and
why would they
buy?
@NYUEntrepreneur
Define Customer Archetype
u Who are they?
o Position / title / age / sex / role
u How/where do they buy?
...
@NYUEntrepreneur
Problem-Solution Fit
Fit
@NYUEntrepreneur
So where does my
technology come in?
@NYUEntrepreneur
It’s not about your technology!
22
bit.ly/1MFD3YJ
@NYUEntrepreneur
So where does my
technology come in?
Customers don’t care about technology
They are trying to solve a pro...
@NYUEntrepreneur
put yourself in
the customers’
shoes
@NYUEntrepreneur
But how?
25
@NYUEntrepreneur
Customer Interviews
(aka Talking to Humans)
Customer Development
26
@NYUEntrepreneur
“You can’t just
ask customers
what they
want and then
try to give that
to them.”
@NYUEntrepreneur
“New ideas come
from watching
something,
talk(ing) to people,
experimenting,
asking questions
and getting...
@NYUEntrepreneur
Talk to Humans!
u GOTB: The #1
lesson of this talk
u In person is best
u You must gain
insight into your
...
@NYUEntrepreneur
Meet People You Don’t Know
u People you know will be nice and tell
you what you want to hear
u Those inte...
@NYUEntrepreneur
@NYUEntrepreneur
Secret: This is why we
brought all the mentors in!
32
@NYUEntrepreneur
What do you want to learn?
33
The Business Model Canvas
Revenue Streams
Channels
Customer SegmentsValue P...
@NYUEntrepreneur
Don’t Assume You
Understand the
Problem!
@NYUEntrepreneur
What do you want to learn?
u Do not sell! No demos! No presos!
u You are there to learn!
u Get stories, n...
@NYUEntrepreneur
Ensuring an Effective Interview
u Beware of confirmation bias
u Get subjects to tell a story
u Look for s...
@NYUEntrepreneur
Gaining Insight
u Facts are interesting…Insights are your goal
u Don’t just scratch the surface, dive dee...
@NYUEntrepreneur38
“It's grueling
listening to
customer
feedback. And
if it isn't, you're
probably
doing it
wrong."
@NYUEntrepreneur
The Minimum Viable Product
Customer Development
39
@NYUEntrepreneur
Help start the process of learning
as quickly & cheaply as possible
The Minimum Viable Product
40
@NYUEntrepreneur
What is this?
41
@NYUEntrepreneur
What is this?
42
@NYUEntrepreneur
What is this?
43
@NYUEntrepreneur
What is this?
@NYUEntrepreneur
Why create an MVP?
u Answer questions & generate new ones
u Validate your assumptions
u Compare alternati...
@NYUEntrepreneur
Why use this approach?
@NYUEntrepreneur
1. Find go-to-market strategy…
47
@NYUEntrepreneur
…and do it more quickly
48
@NYUEntrepreneur
2. Design an MVP
49
Start the process of
learning as quickly &
cheaply as possible
Minimum Viable Product
@NYUEntrepreneur
Questions?
entrepreneur@nyu.edu
@nyuentrepreneur
entrepreneur.nyu.edu
16 Washington Place
50
@NYUEntrepreneur
Helping startups start up
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Translating Customer Needs Into MVPs

Slides from a workshop entitled "Translating Customer Needs Into MVPs" from the 2015 NYU Healthcare Innovation Makerthon

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Translating Customer Needs Into MVPs

  1. 1. @NYUEntrepreneur Translating Customer Needs into MVPs Frank Rimalovski Executive Director, NYU Entrepreneurial Institute Managing Director, NYU Innovation Venture Fund Instructor, NSF Innovation Corps (I-Corps) November 14, 2015
  2. 2. @NYUEntrepreneur What makes for a successful startup?
  3. 3. @NYUEntrepreneur Commercialization Myth Basic & Applied Research Scientific Discovery/ Invention/ IP Creation Venture Formation & Growth
  4. 4. @NYUEntrepreneurThe “valley of death” Basic & Applied Research Scientific Discovery/ Invention/ IP Creation Customer Discovery & Prototype Dev Business Model & Team Formation Venture Formation & Growth • Customer/market discovery • Engineering/prototypes • Mentors & advisors • Collaborative spaces • Business leadership • Legal counsel • Capital Commercialization Reality
  5. 5. @NYUEntrepreneur (At least) Three Parts to Building a Successful Startups 1. Advancing the product/technology 2. Beginning to build a team 3. Finding a repeatable business model u Most focus on #1 and/or #2 u Successful efforts require all three 5
  6. 6. @NYUEntrepreneur It’s Bigger Than the Revenue Model u Testing hypotheses makes substantive changes to biz model before you do science/design o Define clinical utility o Who core & tertiary users/buyers/payers are o Sales & marketing process required for initial revenues and downstream commercialization o Data required for future partnerships/collaborations o Intellectual property risks o Regulatory pathways o Reimbursement strategies u Affects your biological & clinical hypotheses 6
  7. 7. @NYUEntrepreneur Need to do this before finishing the science or building/designing the product
  8. 8. @NYUEntrepreneur Evidence-based Entrepreneurship (aka the Lean Startup) 8
  9. 9. @NYUEntrepreneur The Business Model Canvas Revenue Streams Channels Customer SegmentsValue PropositionsKey ActivitiesKey Partners Key Resources Cost Structure Customer Relationships Designed by: Date: Version:Designed for: This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit: http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? is your business more Cost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing) Value Driven (focused on value creation, premium value proposition) sample characteristics Fixed Costs (salaries, rents, utilities) Variable costs Economies of scale Economies of scope Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with customer routines? channel phases 1. Awareness How do we raise awareness about our company’s products and services? 2. Evaluation How do we help customers evaluate our organization’s Value Proposition? 3. Purchase How do we allow customers to purchase specific products and services? 4. Delivery How do we deliver a Value Proposition to customers? 5. After sales How do we provide post-purchase customer support? For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? For whom are we creating value? Who are our most important customers? Mass Market Niche Market Segmented Diversified Multi-sided Platform What type of relationship does each of our Customer Segments expect us to establish and maintain with them? Which ones have we established? How are they integrated with the rest of our business model? How costly are they? examples Personal assistance Dedicated Personal Assistance Self-Service Automated Services Communities Co-creation What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? categories Production Problem Solving Platform/Network What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? types of resources Physical Intellectual (brand patents, copyrights, data) Human Financial Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? motivations for partnerships Optimization and economy Reduction of risk and uncertainty Acquisition of particular resources and activities What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment? Which customer needs are we satisfying? characteristics Newness Performance Customization “Getting the Job Done” Design Brand/Status Price Cost Reduction Risk Reduction Accessibility Convenience/Usability types Asset sale Usage fee Subscription Fees Lending/Renting/Leasing Licensing Brokerage fees Advertising fixed pricing List Price Product feature dependent Customer segment dependent Volume dependent dynamic pricing Negotiation (bargaining) Yield Management Real-time-Market The Business Model Canvas Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis
  10. 10. @NYUEntrepreneur More than half of your assumptions are wrong! 10
  11. 11. @NYUEntrepreneur Customer Development Test assumptions about customer needs/problem & develop MVPs Seek validation that people are interested in your product/ solution Begins to build demand & improve efficiency of customer acquisition Drive growth aggressively & execute business model
  12. 12. @NYUEntrepreneur Customer Discovery u Apply the scientific method to business model development Modify hypothesis Observe phenomena Formulate hypothesis Test hypothesis via rigorous experiments Establish theory based on repeated validation of results PIVOT! You are here
  13. 13. @NYUEntrepreneur First test the problem, then test the solution Customer Development 13
  14. 14. @NYUEntrepreneur Value Proposition What Problem Are You Solving?
  15. 15. @NYUEntrepreneur Value Proposition describes the benefits customers can expect from a bundle of products and services
  16. 16. @NYUEntrepreneur Key Questions for Value Prop u Problem Statement: What is the problem? u Technology / Market Insight: Why is the problem so hard to solve? u Product: How do you solve it today? u Competition: Who is delivering that solution? u Clinical utility: What level of improvement in efficacy/safety/cost/etc. is needed? u Market Size: How big is this problem?
  17. 17. @NYUEntrepreneur Customer Segment Who Cares?
  18. 18. @NYUEntrepreneur Customer Profile u Who are they and why would they buy?
  19. 19. @NYUEntrepreneur Define Customer Archetype u Who are they? o Position / title / age / sex / role u How/where do they buy? o Discretionary budget (name of budget and amount) u What matters to them? o What motivates them? u Who influences them? o What do they read/who do they listen to?
  20. 20. @NYUEntrepreneur Problem-Solution Fit Fit
  21. 21. @NYUEntrepreneur So where does my technology come in?
  22. 22. @NYUEntrepreneur It’s not about your technology! 22 bit.ly/1MFD3YJ
  23. 23. @NYUEntrepreneur So where does my technology come in? Customers don’t care about technology They are trying to solve a problem Customer discovery is about identifying that problem & exploring how you could solve it
  24. 24. @NYUEntrepreneur put yourself in the customers’ shoes
  25. 25. @NYUEntrepreneur But how? 25
  26. 26. @NYUEntrepreneur Customer Interviews (aka Talking to Humans) Customer Development 26
  27. 27. @NYUEntrepreneur “You can’t just ask customers what they want and then try to give that to them.”
  28. 28. @NYUEntrepreneur “New ideas come from watching something, talk(ing) to people, experimenting, asking questions and getting out of the office!”
  29. 29. @NYUEntrepreneur Talk to Humans! u GOTB: The #1 lesson of this talk u In person is best u You must gain insight into your customer & market u You are doing pattern recognition… Must have sufficient data points to see 2B. Story
  30. 30. @NYUEntrepreneur Meet People You Don’t Know u People you know will be nice and tell you what you want to hear u Those interviews are possibly harmful u Let other teams use people you know u People you don’t know have no relationship to protect…Only they will tell you the truth
  31. 31. @NYUEntrepreneur
  32. 32. @NYUEntrepreneur Secret: This is why we brought all the mentors in! 32
  33. 33. @NYUEntrepreneur What do you want to learn? 33 The Business Model Canvas Revenue Streams Channels Customer SegmentsValue PropositionsKey ActivitiesKey Partners Key Resources Cost Structure Customer Relationships Designed by: Date: Version:Designed for: designed by: Strategyzer AG The makers of Business Model Generation and Strategyzer This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit: http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. strategyzer.com What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? is your business more Cost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing) Value Driven (focused on value creation, premium value proposition) sample characteristics Fixed Costs (salaries, rents, utilities) Variable costs Economies of scale Economies of scope Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with customer routines? channel phases 1. Awareness How do we raise awareness about our company’s products and services? 2. Evaluation How do we help customers evaluate our organization’s Value Proposition? 3. Purchase How do we allow customers to purchase specific products and services? 4. Delivery How do we deliver a Value Proposition to customers? 5. After sales How do we provide post-purchase customer support? For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? For whom are we creating value? Who are our most important customers? Mass Market Niche Market Segmented Diversified Multi-sided Platform What type of relationship does each of our Customer Segments expect us to establish and maintain with them? Which ones have we established? How are they integrated with the rest of our business model? How costly are they? examples Personal assistance Dedicated Personal Assistance Self-Service Automated Services Communities Co-creation What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? categories Production Problem Solving Platform/Network What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? types of resources Physical Intellectual (brand patents, copyrights, data) Human Financial Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? motivations for partnerships Optimization and economy Reduction of risk and uncertainty Acquisition of particular resources and activities What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment? Which customer needs are we satisfying? characteristics Newness Performance Customization “Getting the Job Done” Design Brand/Status Price Cost Reduction Risk Reduction Accessibility Convenience/Usability types Asset sale Usage fee Subscription Fees Lending/Renting/Leasing Licensing Brokerage fees Advertising fixed pricing List Price Product feature dependent Customer segment dependent Volume dependent dynamic pricing Negotiation (bargaining) Yield Management Real-time-Market
  34. 34. @NYUEntrepreneur Don’t Assume You Understand the Problem!
  35. 35. @NYUEntrepreneur What do you want to learn? u Do not sell! No demos! No presos! u You are there to learn! u Get stories, not speculation u Ask open-ended questions o Learn about their problems and how they solve them today u Ask why? Then why? They why again! u Create a guide (not a script) 35
  36. 36. @NYUEntrepreneur Ensuring an Effective Interview u Beware of confirmation bias u Get subjects to tell a story u Look for solution hacks u Understand their priorities u Follow your nose & drill down u Listen and STFU! u Have someone take notes 36
  37. 37. @NYUEntrepreneur Gaining Insight u Facts are interesting…Insights are your goal u Don’t just scratch the surface, dive deep u Find the hidden motivations u Ask why? And why? Then why again? u Depth of understanding always leads to insight
  38. 38. @NYUEntrepreneur38 “It's grueling listening to customer feedback. And if it isn't, you're probably doing it wrong."
  39. 39. @NYUEntrepreneur The Minimum Viable Product Customer Development 39
  40. 40. @NYUEntrepreneur Help start the process of learning as quickly & cheaply as possible The Minimum Viable Product 40
  41. 41. @NYUEntrepreneur What is this? 41
  42. 42. @NYUEntrepreneur What is this? 42
  43. 43. @NYUEntrepreneur What is this? 43
  44. 44. @NYUEntrepreneur What is this?
  45. 45. @NYUEntrepreneur Why create an MVP? u Answer questions & generate new ones u Validate your assumptions u Compare alternatives u Fail early & cheaply u Visualize your ideas & share with others o Team o Customers o Investors 45
  46. 46. @NYUEntrepreneur Why use this approach?
  47. 47. @NYUEntrepreneur 1. Find go-to-market strategy… 47
  48. 48. @NYUEntrepreneur …and do it more quickly 48
  49. 49. @NYUEntrepreneur 2. Design an MVP 49 Start the process of learning as quickly & cheaply as possible Minimum Viable Product
  50. 50. @NYUEntrepreneur Questions? entrepreneur@nyu.edu @nyuentrepreneur entrepreneur.nyu.edu 16 Washington Place 50
  51. 51. @NYUEntrepreneur Helping startups start up

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