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Class 4: Financial Modeling

Table of Contents

ASU SES 498/598

Financial Modeling & Unit Economics

Space Business & Entrepreneurship

Fred von Graf, PMP

Making space ventures financially viable

Today's Mission

What You'll Learn Today

🎯

Customer Discovery Process

AI-enhanced interview techniques

📊

Market Validation Methods

Testing assumptions quickly

🔍

Problem-Solution Fit

Ensuring you solve real problems

💡

MVP Planning

Minimum viable product strategy

The #1 Startup Killer

Building Something Nobody Wants

CB Insights: Top Reasons Startups Fail

  1. No market need (42%)
  2. Ran out of cash (29%)
  3. Not the right team (23%)
  4. Got outcompeted (19%)
  5. Pricing/cost issues (18%)

Space Industry Specific

  • • Long development cycles
  • • High capital requirements
  • • Limited customer base
  • • Complex requirements

Solution: Validate before you build

Customer Discovery Framework

Steve Blank's Four Steps

1. Customer Discovery

Goal: Find problem-solution fit

  • • Identify customer segments
  • • Discover their problems
  • • Test problem hypotheses

2. Customer Validation

Goal: Find product-market fit

  • • Test MVP with customers
  • • Validate business model
  • • Verify sales process

3. Customer Creation

Goal: Scale demand

4. Company Building

Goal: Scale organization

AI-Enhanced Customer Research

Before You Talk to Anyone

Market Segmentation Prompt

Identify all potential customer segments for [space product/service].
For each segment provide:
- Organization types and examples
- Budget range and procurement process
- Current solutions they use
- Key decision makers
- Pain points specific to space operations

Persona Development Prompt

Create a detailed persona for a [role] at [organization type]
who would purchase [solution]. Include:
- Daily responsibilities
- KPIs they're measured on
- Biggest frustrations
- Technology comfort level
- Decision-making authority

The Mom Test

How to Talk to Customers

❌ Bad Questions

  • • "Would you buy this?"
  • • "Do you think it's a good idea?"
  • • "Would this solve your problem?"

✅ Good Questions

  • • "Tell me about the last time you..."
  • • "What's the hardest part about..."
  • • "How are you solving this today?"
  • • "What would happen if..."
  • • "How much does this problem cost you?"

Rule: Talk about their life, not your idea

Customer Interview Script

AI-Generated but Human-Refined

Prompt Template

Create a customer interview script for [target customer]
about [problem space]. Include:

Opening:
- Introduction and permission to record
- Context setting (not pitching)

Problem Discovery (5 questions):
- Current workflow
- Pain points
- Frequency and severity
- Current solutions
- Cost of problem

Closing:
- Next steps
- Referral request

Live Demo - Customer Discovery

Example: Satellite Operators

Step 1: Identify Segments (Perplexity)

"List all types of satellite operators with fleet size, typical budgets, and operational challenges"

Step 2: Find Contacts (LinkedIn + AI)

"Generate LinkedIn search parameters to find [role] at [company type]"

Step 3: Prepare Questions (Claude)

"Based on this company's website [paste], what specific operational challenges might they face?"

Step 4: Synthesize Learnings (ChatGPT)

"Analyze these 5 interview transcripts and identify common patterns"

Problem Validation Matrix

Quantifying Customer Pain

Problem Frequency Severity Current Solution Willingness to Pay
Example: Satellite collision risk Daily Critical Manual tracking $100K/year
Your Problem #1 ? ? ? ?
Your Problem #2 ? ? ? ?

Scoring:

• Frequency: Daily (5) → Never (1)

• Severity: Critical (5) → Nice-to-have (1)

• Current Solution: Nothing (5) → Perfect (1)

• WTP: High (5) → Zero (1)

Target Score: >15/20

Market Sizing with AI

TAM, SAM, SOM Calculation

TAM (Total Addressable Market)

"What is the total global market size for [solution category]
including all possible applications and geographies?"

SAM (Serviceable Addressable Market)

"Within the TAM for [solution], what portion is accessible to
a [company type] based in [location] with [constraints]?"

SOM (Serviceable Obtainable Market)

"What realistic market share could a new entrant capture in
[market] within 3-5 years given [competitive landscape]?"

MVP Definition

What to Build First

MVP Is NOT

  • • A broken product
  • • Half of your features
  • • Just a landing page
  • • A perfect product

MVP IS

  • • Fastest way to test core hypothesis
  • • Solves #1 customer problem
  • • Generates learning
  • • Path to next iteration

Space Industry MVPs

  • • SpaceX: Falcon 1 (not Starship)
  • • Planet: 2 demo satellites (not constellation)
  • • Spire: AIS tracking (not weather)

Validation Experiments

Testing Without Building

Landing Page Test

  • • Value prop clarity
  • • Email capture rate
  • • Traffic sources

Concierge MVP

  • • Manual service delivery
  • • Direct customer feedback
  • • Process refinement

Wizard of Oz

  • • Automated frontend
  • • Manual backend
  • • Scale testing

Crowdfunding

  • • Market demand
  • • Price validation
  • • Community building

Case Study - Planet Labs

From Garage to Global Imagery

Customer Discovery (2010-2011)

  • • Hypothesis: Cheap satellites could work
  • • Interviews: 50+ potential customers
  • • Finding: Frequency > Resolution

MVP Evolution

  • • v1: 2 CubeSats (Dove 1-2)
  • • v2: 4 satellites (Flock-1)
  • • v3: 28 satellites
  • • Today: 200+ satellites

Key Insight

Customers didn't need better pictures—they needed more recent pictures

Hands-On Exercise

15-Minute Discovery Sprint

Your Task:

  1. Define your target customer segment
  2. Write 5 problem discovery questions
  3. Create problem validation matrix
  4. Calculate rough TAM/SAM/SOM
  5. Design simplest validation experiment

Pair & Share:

  • • Partner interviews partner
  • • Use "Mom Test" rules
  • • Document responses
  • • Share key insights

Common Discovery Mistakes

What Not to Do

❌ Avoid:

  • • Leading questions
  • • Talking more than listening
  • • Pitching your solution
  • • Ignoring negative feedback
  • • Only talking to friends

✅ Instead:

  • • Stay curious
  • • Listen 80%, talk 20%
  • • Focus on problems
  • • Embrace rejection
  • • Talk to strangers

Remember: You're not selling, you're learning

From Discovery to Validation

Evidence-Based Decision Making

Green Light Signals

  • • Multiple customers same problem
  • • Quantifiable pain ($$ or time)
  • • Existing budget allocated
  • • Failed previous attempts
  • • Urgency to solve

Red Flag Signals

  • • "That's interesting..."
  • • No current workaround
  • • Committee decisions
  • • "Not my department"
  • • Future problem

Assignment

Customer Discovery Report (Due Thursday)

Requirements:

  1. Interview 3+ potential customers (15-20 min each)
  2. Document using Mom Test methodology
  3. Create problem validation matrix
  4. Calculate TAM/SAM/SOM with sources
  5. Design MVP validation experiment
Deliverables:
  • • Interview transcripts/notes
  • • Problem validation matrix
  • • 1-page market sizing
  • • MVP experiment design
Grading:
  • • Interview quality (40%)
  • • Problem validation (30%)
  • • Market analysis (30%)

Resources & Tools

Your Discovery Toolkit

Interview Tools

  • • Calendly (scheduling)
  • • Otter.ai (transcription)
  • • Typeform (surveys)

Analysis Tools

  • • Miro (affinity mapping)
  • • Notion (CRM)
  • • Dovetail (insights)

AI Prompts Library

github.com/[class-repo]/prompts

Reading

  • • "The Mom Test" - Rob Fitzpatrick
  • • "Talking to Humans" - Giff Constable

Next Class Preview

Thursday: Financial Modeling & Unit Economics

You'll Learn:

  • • Space business economics
  • • Unit economics modeling
  • • Financial projections with AI
  • • Investor-ready financials

Come Prepared:

  • • Customer discovery complete
  • • Basic pricing assumptions
  • • Cost structure ideas

Questions?

Key Takeaway:

"Fall in love with the problem, not the solution"

Office Hours:

Tuesday/Thursday 3:00-4:00 PM

Contact:

Fred@W4M.ai

🚀 Get out of the building and talk to customers!