The Startup Owners Manual – Bob Dorf, Steve Blank

The organization can be confusing. The reader is guided step-by-step through the startup’s necessary tasks in this book.

Phase III — Positioning phase

Return to the positioning statement you created during the customer validation phase at this point. How did it make it through the validation process? Do you know why the customers didn’t like it if they didn’t? Additionally, schedule meetings with the key decision-makers you noted during the customer discovery phase. 

Check to see if these opinion leaders and other business analysts will have favorable things to say about you.

Map of customer access

A Customer Access Map can assist you in identifying organizations to which customers belong (if you are selling to the general public) or key decision makers within the organization (if you are selling to a business). 

Put all of the maps together, think about the sales strategy, and create an Implementation Plan that outlines everything that needs to happen before selling your product.

Tips on optimization testing

• Understand what you’re testing and why.
• Avoid over-testing.
• Controlled tests must adhere to accepted protocols.
• Consider the customer’s lifetime value rather than just this one transaction.

Validation of the business model

This procedure entails answering the following critical questions:

• Have you discovered product-market fit? 
• Is this something that a lot of people require? 
• How well does it solve the problem that it is supposed to solve? 
• How many people would be interested in purchasing this item?
• Who are your customers, and how do you get in touch with them?
• Can you make money while growing the business?

Validating your solution

Following customer problem testing, this phase puts the solution through five rounds of testing:

• Update the business model and team
• Create a physical product solution presentation or a high-fidelity MVP test (web/mobile).
• Test the product solution by asking customers what they think.
• Update the business model (once more)
• Identify board members

Planning a business model: Key Resource Hypothesis

Assets include things like money, people, property, and intellectual property. A dependency analysis is part of this component as well. What are all the contingent events that the business can’t control, and what are the risks if those events fail? 

Here, contingency plans are crucial.

Phase IV — Pivot and/or proceed

Make sure there are sound responses to the hypotheses by going over and analyzing all the material you’ve produced.  

Depending on the type of market, revenue growth curves differ: growth in a new market company will appear as a hockey stick on a graph, starting out slowly before accelerating; growth in an existing market shows a steady rate of growth. 

Testing Phase: Optimisation

Optimisation is all about getting more out of everything—for example, if your activation rate is 6%, try to increase it to 10%. Strive for measurable improvement in everything you track. 

Optimisation should be focused on increasing volume, decreasing cost per activated customer, and increasing visitor to user conversion.

The first product: customer discovery

Startups should work to create a Minimum Viable Product (MVP) for a modest target market. 

The goal of the MVP is to release a product so that early adopters can experiment with it. By releasing an MVP, designers are compelled to concentrate on the core functions rather than the gimmicks. Once the product has received customer feedback, it can be improved.

Planning a business model: Competitive and market-type hypotheses

According to this model, a product can be sold in a variety of markets, including those that are already established, new, expanded, re-segmented, etc. 

Once you are familiar with the market and the competition, you can develop a preliminary strategy for each.

The customer development framework

• Create hypotheses and test them with customers to learn more about your customers.
• Test sales to determine whether customers will buy and whether you can scale up.
• Marketing: creating customers.
• Transitioning to a sustainable business is a company building strategy.

Minimum Viable Product (MVP)

Using the information gathered to create previous versions, you will create a high-fidelity MVP with more features than the previous one.  

Make sure to collect as much information as possible about customer reactions to the new MVP. Collect data, analyze, and optimize—this is how it goes from the moment a web/mobile business opens its virtual doors until it dies.

Getting started

For startups, the traditional product roll-out method is completely incorrect. That process is appropriate when customers are known and the market is well-defined. This is often not the case for startups.

Customer development, then, is very important for startups, and there are a number of phases in the framework.

Customer verification

Customer validation entails testing sales at every stage of the process. 

The customer validation process is divided into four phases:

• Phase I: Prepare to sell.
• Phase II: Go live and attempt to sell.
• Phase III: Refine your product and position your company.
• Phase IV: Analyze, pivot, or continue.

Founders cannot lead from afar; they must be actively involved in the process.

A Sales roadmap

The next step is to create a sales roadmap that covers everything from the first sales call to contract signing. Remember what you’ve learned about the customer and go over some of the materials you created during the customer discovery stage. Create a buyer’s journey model and identify key influencers.

Business Model Planning: Other Hypotheses

The partners hypothesis entails making a list of all the partners you’ll require, outlining what you’ll need from them and what you’ll give them in return.

Pricing and Revenue Hypothesis: 

The following inquiries are included: 

How many products will we sell, first? 

2) What is the revenue model? 

3) What will our fees be? 

4) Is there any evidence that this is worthwhile to pursue?

Planning a business model: Channels Hypothesis

For tangible goods, this also includes an explanation of how the product is delivered to the customer. 

Consider which channels would be best for your product, and the authors advise startups to focus on just one that has the greatest potential for their offering. 

In regards to web and mobile products, weigh the benefits and drawbacks of various distribution channels.

The market’s dimensions

• TAM (Total Addressable Market): the universe in which your product exists.
• The population that your sales channel can reach is known as the “Served Available Market” (SAM).
• Target Market: the people who are most likely to become your clients.

Look at market size metrics in industry reports, press releases, libraries, and anywhere else you can find them.

Phase II — Get out of the building and sell

In this phase, you are validating your business model hypothesis, but you are still testing (by making real sales). Don’t try to scale up just yet—the purpose of your sale is to validate your business model.

You only need a few customers to sell physical products. Remember the early vangelists and adopters? These are your natural customers. But keep in mind that what motivates them is unlikely to motivate the average Joe.

Get Ready to Sell

The Get Ready to Sell phase begins with the refinement of plans and the development of tools to acquire and activate customers. 

Remember that acquisition occurs when a customer first learns about a product, whereas activation occurs when a customer participates, enrolls, or does something. Don’t start the Acquire effort until the Activation program is ready for customers, and engagement is the key to the latter.

Tip: Measure Everything.

Testing customer problems

You must get out of the building to learn the following:

• How well do you understand the customers’ problems?
• How important the problem is to the customers, and how many customers are discussing it.
• If customers are interested enough to tell their friends about it.

Planning a business model: customer relationship theory

This explains how you’ll attract, retain, and grow your customer base. For physical goods, there are four “get” stages: awareness, interest, consideration, and purchase. 

Create and assess various “get” strategies. Programs to retain customers are part of the “keep” phase, while upselling to current customers is the focus of the “grow” phase.

The Customer Discovery Methodology

• Create experiments for customer testing.
• Prepare for customer contact.
• Examine how customers perceive the issue.
• Recognize the customer’s thoughts.
• Learn about the market and the competition.

Phase I — Prepare to sell

This phase begins with developing a positioning statement: a message (short but compelling) explaining why people should buy your product.

Customer-focused sales and marketing materials should be largely based on the information derived from the hypothesis developed for the customer discovery process.

Business model planning: value proposition hypothesis

This includes a description of the minimum set of features necessary to create a stand-alone product (i.e., the MVP), as well as the product’s features and benefits. The low-fidelity MVP is used along the web/mobile track to determine whether you’ve found a problem that people care about, and it uses user stories rather than feature lists.

Planning a business model: The various customer segments

Customers’ needs, wants, or passions are listed here, along with customer types (such as buyers, influencers, recommenders, or end users), customer archetypes, a day in the life of a customer, and a customer organization and influence map.

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