Customer Development for a Consulting Practice in a Downturn

Written by Sean Murphy. Posted in Books, Consulting Business, Customer Development, skmurphy

What follows are some real questions I have answered either face to face or in e-mail over the last 90 days in response to the current downturn in Silicon Valley.

Q: I just completed my first two years of consulting–which were spectacular–after 20+ years of full time work. But long term clients have just dropped me, and after a rather frantic couple months of chasing every lead I could, and exhausting my list, I am facing the imminent need to shut down my operation and go back to getting a job somewhere. What can I do?

A: One book you might read is “Rainmaking” by Ford Harding (an excerpt from page 22, emphasis added)

For your own business you must gain a feel for two variables. The first is the typical gestation period from the time you first make contact with a prospect to the time you actually sign him as a client. Depending upon your business this can range from a couple of months to over a year. The second variable is the typical conversion rate from prospect from client. This may have several subsidiary rates. […]

Understanding them will help you complete the following sentence, which underlies one of the key principles of marketing:

I need x prospects today to have a reasonable assurance that I will have a new client in y months.

Professionals do not often think enough about the implications of this sentence. They become focused on the pursuit of two or three hot prospects, and once these projects are either won or lost, find that they have too few others in the early stages of development to generate the business they will need in the months to come. This is one of the major causes of “porpoising,” the radical and repeated swing from too much work to too little that  so many organizations face. To avoid porpoising you must market and not just sell. To minimize porpoising you will need to generate a continuing flow of new leads.

Q: Is there anything that a professional organization offers in aiding members to get more leads?

A: One of the principles of lead flow is that you have to give to get. Professional communities are not a lead generation service. One of the key points in the “Creating a Consultancy Out of What You Practice” article Theresa referred to in “Two Professional Groups for Consultants” was this one:

Consultants often refer one another to clients they can’t satisfy. “Some get more jobs than they can handle or they get a job that’s not quite right for their expertise,” says Mr. Maclay. They may recommend you to a client, and you should reciprocate when it makes sense, he explains.

As you are out there “frantic..chasing every lead” carry others folks cards and website addresses with you so that even thought it’s not a fit for you it may be a good fit for someone else. I refer business to other consultants frequently. You have to see yourself as part of a larger system or community that will prosper together (or not). See also my “Networking in Silicon Valley” from July of 2007 where I observed:

One of the secrets to navigating Silicon Valley, is that it’s actually a very small place with many connections: some that can take a while to discover are nonetheless quite potent. That being said the single most important thing to avoid is wasting people’s time. Time is more scarce than capital, technology, or knowledge.

Q: I’ve read all the books and really don’t see the merits of all the standard tricks about having a sexy website, publishing a regular newsletter, teaching seminars, etc. I’m sure it’d all help, but it seems like foolish advise for someone starting out. If you don’t have a personal inside referral, or unless the market is so hot and they’re so desperate that they are Googling for you, all the rest is just noise that they’d rather do without.

A: A website, a regular newsletter, seminars are all good ideas for marketing your expertise.  They are not noise. Talk to folks who have been consulting  five or ten years not just two. If you don’t have a website you don’t exist. I apologize if this sounds too judgmental, it’s certainly challenging times, but establishing a consulting practice that can survive a full business cycle is not easy. It may take longer to succeed than you have runway, in which case finding a part time regular job may allow you to ease into it or a full time job may be more of a fit with your nature. Here are some rules of thumb we have tried to follow over the last five years at SKMurphy, Inc.

  1. Once you let one client get to be more than a third of your revenue, certainly if they are more than half, you may have inadvertently let them become your employer because you become afraid to tell them “No.”
  2. As a consultant your job security is your ability to get new work. You need to be continually marketing yourself to avoid “porpoising” or going deep on one or two clients and then going idle until you can find your next big client.
  3. It’s almost always easier to look for new clients when you have existing client work: it increases your confidence and improves your negotiating position.
  4. One good book on consulting is Gerald Weinberg’s “Secrets of Consulting” (he also blogs at ). He advises that in a week you spend two days doing work, two days marketing yourself, and one day getting better at what you do. If you are working on a product to complement your consulting you might modify that to three days doing work, 1 day marketing yourself, and one day developing your product. As work slacks off divide your time between additional marketing efforts and working on your product.

Update February 19, 2009: Ford Harding E-mailed me a reminder to link to his second addition of Rainmaking, called “Rainmaking Attracting New Clients No Matter What Your Field” which has 40% new material in preference to his older addition of “Rainmaking.” The page/quote cited in this blog post are from his first edition.

3 Tips for Developing User Community Sites

Written by Theresa Shafer. Posted in Customer Development, skmurphy

After blogging about how “User Communities are Critical for Complex Products” two days ago I thought I would offer some quick tips on how to get started:

  1. Be clear on the benefits to the members. So many social networking groups are very clear on how members bring benefit to a user site, but not very clear on the benefit to the members.
  2. Treat it as a conversation, and it’s not just with customers. It’s as important to have a dialogue with non-customers.
  3. Don’t forget face-to-face dialogue. They are critical to on-line communities and ecosystems.
    • Blend on-line and face-to-face events in complementary ways: typically a face-to-face kickoff with inject a lot of energy and useful context into ongoing on-line interactions.
    • Consider using on-line content and interact to prepare for a face-to-face event.

Herb Reiter Interview on Fostering Static Timing Analysis Adoption

Written by Sean Murphy. Posted in 4 Finding your Niche, 5 Scaling Up Stage, Customer Development, skmurphy

I have followed Herb Reiter‘s consulting career over the last five years or so:  there aren’t very many business development consultants who work with EDA firms, fewer who have the mix of semiconductor and design background that Herb accumulated on the way to honing his business development expertise. He is personable, methodical, and always interested in talking with new start-ups. He gives good advice informed by a perspective on both industry and technology trends. When he met with PicoCraft a while back he mentioned that he had been part of the team at Synopsys that helped to establish PrimeTime as a de facto standard for STA (Static Timing Analysis), building on experience he had gained doing the same for Motive at Viewlogic before they were acquired by Synopsys. I caught up with him recently and asked him to tell the story of PrimeTime’s early customer development and lessons it may hold for other EDA companies, especially start-ups. What follows is an edited (and hyperlinked, good blogging is good linking) transcript of our conversation.

Q: Can you give me a brief bio and some background on the events that allowed you to establish static timing analysis as a viable new tool in the ASIC design flow and PrimeTime as a key player in that market?

I spent almost 20 year in semiconductors, I have seen the consequences of insufficient design tools. For example, in the early to mid 80’s I was part of National Semiconductor‘s plan to bring their impressive portfolio of micro controllers, communication chips, and other ASSPs as mega-cells into the rapidly growing ASIC world. A lack of good tools was the primary reason for this failed attempt.

When I joined VLSI Technology in 1989, VLSI had the best cell-based tools and flows. Their design centers were world-class, working with leading edge IC design teams at very successful companies. I got a close up view of the challenges the development of ASIC core technology represented. As VLSI’s lead in cell-based design methodologies waned, revenues and profits declined and eventually Philips acquired VLSI. After VLSI I joined Viewlogic. After I had been working there for a year, successfully encouraging many ASIC vendors to qualify Motive STA and VCS gate-level simulation as sign-off methodologies. Then Synopsys offered around $400M to Viewlogic’s shareholders and we merged with our former competitor.

Q: It’s rare that a larger EDA firm is able to develop and launch a new product in a new area. As you said, you were part of the Viewlogic acquisition at Synopsys. How did you build internal support to enable PrimeTime to achieve not just traction in the market, but ultimately dominant market share?

At Viewlogic we had been winning accounts with Motive against Synopsys/PrimeTime at Viewlogic. When I “changed sides” many members of the PrimeTime team were interested in our approach. The first thing that I did for Motive and then for PrimeTime, was to narrow our focus from dozens of potential partners to the top dozen technology leaders. Both at Viewlogic and Synopsys my team used the same basic formula:  We worked hard to understand our partners’ requirements, developed trust relationships with a dozen ASIC semiconductor vendors. This allowed us to make Motive and then PrimeTime an integral part of their ASIC design flows and the key to timing sign-off.

Just like my semiconductor partners, I had engineering sites all over the world, I wanted my people to be as close to these partners as possible. One of my engineering experts even worked at TSMC in Taiwan, and was instrumental in implementing Dr. Ping Yang’s vision of TSMC’s reference flow number one.

We also waived the PrimeTime training fees for the ASIC Design Centers of our partners. Synopsys’ product group gladly covered the training department’s exploding expenses and was rewarded with a flood of PrimeTime bookings from these Design Centers and their many ASIC customers. Just like TSMC‘s first and second reference flows–which were dominated by Synopsys tools–increased Synopsys revenues at fabless IC vendors, these ASIC Design Center seminars did the same at our big partners and their ASIC customers.  Most of the smaller ASIC vendors adopted PrimeTime quickly, after seeing its benefits giving their larger rivals a competitive advantage, and a de-facto Timing sign-off standard was established in about two years.

Q: What were a couple of lessons learned?

Introducing new EDA design tools is a lengthy and difficult process. Gate-level timing simulation was the proven and trusted methodology for timing verification through the 0.35 micron process node. But at 0.25 micron  chip complexities and clock speeds increased the challenge of chip level timing closure, 0.18 micron was even more difficult, such that simulation run times approached eternity. Mask and re-spins costs, coupled with the economic impact of being late to market meant that an exhaustive method that guaranteed timing closure was urgently needed. PrimeTime’s static timing analysis offered a comparatively very fast way to do exhaustive timing verification and the product group as well as my team offered excellent support during this transition.

It’s important to note that static timing analysis had been around for more than a decade, Motive had originally been used for board level design. When my ASIC Vendor team at Viewlogic together with the Motive developers introduced it to the semiconductor vendors, we learned a key lesson: People were not willing to abandon a methodology that is working until it seriously hit their pocket book. Eternal runtimes of 0.18 micron chips and expensive re-spins because dynamic simulation is not exhaustive, helped us win STA converts.

Q: How big an issue was library management for the ASIC vendors?

Huge, ASIC vendors were at first reluctant to take on creating and supporting yet another library. One common complaint that I heard many times from ASIC vendors: supporting different libraries for different process technologies was a never ending effort. This huge effort got multiplied by the number of tools that relied on accurate libraries and, to make matters even worse, required a complete update and re-verification, whenever a new tool revision was introduced. I knew that we had to make it much easier for our customers to manage these libraries.

Q: When you talk about AEware (scripts written by Applications Engineers to supplement and extend the base product?

Already at VLSI I have seen our design centers developing a lot of what you call AEware, primarily to overcome tools deficiencies or extend the life of a proven tool. My Silicon Vendor Program team at Synopsys worked very closely with the strong corporate CAD groups at our partners to temporarily give Synopsys tools important capabilities for chip design within existing flows and to demonstrate to the Synopsys product groups the importance of such features–with remarkable success. The product groups, especially the PrimeTime team, adopted many of these scripts and made them integral and professionally supported parts of the next tools releases.

Q: Can you talk about how this experience led you to form EDA 2 ASIC Consulting and what your business is today?

In my role managing the Synopsys Silicon Vendor Program team I really enjoyed being a bridge between the powerful ASIC industry and the innovative EDA industry. I saw PrimeTime, VCS, TetraMax, Physical Compiler and other Synopsys tools getting accepted widely and really making a big difference for our highly interdependent industries. When I started my own firm in 2002 I wanted to replicate my dream-job: Being a bridge between these two industries and bringing to my friends in the semiconductor industry innovative EDA solutions, now primarily from smaller EDA vendors. In the 7 years of managing my own firm I have been able to make a number of contributions to the semiconductor industry. But I still look back at the work I did at Synopsys. Together with the product group and the training department, we laid the groundwork for PrimeTime’s market dominance as a lasting contribution. PrimeTime is still at 87% market share today, almost ten years later, according to Gary Smith EDA.

90-day Plan for Blogging from “Getting More Customers” Workshop

Written by Theresa Shafer. Posted in Blogging, Customer Development

One of the strategies we cover in our Getting More Customers workshops is blogging.

Below is a 90-plan developed by a workshop attendee last year, anonymized and presented with permission. Actual implementation took more than 90 days but he has been blogging for a little less than a year and has 60 blog posts that have been gathering readers. He also uses the blog to answer questions that keep coming up, treating it like a FAQ in progress.

Any good action plan builds on your existing strengths and successes. If you are comfortable with writing, a blog is a good way to gently remind your prospects that you are out there and are available to help them when they have a problem.

Here is the blank worksheet he filled out, answers in italic

One Page Customer Development Plan

Chose the techniques you are going to implement and have a plan! Figure out how you are going to measure it and track the outcome.


  • Who are the NEW customers you want to attract?
    want to target customers in financial space
  • How will you develop NEW business?
    use blog as a way to reach and influence prospects
  • How will you grow EXISTING business?

90-day Plan

2 weeks: Identify blogs where I can guest blog or comment on

4 weeks:

  • Select blog software and domain name
  • Check out at TypePad, WordPress, Blogger
  • Does my hosting service have one?
  • Comment on other blogs – 3 times/week (Can I keep this up?)

8 weeks:

  • Develop a plan for one/week blogging topics
  • Start writing one blog per week

13 weeks:

  • Start my blog
  • Write one blog a week on my blog
  • once a week comment on someone else blog (linking to my)

We checked in with him briefly at each of the milestone dates (basic follow-up is included in the workshop fee) and recently spoke with him now that he has been blogging for about 10 months to get his assessment of the results achieved.

I got busy so it took about 5 or 6 months to do. It takes a lot more planning, reading and thought than I anticipated that it would and readership is smaller than I would like (at least compared to our newsletter). I need to get better at commenting on other blogs. When I am busy this is the first thing to fall off, yet it is critical to building my readers. I have seen it boost my website traffic but I have not seen it generate sales leads directly yet. It was been useful to answer inquiries we get by writing a blog post, and doing this has made them easier to re-use. It’s also been helpful when we wanted to respond quickly to an event (e.g. an acquisition) that our customers and prospects are looking for a quick take on. But it’s a different writing style from a forum post or a newsletter article that requires practice to master.

“Better” is the Enemy of “Good Enough”

Written by Sean Murphy. Posted in Customer Development, Rules of Thumb, skmurphy, Startups

Better is the enemy of good enough–This phrase is attributed to Sergey Gorshkov, the commander in chief of the Soviet Navy from 1956 to 1985, who managed it’s dramatic expansion during the Cold War. Perfectionists get this wrong, siding with “Better.” Entrepreneurs who prosper, for the most part, side with “Good Enough” and keep improving.

You Have Five Minutes: Practice

Written by Sean Murphy. Posted in Customer Development, skmurphy

I am always surprised by how unprepared CEO’s and founders were to meet the time limits, typically five or six minutes, that they had been given at various conferences to get their point across: Office 2.0, Under The Radar, and Struct08 to name a few that come most readily to mind.

Five Minutes Is Not An Artificial Limit

Peter Cohan, in his Great Demo! methodology, stresses the need to get through a basic demo in six minutes. Get the audience’s attention with a glimpse of what’s possible that can help them satisfy a real business need.

On a trade show floor you have perhaps a minute to a minute and a half to capture prospect’s attention, after you’ve gotten them to stop and listen to that much.

When you meet someone at a networking event and are asked “what do you do” you have perhaps 30 to 45 seconds to trigger a conversation. This is typically referred to as the “elevator pitch.” Entrepreneurs should bear in mind that most buildings in Silicon Valley are two to four stories, it’s a very short ride.

Even if you come have arranged a meeting in someone’s office for 30 minutes, the first five or six minutes set the tone for the balance of the time. Jill Konrath’s third story in her “3 Hard Earned Lessons from the School of Hard Knocks” post recounts an actual situation:

“Sit down,” he said gruffly. “You’ve got 5 minutes. Talk.”

“If you’re busy, I’ll come back,” I said, trying to be gracious.

“Nope,” he stated. ” 5 minutes. Tell me why I should buy your product. Your 5 minutes is starting now.”

I mumbled. I stumbled. I tried to engage him in conversation. I tried to explain that I needed more time. He wasn’t one bit interested. After 5 minutes, he arose and said, “Your time is up. You can leave now.”

[…] I couldn’t concisely state why he should listen to me.

I wanted to build a relationship and warm up the call. That made me feel better. He was a busy man who chose to use his time judiciously. I didn’t respect his needs.

There is really only one way to achieve this. Practice.

“It’s not the will to win, but the will to prepare to win that makes the difference.”
Bear Bryant

You are a Doctor not a Salesperson

Written by Theresa Shafer. Posted in Customer Development

Do you think selling as dishonest and manipulative? Some of the teams we encounter are looking for the most accomplished liar they can find to jumpstart their sales process. Perhaps you feel that way?

This post “You are a Doctor, not a Salesperson” from eLAMPROS might change your mind. Some key points:

“Studying the ‘sales process’ the doctor uses to sell a cure, you will notice …

  • A doctor is important enough for you to go to them.
  • Generally a long wait is worth your time to get to see the doctor.
  • The more important the problem you have, the more important the doctor becomes. And, by the way, you don’t try to go the least expensive route.
  • Doctors don’t sell you – they diagnose you using data points you provide. And you believe them and act on it.
  • Doctors can tell you about a problem you don’t even know you have.
  • The diagnosis and recommendations you get from doctors always trump those you get from a friend or family member … or even a website.
  • The ‘sales cycle’ is very short.
  • Doctors are always going straight to the decision maker for the decision.
  • Every time you have a problem you go back for another consultation.

We tell our team, “You are not a salesperson, you are a DOCTOR”. When we find ourselves working with prospects to DIAGNOSE their problems we seem to end up in a doctor-like situation. Our prospects buy more quickly, they trust our recommendations, the decision maker is involved early and often, and they appreciate our advice and come back for it often.”

For the record we believe that integrity is essential to the startup sales process, many times you are promising future performance and the team needs to be mindful of the consequences not only to the customer and but to their reputation. We follow Steve Blank’s “Four Steps to the Epiphanycustomer development model, which means that we believe the founders must sell. Why? Sometimes it’s the presentation and sometimes it’s the product. In the early market it’s too easy to blame the messenger if you weren’t part of the conversation with the customer and don’t want to hear that your product needs to be changed.

We have a roundtable next Tuesday that will look at sales issues for SaaS firms. In particular how does SaaS change sales management, sales compensation, and selling strategies. It’s over a lunch from 11:30 to 1pm at Plug and Play, 440 N Wolfe Rd Sunnyvale, California 94084. You can Register here.

Paul Graham’s Six Principles for Making New Things

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, Customer Development, Rules of Thumb, skmurphy

This article compares Paul Graham’s “Six Principles for Making New Things” with Bob Bemer’s “Do Something Small But Useful Now”,  Gary Hamel’s Innovation Hacker, and Peter Drucker’s list of seven places to search systematically for opportunities.

HP’s Early Customers Came From Fred Terman’s Social Network

Written by Sean Murphy. Posted in Customer Development, Founder Story, skmurphy

The founding team for a startup typically provides the basic intellectual capital, and frequently the initial seed capital. But a young team often has to rely on advisors for social capital–existing relationships based on mutual trust and prior shared success. These relationships act as points of departure for market exploration and social navigation to early customers.

One early example in high technology is Fred Terman‘s role in the formation and early success of Hewlett Packard. In “The Engineer Who Jump-Started Silicon Valley” a 1997 Business Week article by Joan O’C. Hamilton it’s clear that he provided the founders with considerable social capital:

Packard’s recollections complete the picture: “We built the first production model by Christmas, and I clearly recall having [the first oscillator production unit] sitting on the mantel above the fireplace,” he wrote in “The HP Way.” “There we took pictures of it and produced a two-page sales brochure that we sent to a list of about 25 potential customers provided by Fred Terman. We designated this first product the Model 200A because we thought the name would make us look like we’d been around for awhile.”

Social navigation, or the ability to navigate in a population and gain cues and guidance from individuals both directly and by their actions, is a key skill that founders must develop. As much as they want to focus on technology, finding prospects to validate that they are solving a real problem and that their solution is compelling is twice as important. Navigation requires that you know where you are, where you want to go, and how you want to get there. It may also involve experimentation and exploration of the market, and in many cases for a startup’s founders, one or more revisions to your destination.

Postscript: just so it’s a little clearer that a few of the names that Terman supplied became customers, here is another paragraph from same “Litton Answers the Call” section of the “Garage Becomes Workshop” chapter of the “The HP Way” the first excerpt above came from.

“We weren’t expecting much from our first mailing, but amazingly enough, in the first couple of weeks in January back came several orders…and some were accompanied by checks.”

Fostering Technology Adoption: Early Customers & Early Revenue

Written by Theresa Shafer. Posted in 2 Open for Business Stage, Customer Development, Startups

Software companies typically have to convince prospects to adopt new technologies based on their shared history, their service track record, and their ability to accurately predict and deliver real results that overcome the cost and friction of adopting new tools and methodologies. There are a number of lessons we draw on to help startups fostering technology adoption to attract their first paying customers.

The Best Feedback From Your Early Customers Is a Story

Written by Sean Murphy. Posted in Customer Development, skmurphy

Building on yesterday’s post that stressed the importance of serious conversation with your early customers I want to explore the kind of stories you should listen for and how to take advantage of them.

Peter Cohan in “Four Opportunities to Harvest: The Value of Informal Success Stories” outlines the benefits an kinds of stories that are extremely useful to gaining a better understanding of the value and uses your customers have for your product. Peter identifies four kinds of stories that each have their own uses:

Vision of a Solution: The customer gains an understanding of his problem and then builds a Vision of a Solution, often in concert with the sales team. This Solution is what the customer has in mind when he moves through a typical buying process – and is the first opportunity to harvest. This information, along with the sales strategy, is what is occasionally gathered in “win/loss” analysis.

This gives you some idea of the real problem the customer is trying solve and the benefits they are seeking. Make sure to capture their own words, don’t force you phrasing because theirs is much more likely to be compelling to other prospects.

Solution as Initially Implemented: Once the purchase is completed, the customer implements the initial application or applications he has in mind. These deployments may be rough, incomplete (or over-complete), and often only partially address end-user needs. This Initial Implementation is the second harvest and can represent very useful information to share within the sales and marketing organization. Often, these early implementations will be the same or similar to what other customers want to achieve, as well.

Pay a lot of attention to how long it actually takes the customer to get some benefit. Your risk of “putting a dent” in your internal champion’s career goes down dramatically once a basic system is in production use. One of the secrets of Silicon Valley is that it’s not that large (most industries aren’t really that large, and in particular for startups don’t have that many early adopters you can sell to). One thing early adopters and internal change agents have a very long memory for is a product that couldn’t be made to work in a basic way, in a SaaS application the customer may be quite willing to exit the arrangement quickly.

Solution as Consumed: Now things begin to get interesting…! How much of what is initially rolled-out is actually consumed by users? 30% of the capabilities delivered? 40%? While the real number depends on individual situations, as an aggregate we often find that the capabilities actually consumed by users is a fraction of what is deployed. What is most important, however, is that the capabilities actually consumed represent the real success story – and this information needs to be captured as an Informal (or Formal) Success Story by your team to be leveraged by your organization.

It’s also the case that if most or almost all of your customers aren’t using certain features you should probably delete them. Certain capabilities (e.g. the ability to deliver data in a portable interchange format) may be important in lowering a prospect’s perception of the risk of adopting your product, but may never actually be used in a production case. These you can’t delete without escalating the perceived (or real) barriers to exit, which will make prospects more chary about adopting your solution, no one likes to go through a trap door.

Solution as Evolved: Have you ever visited a customer and noted that they have implemented applications of your software that were never envisioned by you, the vendor? Is this exciting? (Say “Yes!”). How can this information be used? Solutions after they have evolved are often the most valuable of all Success Stories. These are applications of your offering that often represent new market opportunities, increased deployment, and deeper market development. These stories can help you make your numbers!

These are the most useful but sometimes you are tempted to tell your customers “You are using my product incorrectly, it wasn’t meant for what you are doing.” This is OK if it’s really not a good fit, but it’s conceding an opportunity to someone else if this customer is not an outlier but a harbinger of others you haven’t met yet.

There is a real temptation to “be more efficient” and automate your “data collection” but genuine conversation is what drives “story collection” and stories are the real key to understanding how your customers value your product.

Update Dec 3: I just learned that Peter Cohan will be giving a webinar on “Four Opportunities to Harvest Informal Success Stories” on Wednesday December 5 at 12pm EST. Peter is an articulate, insightful, and dynamic speaker. It’s a great topic and should make for a great webinar.

Steve Blank Speaking at TiE on Wed Aug-15-07

Written by Sean Murphy. Posted in Customer Development, Events, skmurphy

Steve Blank serial entrepreneur, author of “Four Steps to the Epiphany,” and a lecturer at the UC Berkeley Lester Center for Entrepreneurship and Innovation will be speaking at TiE on Wednesday August 15, 2007. The event starts at 6pm and ends by 10pm, it will be held at the TiE Conference Center, in Suite 108 of 2903 Bunker Hill Lane, Santa Clara, CA 95054

Register here.

Steve is an insightful and energetic speaker. His focus is on what he calls the “customer development” problem in startups, which is parallel to the product development problem, but much less well understood. Most engineering heavy startups focus primarily on technology and product development risks, ignoring that customer adoption, market size, and share of market are almost always the most significant risks a startup faces.

I am a huge fan of Steve and his book, and have blogged about him several times. He has the best methodology that I am aware of for startups who are in product definition and early market exploration. His techniques will also work for established firms launching new products. Tickets are $20 for members and $50 for non-members, cheap at twice the price as far as I am concerned. I hope to see you there.

Related posts:

  • Twelve Books For Busy CEO: includes Blank’s Four Steps to Epiphany which outlines customer development.
  • Sean Murphy SDForum Interview with Barbara Cass where I observed:

    “What I tend to see are startup teams who have a firm grasp on technology and product development issues but are less clear on one or more of the key concepts for successful new product introduction. Bill Davidow’s “whole product” paradigm from his “Marketing High Technology” book is fundamental to understanding the different between selling an invention and marketing an innovation. Geoffrey Moore’sCrossing the Chasm” framework, best expressed in his “Inside the Tornado” book is the solid explanation of the evolution of technology markets. Clayton Christensen’s “sustaining vs. disruptive innovation” model in his “Innovator’s Dilemma” book is the best “anatomy lesson for a karate student,” explaining to startups how and where to attack an established firm. Steve Blank’s “Four Steps to the Epiphany” is filled with detailed checklists for how a startup team must distinguish between product development and customer development as they explore a new market.

  • Getting Early Customer Feedback
  • W. J. King’s “Unwritten Laws” Are Business Rules of Thumb.

    Develop a “Let’s go see!” attitude Throughout your career people will approach you with all manner of real-life problems resulting from your work. A wonderfully effective response is to invite them to have a look with you–in other words, “Let’s go see!” It is seldom adequate to remain at one’s desk and speculate about causes and solutions and hope to sort it all out.

    Steve Blank makes a similar point in “Four Steps to the Epiphany” when he says “there are no facts inside of the building, only opinions.” We often tell clients “You need to leave the BatCave (and not only talk to but listen to strangers!)

Getting Early Feedback

Written by Sean Murphy. Posted in 3 Early Customer Stage, Customer Development, Rules of Thumb, skmurphy

The temptation is to use a on-line survey tool to save your time, but I think for your early customers a questionnaire may only give you the answers that you are looking for, not the information that you need.

Conversation Works Best With Early Customers

One on one conversation works best in my experience.

It’s important early on to ask open ended questions and to consider your product more of a hypothesis (See Steve Blank’s “Four Steps to the Epiphany” for more on this framework) than an accomplished fact. Even though it’s been debugged and ready for rollout it doesn’t mean you understand the benefits that customers (much less prospects) perceive that it offers.

You should also consider instrumenting your product if it’s SaaS (or adding a “flight recorder” if it’s on-premises software or delivered as an appliance) that with the user’s permission can “phone home” some usage patterns. In particular you want to be able to assess how much use (and what commands, command options, service areas, etc.. are being accessed) they are making. It’s not uncommon to start removing commands, options that are little used.

You should pay as much attention to your “dropouts” as much as your “frequent flyers.” With the kind of customer counts you are talking about you should be trying to e-mail/IM/Skype/call as much as construct a survey. Even up to a 100 or so early users you want to be as open ended in your data collection as possible.

Don’t Wish For Smarter Customers Or React When They Call “Your Baby” Ugly

It’s easy to become frustrated or wish for “smarter users” when your customers look at the value of your offering differently than you do, or don’t adopt certain features or commands that you thought would be compelling. Sometimes it can help to have a third party interview customers and non-customers as they will have less of a “you are calling my baby ugly” reaction.

One thing to focus on as you scale up and add more prospects is how your existing customers invite new folks to evaluate your offering. What is the value they promise if someone new adopts: this “language of referral” is extremely important. You should probe for it in your conversations and incorporate it into your messaging. It can help you to identify distinct types or segments of users who get different kinds of value from your offering.

Maximize Learning by Being Efficient With Customer’s Time

The temptation as engineers is to look for a technology solution that’s efficient with your time, but surveys and the like to channel answers along pre-determined paths. This can cause you to overlook real benefits, and real problems, with your product–especially on the part of your early customers.

See also

June 2006 SDForum Interview

Written by Sean Murphy. Posted in Books, Customer Development, Quotes, skmurphy

I was interviewed in June 2006 by Barbara Cass, Volunteer Director for the SDForum, the final text appeared in the July/August 2006 newsletter (see page 15 of the PDF version). I have updated it here to add links for many of the referenced works and the quotes. KV Rao and I did a one year term as co-chairs of the Marketing Special Interest Group (SIG), our term ended in December 2006. Filomena U and Ed Buckingham took over, and are now the ones answering the alias.

Volunteer Spotlight
Interview with Sean Murphy, Co-Chair of the Marketing SIG

Q: Sean, you are a long-time member of SDForum. What helped you to decide to volunteer as chair of the Marketing SIG?

I had attended a number of the programs over the years and found them useful not only for the information that the speaker offered but also for what I would learn from other attendees. SIG meetings are a good way to keep a finger on the pulse of Silicon Valley. William Gibson observed that “the future is already here, it’s just unevenly distributed,” The SDForum SIGs are one place that’s certainly true. And I wanted to show my support for what the SDForum offers.

Q: What has been your experience in organizing these meetings thus far?

I am fortunate to have KV Rao as a co-chair. He is bright, articulate, and deeply thoughtful. He was early at WebEx in marketing and business development and has an appreciation for both startup and established company marketing issues. He has pulled together our two best programs so far: the “DotCom to DotBust to Web 2.0” talk by Dave Thompson that was our January kickoff and our May panel on “Making The Leap From An Application To A Platform Business.”

I have enjoyed pulling together an eclectic mix of topics: “Guerrilla Marketing for Startups“, “Internal Marketing–Fostering Technology Adoption“, “Building Strategy and Driving Consensus through Shared Mapping“, and “You Named it What?” We have attracted a diverse and thoughtful audience. Bill Grosso, who runs the Emerging Technologies SIG has been an invaluable advisor to me to get this year’s programs off to a running start.

Q: What have you learned from the first six months of putting on programs?

I think we have run informative programs on a broad range of topics, often because the audience has contributed as much as the speaker or speakers have. It’s very important to get a good title and to explain early in the description the speaker’s key experiences that will equip them address the topic as an expert. We are the Marketing SIG for the Software Development Forum so we tend to get a very technical audience: the key to successful programs is adequately preparing the speakers.

Q: What is the focus of your own business and have you seen value to your business since meeting with this group each month?

Our firm, SKMurphy, Inc. offers business development consulting to early stage software startups with a focus on early customers and early revenue. I think the value for me is the insights I get from the people I have met, either because I invited them to speak, or they were attracted to the topic for that night’s program. The SIG has given me a good reason to reach out to some individuals and have conversations that I otherwise might have missed out on. I would encourage folks to get involved, but I believe that it’s more about creating a community that we would all like to live in, and listening to and learning from strangers.

Q: Have you seen changes in the ways companies market or should be marketing their products in today’s world?

My firm’s focus is on strategy and business development for software startups. We work with early stage startups who sell to businesses. I personally have an interest in new technologies for collaboration–things like wikis, blogs, IM that are “new” in the sense that they are only a little over a decade old–and knowledge management methodologies like the “community of practice” model. So I look at the marketing issues from perspective that’s distinct from the consumer-oriented “get big fast” model that seems to be coming back into vogue: 2006 feels a lot like 1996 to me, with all of the various “pitch events” that are going on every month now. And I tend to work with teams that are bootstrapping both because it’s a mindset I find easier to relate to–I prefer pitching to prospects rather than VC’s–and because they tend to be more innovative than the VC-backed folks, who are normally channeled into a handful of predictable trajectories.

So, what I tend to see are startup teams who have a firm grasp on technology and product development issues but are less clear on one or more of the key concepts for successful new product introduction. Bill Davidow’s “whole product” paradigm from his “Marketing High Technology” book is fundamental to understanding the different between selling an invention and marketing an innovation. Geoffrey Moore’sCrossing the Chasm” framework, best expressed in his “Inside the Tornado” book is the solid explanation of the evolution of technology markets. Clayton Christensen’s “sustaining vs. disruptive innovation” model in his “Innovator’s Dilemma” book is the best “anatomy lesson for a karate student,” explaining to startups how and where to attack an established firm. Steve Blank’s “Four Steps to the Epiphany” is filled with detailed checklists for how a startup team must distinguish between product development and customer development as they explore a new market.

Postscript: I think answering this question started me down the path to the December 2006 Marketing SIG Program: Twelve Business Books in One Hour for the Busy CEO. I wish I could claim “anatomy lecture for the karate student” as mine but it’s based on a line from Chapter 18 of Red Dragon by Thomas Harris: “The others listened like karate students at an anatomy lecture.”

Q: What are some of your aspirations for the Marketing SIG in the near future?

We want to continue to fulfill our promise to provide practical tips and techniques for anticipating, identifying, and satisfying customers needs for emerging technologies profitably. We have several exciting programs in the hopper for the second half of 2006 but are always looking for good speakers on interesting topics. Contact us at with suggestions or to volunteer.

Quick Links

Bootstrappers Breakfast Link Startup Stages Clients In the News Upcoming Events Office Hours Button Newsletter SignUp