The Startup Owner's Manual: The Step-by-Step Guide for Building a Great Company

A third type of market has both invention and market risk. For example, complex new semiconductor architectures mean you may not know if the chip performs as well as you thought until you get first silicon. But then, because there might be entrenched competitors and your concept is radically new, you still need to invest in the Customer Development

Therefore, a bottom-up estimate is usually more realistic for startups. Toy makers, for example do this quite easily: there are roughly 2 million girls born in the U.S. each year, and half can’t afford a $90 doll, so the U.S. target market for a new doll for girls age 6 to 8 is at most 3 million.

The steps: • Customer discovery first captures the founders’ vision and turns it into a series of business model hypotheses. Then it develops a plan to test customer reactions to those hypotheses and turn them into facts • Customer validation tests whether the resulting business model is repeatable and scalable. If not, you return to customer disco

Niche re-segmentation looks at an existing market and asks whether some segment of this market would buy a new product designed to address more specific needs. Can some sizable portion of the market be convinced that a characteristic of the new product is radical enough to change the rules and shape of an existing market. See Chan Kim and Renee Mau

Customer discovery includes two outside-the-building phases. The first tests customer perception of the problem and the customer’s need to solve it. Is it important enough that the right product will drive significant numbers of customers to buy or engage with the product? The second phase shows customers the product for the first time, assuring th

These product/market relationships generally fit one of these descriptions: • bringing a new product into an existing market • bringing a new product into a new market • bringing a new product into an existing market and trying to: • re-segment that market as a low-cost entrant or • re-segment that market as a niche entrant • cloning a business mod

Estimating TAM and SAM and target market is a good starting point for the market size hypothesis. Customers will help turn these hypotheses into facts. A top-down estimate is a first step.

Companies in execution suffer from a “fear of failure culture“ (quite understandable since they were hired to execute a known job spec.) Startups with Customer Development Teams have a “learning and discovery” culture for search. The fear of making a move before the

In both physical and web/mobile channels, earlyvangelists display these common characteristics (see Figure 3.1): • They have a problem or need. • They understand they have a problem. • They’re actively searching for a solution and have a timetable for finding it. • The problem is so painful that they’ve cobbled together an interim solution. • They’