Duke ECE 490L: How to Start New Ventures in Electrical and Computer Engineering

Poornima Vijayashankerpoornima@femgineer.com

Jeff Glass jeff.glass@duke.edu

Akshay Rautar118@duke.edu

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Review

Duke ECE 490L

• Stories to Features

• Usability Testing

• Paper Prototyping

• Interaction Testing

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Announcements

• Questions on Lab 2?

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Idea Summary

Review Session:Wednesday October 23, 2013

DUHatch

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Agenda

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• Customer Creation

• Concierge MVP

• Exercise

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Customer Discovery Validation Customer CreationBusiness/Company

Formation

Early AdopterPricing Product

Distribution

Mainstream AdoptersMoney for Marketing

Market Research

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Customer Discovery Validation Customer CreationBusiness/Company

Formation

Early AdopterPricing Product

Distribution

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We’ve conducted interviews to test across various segments and usability tests to test product.

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Figured out market position: new, existing, re-segmenting.

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Maybe outside factors that will limit growth.

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Customer creation marketing activities necessary for customers to learn about product and create a desire to buy it.

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“Get big fast!”

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• Market adoption v. market share

• Education

• Not customer acquisition programs

• Earlyvangelist find product and spread the word

Demand Creation v. Early Adopter Launch

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• Not about marketing department

• Creation events

• Marketing programs depend on market

• Product launch

• Advertising, PR, trade shows

Customer Creation

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Market Share Cost of Entry Entry Strategy

Monopoly >75% 3x Resegment/New

Duopoloy >75% 3x Resegment/New

Market Leader >41% 3x Resegment/New

Unstable Market >26% 1.7x Existing/Resegment

Open Market <26% 1.7x Existing/Resegment

Table 5.2 from Four Steps to Epiphany

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• Year 1 Objectives

• Positioning: both the company and the product

• Launch: both company and product

• Demand creation: advertising, PR, trade shows

Four Building Blocks of Customer Creation

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What kind of company are we?

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• How do customers buy?

• What are their needs?

• What trade shows do they attend?

How Customer Will Interact with Your Company

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Describe life to a customer without your product.

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Need to set a budget for customer creation.

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Company Positioning

Product Positioning

Company Launch

Product Launch

Demand Creation Activities

Year One Objectives

Existing Market

Differentiation and credibility

Product Differentiation

(features)

Credibility and delivery

Existing basis of

competition

Create, drive demand into

the sales channel

Market Share

New Market

Vision and innovation in

the new market

Defining new market, the

need, and the solution

Credibility and innovation

Market education, standards

setting, and early adopters

Customer education, drive early

adopters into sales channel

Market Adoption

Resegment via Low-End

or Niche

Segmentation and

innovation

Redefining an existing

market and product

differentiation

Segmentation, delivery & innovation

New basis of competition

Educate users about what’s changed in

market, drive demand into

sales

Market reframing and new market

share

Table 5.3 from Four Steps to Epiphany

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First mover advantage.

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• 1921: Ford sold 900,000 Model T’s for 60% market share v. GM 61,000 Chevys at 6% market share

• 10 year period Ford focused on cost reductions, while GM diversified and differentiated product line

• 1931: GM had 31% market share v. Ford 28%. GM still has lead.

• 1964: Toyota...

• Today: Toyota is dominant American car company

Case Study #1: Ford v. GM v. Toyota

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Not enough to be 1st to market, need to understand the type of market your company is going to enter.

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1st year is all about customer creation.

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Serviceable market: subtract customer who bought competitor’s solution.

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They wanted a “whole product” (service, support, and other infrastructure).

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Given our pricing, how many customers can afford our product in year one?

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Revenue Number for Year One

# of qualified prospects to close 1 order?

How many raw leads do you need?

Paying full price?

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Where would most qualified leads come from?

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External Audit QuestionnaireRecognitionHave you heard of the company? Do you know what they do?Market ForcesAre there other products int he market that are similar to the company’s? If so, how are the company’s products different?Which do you like best? Why?Customer FocusAre you familiar with the types of customers the company is calling out?Product FocusDo you know that the top three features of the company’s product are?Are these “must have” features?PositioningHave you heard the company describe its positioning? Do you believe it? Is it right?Have you heard the company describe its mission? Do you believe it? Is it right?CompetitionWho do you think the company will compete with in the first year?Sales and DistributionIs the company’s distribution strategy the right way to reach customers?Strength/WeaknessesWhat are the strengths of the company?TrendsWhat tech/product trends should the company worry about?Acquisition InformationWhat do they think is the best way for the company to get product info to customers?

Figure 5.5 from Four Steps to Epiphany

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In customer validation phase you should have understood needs and who buys or influences markets.

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Messengers.

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Messengers: reach a few experts, evangelists, and connectors.

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Experts

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• Know industry and product in detail.• Others rely on their opinions.• Some may not proselytize product and will charge for advice or consulting.

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Evangelists

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• Cheerleaders and salespeople.• Typically paying customers• Some may not proselytize product and will charge for advice or consulting.

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Connectors

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• Maybe bloggers or write for magazine or newspaper column.

• “Thought leaders” because of their ability to bridge across multiple worlds.

• Need to have already established a relationship with them.

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Messages need to be memorable and sticky.

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Media Checklist

Which media did my earlyvangelists tell me they rely on?

Which media do I believe my potential mainstream customers rely on? Are they the same as the media that reach earlyvangelists?

Which media do others in the influence map rely on?

Which medium offer the best return on investment?Table 5.7 from

Four Steps to Epiphany

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May have trouble getting traction.

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“Our app has been downloaded 10,000 times!”

“We have 1M users!”

“We were featured on TechCrunch.”

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Some time passes...

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Keep building!

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What happened?

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Validate early adopters and value proposition.

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MVP Fails

1. Don’t know who you’re early adopter is?

2. Don’t have a simple value proposition.

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Resist the urge to build before you validate!

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Concierge MVP.

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Concierge MVP

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• An experience is a product• Questions

• Do consumers recognize they have the problem you are trying to solve?

• If there was a solution, would they buy it?• Would they buy it from you?• Can you build the solution for that problem?• How can you build a simple version?

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Concierge MVP validates value proposition.

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Case Study #2: Food on the Table

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• Creates weekly meal plans and grocery lists, and hooks into grocery stores to find best deals for ingredients

• Began with a single customer!• Interviewed customers are local super markets.• Signed up 1st customer and dropped off groceries weekly.

• Collected $9.95 on each visit!

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Case Study #3: Dropbox

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• Built a prototype: no one believed it.• Validated concept through a video.

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Not the time to focus on growth!

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Customers care about a product solving their problems or servicing their needs.

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Who are your customers?

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Not just product, but entire experience!

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Can you bounce back?

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Case Study #4: BizeeBee

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• Initially a tool for ALL small business owners• 100+ email signups - no one came back!• I called EVERYONE• No clear early adopter or value proposition• Focused on yoga studios first

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Will I grow?

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Eventually!

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Case Study #5: Femgineer

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• Blog that became a business• Bootstrapped through customers• Concierge MVP

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Case Study #6: Zappos

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• e-commerce platform• Started with brick and mortar stores• Focused on one market: shoes• Simple site with same inventory that was in stores

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Case Study #7: AirBnB

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• Marketplace• Started with concierge MVP• Early adopters were people who crashed with friends & family

• Simple value proposition to rent a bed, room, or apt for a short stay

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What about quality?

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Customers care about a product solving their problems or servicing their needs.

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If design is an issue that will be revealed in testing on early adopters.

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Throw away your work!

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Exercise!

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Review

Duke ECE 490L

• Customer Creation

• Concierge MVP

• Exercise

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