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Monday, September 06, 2010

5th Sep OCC Meetup Roundup

A couple of links from the discussions at yesterdays OCC meetup

- Naeem Zafar's Seven Steps to a Successful Startup - http://www.scribd.com/doc/15245595/7-Steps-to-Successful-Startup
- Steve Blank's blog - http://steveblank.com/

We started out with a theme - How do you find your first customer?

Suresh pointed out that we need to differentiate between customer (who pays) and a user (who uses the software). What we really need in the beginning is a user who can validate our assumptions. Once you have a validated model, then it is a lot easier to find a paying customer.

The conversation went on to How desperate is your customer's need? The more desperate the need is, the easier it is to find and sell. Sometimes entrepreneurs work on products that that are not solving really desperate problems. A company may have a hundred problems, but stakeholders only have time to only solve 5-10 of them a year. Is the problem you are solving in their top-10?

Here is a story from Steve Blank's book The Four Steps to the Epiphany (summarized):
Imagine a bank with a line as customers wait for an hour to cash paychecks. You have a product that could reduce waiting time to ten minutes. You meet the president and tell him you have a product that could solve his problem. What does the president say?
  1. "What problem?" - The president doesnt realize they have a problem. They won't become customers anytime soon. They are late adopters
  2. "Yes I feel bad about it and give them cups of water" - They know they have a problem but are not motivated to solve it. It's not an important problem to them.
  3. "This is a big problem, we are losing $500,000 a year! I'm looking for a a product that will cut processing time by 70%, cost less than $150,000 and integrate with our back end" - Getting warm. Recognize they have a problem and have visualised a solution
  4. "I requested our IT department to develop a solution, but it doesn't work and keeps crashing." - Hot. They have a problem and are spending money on solutions, but nothing works.
  5. "Boy, if we find a vendor who solves this, we can spend the $500,000 I've budgeted for it!" - Fiery hot. Ready to spend big, but no solution in sight. Perfect first customer
In case we thought the last type of customer doesn't exist, Dorai told a story of how he was talking about his vision to a customer and it was such a desperate problem that they paid him in advance to create a product to solve it. You know you have a market when customers are willing to part with their money even before you have started development. Steve Blank calls these customers "Earlyvangelists".

This tied in with the theme of a track at the upcoming Nasscom Product Conclave, which is Sell, Develop, Market, Sell. In other words, first sell your vision, and get someone to buy into it. Only then start with development. Where most of us think of selling as the last step, it really should be the first one.

From there we went into Steve Blank's Customer Development method and Naeem Zafar's 7 steps (links above). Both methods advocate having a customer to validate assumptions even before you start development.

The discussion also went into 2 common product development strategies

- Find a customer, then develop the product (Customer Development method)
- Create products, launch, and go for customer usage (Web 2.0 VC method?)

and the pros and cons of each method. With that we broke up for networking.

2 comments:

dorai said...

Suresh pointed out Sell, Develop, Market, Sell. An interesting pattern.

I will extend it with one more step (which we tried):
Prototype, Sell, Develop, Market, Sell More.

The prototype tickles a client's imagination more than a PPT and they know that you have thought through many problems.

There are lots of other variations too:

When you build something small and give it to a set of customers, they will tell you what else they need (at least the more vocal ones). In some cases, these are pre-sales questions too. We must make sure that we listen carefully to several different (some times conflicting) opinions and use our judgement.

One thing I found is that as a developer what you think as one product is normally many different products to customers.

K Siva Karthikeyan said...

I largely agree with dorai, because without an wireframe or prototype we have in hand it would difficult to sell or convience, but what I think is there an step before prototype because how would you know the prototype you are doing is really going to sell??