Startups Fail from a Lack of Customers not Product Development Failure

Steven Blank 2008

Start-ups have to have a process to develop

customers in parallel with product development

processes.
Focus on Customers and Markets from Day One!

Mind2Net, Inc. 2011 all rights reserved

The new start-up funding reality is you have to show TRACTION TRACTION = SALES Revenue = INVESTOR interest = get the MONEY

Everybody has a product/service idea but most entrepreneurs focus on developing the product/service thinking if we build it they

will come NOT!

Focus on Customers and Markets from Day One!

Mind2Net, Inc. 2011 all rights reserved

What Early Stage Investors Are Asking?

Are you going to:

Blow my initial investment?

Or are you going to make me a ton of money? Are there customers? How many? Now? Later? Is there a profitable business model?

Can it scale?

Mind2Net, Inc. 2011 all rights reserved

Step 1
Opportunity Innovation Customer

Startup Checklist
Where does the idea come from? Where is the innovation? Who is the User/Payer?

Competition
Sales Marketing: What does Biz Dev do?

Who is the competitor/complementor?

What is the Channel to reach the customer? How do you create end user demand? Deals? Partnerships? Sales?

Business/Revenue Model(s) How do we organize to make money? IP/Patents Regulatory Issues? How and how long? Time to Market How long does it take to get to market?

Product Development Model How to you engineer it? Manufacturing Seed Financing Follow-on Financing What does it take to build it? How much? When? How much? When?

Liquidity

How much? When?

Mind2Net, Inc. 2011 all rights reserved

Step 2 Focus on Customers and Markets from Day One!

Is there an articulated customer need?

How do you know?

How big a market and when? Are others trying to solve it? If so, why you? Does it solve an existing customer problem? Do you have a sales roadmap? Org chart? Influence map? Do you understand the sales cycle? ASP, LTV, ROI, etc. Do you have a set of orders ($s) validating the roadmap? Does the financial model make sense?

Mind2Net, Inc. 2011 all rights reserved

Step 3

Parallel Development Tracks

Feedback Product Development Cycle

Concept/ Bus. Plan

Product Dev.

Alpha/Beta Test

Launch/ 1st Ship

Feedback
Company Building $$$$ Customer Discovery
Validation

Customer Need

Validated

Traction

chasm

Yes Ill buy this

Customer Development Cycle

Mind2Net, Inc. 2011 all rights reserved

Step 4 Know Your Customer - Questions What are your customers top problems? Does your product concept solve them? Do customers agree? How much will they pay?

Draw a day-in-the-life of a customer before & after

your product Draw the org chart of users & buyers

Focus on Customers and Markets from Day One!

Mind2Net, Inc. 2011 all rights reserved

Step 5

Iterate

Until you cross the chasm and validate market need. Traction comes after proof of sales. It is a strategy not a tactic.
Increasing population of affluent singles over 40

Define the market landscape to represent reality. Emphasis is on learning & discovery before execution (or it could be your execution).
Its hard work and usually you need outside help
Mind2Net, Inc. 2011 all rights reserved

Step 6

Where to get help?

Put an ad out for the talent you need to succeed Offer equity

There are many organizations with talent that you can tap for free (Crunch Base, Score, SBA, Start-uppers, FB,
LinkedIn, search)

Use online tools

Enlist a family members help Crowd Source

Mind2Net, Inc. 2011 all rights reserved

Step 7

Funding

Develop your Pitch Deck

Summary with Ask, Market potential, Product Niche, Scale, 8-10 other slides market forces, customer need, product description, sales strategy, scale strategy, financials 3 yrs proforma, exit strategy, team, supplemental slides (make it visual)

Make a video Pitch Post/Pitch to Angellist, Keiretsu, Y-combinator, Crowd Funding, Golden Seeds, Fund Me, Band of Angels, Norcal Angels, Institutional investors, Private Placements, get out here

Practice, Practice Make a compelling business case

Traction will attract investment
Mind2Net, Inc. 2011 all rights reserved

Step 8

Due Diligence Binder

Marketing Plan Advertising Plan Business Operations Processes

Be prepared Put this together early Accelerate the Funding Process

Due Diligence Binder Table of Contents
Executive Summary
Business presentation Product/Brand definition Monetization Model Management team bios Ownership structure CAP sheet 2nd deck and process overview slides

Financials

3Year P&L summary, scaling, ROI, 3yr P&L worst case, and cap table 2011 financials 2012 financials 2013 financials 3 Year cash flow summary, worst case and expansion cost summaries

Human Resources

Sales and engagement overview Contract and payment terms Business process flows Expansion plan overview Position descriptions and training overview IP product application(s) IP algorithm Network architecture Contingency planning IP management and protection Legal representation and trademark Data Privacy Policy Hiring profiles and policies Compensation structure Incentive Comp. structure Benefits Policies & procedures Code of conduct Records Privacy Policy

Market Research

Who is our customer? Current market penetration and engagement summary Competitive analysis SWOT TOWS analysis Competitive landscape Scatter diagram Focus group research Brand Beta test interview notes Partners News articles
Mind2Net, Inc. 2011 all rights reserved

Investor Relations

Step 9

Company Building

Is your team right for the stage of company? Does sales growth plan match market? Who/How will drive innovation? Does burn rate match revenue model?

Have we built a mission-oriented culture?

Can we own the market or are we threatened by stiff competition?

Are we listening to our customers?

Does the board agree?

Mind2Net, Inc. 2011 all rights reserved

From stealth start-ups to cloud commerce to going businesses - East Bay Scores experienced counselors can add value in Starting Running

Growing
Your Business. Call us at (510)-273-6611 info@eastbayscore.org
Mind2Net, Inc. 2011 all rights reserved