PHILIPS DigiSummit - A startup approach to hacking markets

@jeroentjepkema
Philips DigiSummit, 3 November 2016
A startup approach to
hacking markets

The best pitch ever: The Penny Machinehttps://medium.com/@acroll/the-penny-machine-ec1bd0a0ebc5

An entrepreneur walks into a boardroom:
Entrepreneur: Does anyone have a penny on them?
Investor 1: Yes, here’s one...
Entrepreneur: Now watch!
(The entrepeneur puts the penny in the machine, there’s a pause, and then a shiny nickel tumbles out of
the machine)
Investor 2: That’s a great trick, do it again...
(The entrepeneur again puts the penny in the machine, there’s a pause, and then again a shiny nickel
tumbles out of the machine)
Investor 1: How many pennies an hour can I put in there?
Entrepreneur: It takes 5 seconds to cool down, so you can insert 720 pennies an hour. That’s $36 in
nickels and hour, with a margin of 80%
(the audience pauses)
Investor 1: Can I put nickels into it?
Entrepreneur: I’ve tried it with dimes, it works. It produces neatly folded dollar bills. I haven’t tried more
than that
Investor 2: How many machines can you make an run at once?
Entrepreneur: I think we can have ﬁve hundred running around the clock
Investor 2: One more questions and I think we have a deal. Why can’t someone else build one?
Entrepreneur: I have intellectual property protection and I’ve signed an exclusive agreement with the US
mint....
http://differentbetterbook.comSee:https://medium.com/@acroll/the-penny-machine-ec1bd0a0ebc5

The perfect pitch?
http://differentbetterbook.comSee:

Penny
=
Familiar
The perfect pitch?

Penny
=
Familiar
Answers key
questions
The perfect pitch?

Penny
=
Familiar
Answers key
questions
The perfect pitch?
Leading the
customer

Penny
=
Familiar
Answers key
questions
The perfect pitch?
Leading the
customer
customer in
charge

Penny
=
Familiar
Answers key
questions
The perfect pitch?
Business model = Product
Leading the
customer
customer in
charge

Penny
=
Familiar
Answers key
questions
Leading the
customer
customer in
charge
The perfect pitch?
Business model = Product Customer = Intrinsic Motivation

Building the perfect pitch for your
(existing) products...

Step 1: Hacking into current markets

Current markets & channels are noisy!

But most of all, users are
skeptical and have the ability to
check everything

Positioning brings focus to your entire
organization, as it has to match
every interaction a user has with
both company, competitor and
product...

Position yourself:
What kind of market am I chasing for
my product?

New
Current
Current New
Market
Product category
Based on H. Igor Ansoﬀ’s matrix

New
Current
Current New
Market
Product category
Dominate:
Go for market
leadership to
increase revenues,
market share and
brand differentiation.

New
Current
Current New
Market
Dominate:
Go for market
leadership to
increase revenues,
market share and
Segment:
Wrap your product
around customers
understanding of
market. High reward,
less potential growth
Product category

New
Current
Current New
Market
Reframe:
Beat leadership by
creating new
category from
existing one. Focus
on innovation
Dominate:
Go for market
leadership to
increase revenues,
market share and
Product category
Segment:
Wrap your product
around customers
understanding of

New
Current
Current New
Market
Reframe:
Beat leadership by
creating new
category from
existing one. Focus
on innovation
Create new:
Merge existing
categories to create
blue ocean.
Convince the world
for ﬁrst mover
advantage
Dominate:
Go for market
leadership to
increase revenues,
market share and
Product category
Segment:
Wrap your product
around customers
understanding of

But what if I already have a product?

Dominate:
New
Current
Current New
Entering
Market
Segment:
Reframe:
Create new:
Business
model
Product
Features
Constraints?
Your
competitors?

Dominate:
New
Current
Current New
Entering
Market
Segment:
Reframe:
Create new:
$ & Categorize
Add & Replace
Business
model
Product
Features
Constraints?
Your
competitors?

Dominate:
New
Current
Current New
Entering
Market
Segment:
Reframe:
Create new:
$ & Categorize
Add & Replace
Stack&Conquer
Business
model
Product
Features
Constraints?
Your
competitors?

Dominate:
New
Current
Current New
Entering
Market
Segment:
Reframe:
Create new:
$ & Categorize
Add & Replace
Stack&Conquer
Pivot
Business
model
Product
Features
Constraints?
Your
competitors?

The Positioning Canvas
(because all good things need one)

A positioning statement describes
your unique value for something that an
identiﬁed market segment
truly cares about

What is it?
A short statement that describes what you
are/do
Target Segment
The specific target market you are
targeting in the short term (aka which are
the leads you’re most likely to close?)
Market Category
Describe the market that you’re competing in
Competitive Alternatives
If your customers don’t use you, what
products/services do they use?
Primary Differentiation
The one thing (yes, one!) that sets you
apart the most from competitive analysis?
Key benefit
The biggest benefit your target market
derives from your offering?
Positioning Canvas

The core of lean is iteration...

Data Ideas
Product
Measure
Learn
Build
Lean = Iteration

The faster you can iterate, the
faster you can ﬁnd the right product
& market...

Data Ideas
Product
Measure
Learn
Build
1 iteration = 1 Experiment
Rapid MVP experiment framework

Data Ideas
Product
Measure
Learn
Build
Experiment Backlog
Be Creative
Teamwork
Customer Validation
Data Driven
Positioning Framework

Data Ideas
Product
Measure
Learn
Build
Experiment Backlog
Be Creative
Teamwork
Customer Validation
Data Driven
Product
Best Customer
Core Values
Customer Care
On Boarding
Channel activation
Success? Implement
into core product

Data Ideas
Product
Measure
Learn
Build
Experiment Backlog
Be Creative
Teamwork
Customer Validation
Data Driven
Product
Best Customer
Core Values
Customer Care
On Boarding
Channel activation
Success? Implement
into core product
Failure? Store data,
rinse & repeat
experiment

Pirate Metrics = Your Framework

Acquisition
Activation
Retention
Revenue
Referal
AARRR Framework

Anatomy of a
web page
AARRR = Search fo DNA of best bustomer

“”Zero moment of Truth:
That moment when you grab your laptop, mobile
phone or other device and start learning about a
product/service you’re thinking about trying.
It’s a moment where consumers make choices that
affect the success and failure of nearly every brand
in the world...

Customer Journey:
Consider your Monday morning routine?
Wake up What happens here?
First
coffee
break

Repeatable growth comes from
understanding how to market your
product, ﬁnding your best user and how
to acquire more of them...

Why your experiments love positioning...

Positioning. Your experiment umbrella:
(re-)Framing Product
Message
map
Market
Positioning
components

Best
Customer
Scaleable
Product
Business
model
Startup
Corporate
The startup challenge

Product/Content ﬁt:
Turn your audience into a prospect
http://solveforinteresting.com/building-a-message-map/

“Your best customer”
“I need a vehicle to get around,
be productive, and enjoy my life.”
“I want to own a car because it’s
convenient; it’s a personal
relationship; I don’t trust others.”
“I want to save money and fuel. I
also care about the environment
and want to be seen as ‘green’.”
People who want to driveA.
Prospective car buyersB.
People looking for a hybridC.
Honda Civic OwnersD.
Everyone in the world

Those who don’t need
cars
•I’m too young to drive
•I’m too old to drive
•I can walk or take public
transit
Car users who won’t buy
•It’s too expensive for me
•I will use a shared car service
•It’ll get stolen
Those who won’t buy
hybrids
•Hybrids are gutless
•Batteries are toxic & explosive
•In the end it costs more than it
saves
I will buy another brand
•I’ve always driven a VW
•Toyotas are reliable
•I want something prestigious
D.
Honda Civic Owners

cars
transit
hybrids
saves
D.
“Isn’t it time you got out of the city?”
campaign showing how cars make
nature accessible & ridiculing urban
hipsters.
Ads showing how cars are needed
any time (pregnancy, errands, urgent
business) and how a car is a
“personal assistant.”
Urgency (“every time you drive a non-
hybrid car you kill the planet a little”)
and testimonials from buyers who’ve
saved money.
Honda branding ads and model-
speciﬁc promotions.
Referral campaign to encourage
buyers to tell their friends
Honda Civic Owners

D.
Honda Civic Owners
cars
transit
hybrids
saves
Sponsor a driving school
“Give the gift of driving”
campaign for grandparents.
Financing, cashback
Sell to carshares;
underscore their limitations
PR on dangers of commuting,
pedestrian deaths
Independent tests,
standard metrics (0-60 in
X)
Lab research, studies
Spontaneous accel. stories
Premium brand (Acura)

It deﬁnes your marketing campaign

http://www.yearonelabs.com/three-questions-all-marketers-must-answer/
Decide how you will know if it worked, or need to adjust?
Who are you
targeting?
Size, reachability,
homogeneity.
What do you
want them to
do?
Speciﬁc, measurable
call to action.
Why should
they do it?
Laid, paid, made,
or afraid; message
ﬁts their mindset.
How will you
know if they
did?
Analytics,
instrumentation.

Using lean to get your message map...

Scale
Scale-up/Business Unit
Message/
Solution
Content
Fit
Growth
Product
Features
Pain/
Gain
Lean Experiment Cycles

Pain/
Gain
Message/
Solution
Growth
Product
Features
Message Best Customer
Repeatable
revenue
Content
Fit
Scale
“Growth
hack”

Scale
Pain/
Gain
Message/
Solution
Growth
Product
Features
Repeatable
revenue
Explorative (< 6 weeks) (Digital) Validation (< 6 weeks) Scale ($$$)
Analytics
stages
“Growth
hack”
Content
Fit
Message Best Customer

The power of explorative research

0
25
50
75
100
2007 2008 2009 2010 Untitled 1 Untitled 2 Untitled 3 Untitled 4 Untitled 5 Untitled 6 Untitled 7 Untitled 8 Untitled 9 Untitled 10 Untitled 11
Zipf’s law
#mentions
Keywords

Step 4: Knowing what works, when?

Why is Nigerian spam so badly
written?

Aunshul Rege of Rutgers University, USA in 2009
1000 emails
1-2 responses
1 fool and their money, parted.
Bad language (0.1% conversion)
Gullible (70% conversion)
1000 emails
100 responses
1 fool and their money, parted.
Good language (10% conversion)
Not-gullible (.07% conversion)

Nigerian spammers
have really learned to understand their
target market and ‘best customers’

Inﬂuencing behavior?
Know what lever to pull

Correlated
Two variables that are
related (but may be
dependent on
something else.)
Causal
An independent
variable that directly
impacts a dependent
one.

Alarm
clock
Being
Late
Trafﬁc

Not knowing what normal behavior
looks like makes us do stupid things...

Alarm
clock
Being
late
Trafﬁc
Power
Disaster
Weather
Bills
Health
GPS

Adding common, large, effects to the
model treats them as noise and turns
causation into likelihood

A leading, causal, connection is
the analytics superpower...

‣ A Facebook user reaching 7 friends within 10 days of signing up
(Chamath Palihapitiya)
‣ A Dropbox user who puts at least one ﬁle in one folder on one
device (ChenLi Wang)
‣ Twitter user following a certain number of people, and a certain
percentage of those people following the user back (Josh
Elman)
‣ A LinkedIn user getting to X connections in Y days (Elliot
Schmukler)
Some examples
(From the 2012 Growth Hacking conference. http://growthhackersconference.com/)

The simplest rule of causation:
If a metric doesn’t change behavior it’s a bad metric

Your experiments, demystiﬁed.
Find
correlation
Test
causality
Rinse & Repeat for
optimum
Pick 1 metric
at a time

Step 5: Replacing opinion with facts

Analytics is the measurement of
movement towards your
business goals.

In a startup, the purpose of
analytics is to iterate to product/
market ﬁt before the money
runs out.

In a corporate, the purpose of
analytics is to replace opinion
with facts.

Complete Web Monitoring
Web Analytics
(what did they
do on the site?)

Web Analytics
(what did they
do on the site?)
Usability
(how did they
interact with it?)

Web Analytics
(what did they
do on the site?)
Performance
(could they do
what they wanted
to?)
Usability
(how did they
interact with it?)

Web Analytics
(what did they
do on the site?)
Performance
(could they do
what they wanted
to?)
VoC
(what were their
motivations?)
Usability
(how did they
interact with it?)

Web Analytics
(what did they
do on the site?)
Competition
(what are they up
to?)
Performance
(could they do
what they wanted
to?)
VoC
(what were their
motivations?)
Usability
(how did they
interact with it?)

Web Analytics
(what did they
do on the site?)
Competition
(what are they up
to?)
Performance
(could they do
what they wanted
to?)
VoC
(what were their
motivations?)
Usability
(how did they
interact with it?)
Social Media
(what were they
saying?)

Web Analytics
(what did they
do on the site?)
Competition
(what are they up
to?)
Performance
(could they do
what they wanted
to?)
VoC
(what were their
motivations?)
Usability
(how did they
interact with it?)
Social Media
(what were they
saying?)
“Soft” data
“Hard” data

Putting a line in the sandAccounting...

Voice of Customer PerformanceUsabilityWeb Analytics Social Media
Google Analytics Hotjar Usabilla Webpagetest Obi4Wan
Mouseﬂow
Optimizely
Qualaroo
Hotjar
Soasta mPulseMixpanel Sprout
Visual Web Optimizer
Google Experiments
SpeedCurveLocalytics
IntercomWoopra
Firebase

Analytics stack @ Soundcloud
Install
Attribution
In-App
Events
Campaign
Measurement
Screen
Flows
Conversion
Funnels
User
Testing
User/Device
demographics
Cohort
Analysis
Bug
Tracking
A/B
Testing
HeatMaps
App Store
Analytics
Sentiment
Tracking
Keyword
Performance
CPU/Battery/
Network
LTV modeling

Analytics is your oxygen. Pick one metric at a time
Optimize for the right product/content fit
Experiment! Rinse, repeat to find causation
2
3
4
1 Build your positioning statement
Grow Better Products demystified
Then, scale your AARRR funnel5

Remember, Cycle time is everything

Thanks! More questions?
M: jtjepkema@measureworks.nl
T: @jeroentjepkema
W: www.measureworks.nl
View slides: bit.ly/MW-PDS16

PHILIPS DigiSummit - A startup approach to hacking markets

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