Step-by-Step to
Paying Customers
LUKAS FITTL
@lfittl
spark59.com
LEAN
STARTUP
Lean Startup is trademarked by Eric Ries and used with permission.
Business Model Canvas is created by Alex Osterwalder and licensed under CC-BY-SA.
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About Myself
Co-Founded 3 tech startups,
worked with many others
fittl.com
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Profitable & Proud!
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This is based on lots of books
& many failures, small and big.
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How does the old way look like?
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My 2nd Startup:
failed, badly.
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100k EUR Investment.
1.5 years of 3 founder’s lives.
Great technology.
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0 EUR Revenue.
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Why?
We were basically trying one strategy.
Licensing Cloud Technology to
Hosting Companies.
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How does Lean look like?
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Profitable & Proud!
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Charged Customers
$200 / month
from Day One
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Version 1: Analytics for Marketers
Version 2: Analytics for Startups
Version 3: Analytics for SaaS Startups
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Don’t fall in love
with your idea!
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Its about Planning,
not Plans.
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Make the Plan,
focus on the assumptions.
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Main Assumption:
Customers would buy a
5000+ EUR license
&
integrate our Product
within weeks (not months)
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$$$/users/etc
Time
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Product/Market Fit:
The moment when you can
consistently deliver value
to the right people.
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Product/
Market Fit
1. Deliver Value 2. Accelerate Growth
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Product/
Market Fit
(Almost) Everyone
Gets Stuck In Delivering Value!
1. Deliver Value
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Customer
Development
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Your Focus.
What you do
What you ignore
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You’re focused on
your Idea.
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But:
Who is your customer?
How do you reach them?
Why do they care?
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Don’t ignore your
Customers.
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Credit: Kathy Sierra
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Find your
Customers.
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Focus on your
Customers.
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[ Exercise ]
Who is your Customer?
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1. Who is your Customer?
• Persona of your
prototypical (early) customer
• Narrow group of people that buy/
use your product
• Marketing is easier if you have a
narrow customer segment
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2. What are they trying to do?
• What is the use case?
• What are the problems the
customer is trying to solve?
• These might be things they’ve
already started building in house,
because there is an active need
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Your Product Will:
A) Solve a Problem / Get a Job Done
B) Fulfill a fundamental human need
(friendship, dating, entertainment, networking, gambling, etc.)
http://steveblank.com/2012/04/19/how-to-build-a-billion-dollar-startup/
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3. What are they currently using?
• Existing Alternatives that solve part
of their use case
• Often this can be a self-built, quick
solution using multiple tools
• Examples: Microsoft Excel, Email,
[Competitor’s Product]
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4. How much would they spend?
• How much is the problem worth to
the customer?
• Not how much it costs you to
implement the solution
• Avoid Free and Freemium
Its just a marketing tactic!
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Lean Startup is about
Optimising for Learning
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Small Decisions,
Open Mind
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Our biggest risk is
following one strategy
for too long
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Launch!
Risk
Time
BUILD
BUILD
BUILD
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Risk
Time
Launch!
BUILD
Launch!
BUILD
Launch!
BUILD
Launch!
BUILD
Interview Structure
1. Are they your customer?
2. Explore their worldview
3. Close & Collect Contact Info
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You are looking for emotions.
Frustration.
Excitement.
Things they care about.
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Ask about concrete past experiences
“When was the last time you wrote a blog post?”
“Umm, 3 months ago.”
NOT future behaviour:
“How often do you write blog posts?”
“I’m trying to write one every couple of weeks.”
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The Mom (or Dad)
Test
Credit to @robfitz for the idea
If you asked your parents,
could they lie to you?
Never ask people their opinion!
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Asking about what
they are spending changes
the conversation.
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Interview 10-20 customers,
then look for patterns
& focus on those.
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Shifting
Your Perspective
For Growth
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Make Happy Customers,
Not: Make Customers Happy
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$10000 / month
$2000 / month
Now Sept 2013
?
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Break Revenue Targets,
down into Unit Economics.
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Dave McClure’s AARRR
ACQUISITION
ACTIVATION
RETENTION
REVENUE
REFERRAL
How do users find you?
Do users have a reat first experience?
Do users come back?
How do you make money?
Do users tell others?
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$2000 / month
ACQ
ACT
20% to paid at $35
RET
REV
20% stay for 1 week
8% activate
5% sign up
2 paid
$70 / day
10 retained
50 activated
625 signed up
12500 unique visitors
Each Day:
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Cohort
Analysis
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Cohort: Group of people that
share a common characteristic
over a period of time.
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Track people,
not events.
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$10000 / month
$2000 / month
Now June 2013
?
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$2000 / month
ACQ
ACT
20% to paid at $35
RET
REV
20% stay for 1 week
8% activate
5% sign up
2 paid
$70 / day
10 retained
50 activated
625 signed up
12500 Unique Visitors / day
Cohort of May 12th, 2013
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$2000 / month
Now
ACQ
ACT
20% to paid at $35
RET
REV
20% stay for 1 week
8% activate
5% sign up
$70 / day
12500 Uniques
$10000 / month
Sept 2013
20% to paid at $35
20% stay for 1 week
20% activate
10% sign up
$350 / day
12500 Uniques
2
10
50
625
10
50
250
1250
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$2000 / month
Now
ACQ
ACT
20% to paid at $35
RET
REV
20% stay for 1 week
8% activate
5% sign up
$70 / day
12500 Uniques
$10000 / month
Sept 2013
20% to paid at $35
20% stay for 1 week
20% activate
10% sign up
$350 / day
12500 Uniques
2
10
50
625
10
50
250
1250
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What is success,
for you?
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Luxurious Lifestyle?
Feeding your Family?
Make it a number.
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The day you’re profitable,
is *magic*.
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What is your success?
[ Exercise ]
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How many customers
would it take?
[ Exercise ]
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Applying it in Practice
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Principles, not Process
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The goal is not to be perfect,
but to do more of the
right things at the right time.
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+ Think Visually!
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What is your riskiest
customer assumption,
right now?
[ Exercise ]