I recently sat down with Nivi from Venture Hacks and discussed what it takes to build a successful startup.  The full conversation is available here.  There have also been some great thought provoking questions that I’ve answered in the comments section following the Venture Hacks post.  Please jump in and join the conversation over at Venture Hacks.

I just wanted to highlight a reply to a comment on my post Founders Make the Best Startup Marketing Leaders :

“In hindsight, probably one of the most important points of the blog post is that CEOs must take an active role in driving customer growth whether or not they have an interest in marketing. Nearly all of the risk and upside in a startup is in your ability to gain customer traction and then drive scalable customer growth. The CEO should not abdicate this responsibility to the marketer.”

I spent a fun evening with Steve Blank’s class. Here are the slides from my guest lecture. There are a few additions to the slides I presented at Seedcamp last month in London. Slide 14 is new and there are major edits to slide 2.

In the last year, Social Media sources (blogs, Digg, Twitter, Facebook, etc) have quickly emerged as the most powerful growth drivers in the startups I’ve helped launch. Despite this, I’d have a hard time writing a ten page book on Social Media Marketing. So on a recent trip to Barnes & Nobel I was surprised to see several thick books on the subject. One contained over 350 pages of social media marketing “wisdom.”

I’m sure there are a few useful nuggets in each of these books, but I doubt it would be worth wading through hundreds of pages to find them.

This will be a very brief blog post explaining how we’ve been able to drive hundreds of thousands of new users through social media in recent startups. OK, here it is: effective customer development… By figuring out who needs your product/service, why they need it, what constitutes a gratifying experience with the product/service and getting more of the right type of people to this gratifying experience (highlighting the right benefits and reducing barriers) social media can become a powerful driver for your business too.

You are probably asking: How can this possibly be an effective Social Media strategy? To understand this, you need to understand why social media is important for startup marketers. The most relevant part of social media is that it includes a person’s network of trusted online contacts. Some of these contacts broadcast their opinions widely through blogs, others a bit more narrowly through twitter and status updates and finally others through facebook wall posts, etc. Social media has given consumers better access to their expanded personal networks and a megaphone to broadcast their opinions and experiences to people who actually care.

So how does this help startups? The best innovations have always come from startups, but we’ve been blocked from the channels that were so critical for established companies. Over time these companies educated the channels and expanded their presence. A little startup had a very hard time competing even if they had a vastly superior product. And the channels were seldom awarded for trying to help the startup, since most startups went out of business anyway.

Today, social networks make it much easier for useful innovative products to spread to the masses (especially when combined with Google Adwords). But for a startup to leverage these social networks, they need to get their innovation into the hands of the right users and ensure they have the right experience. And if they are able to create a clear value proposition, these users will be able to more easily spread the innovation to their networks.

While social media makes it easier to spread useful innovative products, it also empowers vigilante customers that have been wronged. Therefore be very careful trying to game these systems. One of the most common short-term gaming tactics is address book scraping where users are prompted to invite their entire address book to join a service. This is often successful because a small percentage of users inadvertently agree to allow their address book to be scraped when they initially sign up for the service. If one in ten people get their address book scraped and each one has 100+ contacts, growth quickly goes viral. In the short-term the marketer looks brilliant as numbers go through the roof. But many of these (former) customers are now furious and let their network know about it. Eventually these tactics bite the company in the ass.

One of my favorite travel services recently burned my mother with this tactic (after I introduced her to the service). Not only has she expressed her anger to every contact, I will never recommend the service again. And that is after I earlier blogged about the service and verbally recommended it to many. I’d reveal the name, but a good friend is an investor. Was that really worth the short term gain of address book scraping?

Effective social media marketing is really just about good old fashion doing the right thing for your customers. Once you’ve accomplished this, you can use these networks to enhance your relationship with your customers (through a company blog, twitter account, facebook page, etc), but I believe these tactics are minor compared to the approach described above.

I kicked off this quarter’s two new customer development projects earlier this week. It seems like I just started with Dropbox and Eventbrite, but we’ve actually completed the full six months with Eventbrite and we’re in the last few weeks with Dropbox. Eventbrite and Dropbox were really the “Beta” customers for my six-month customer development program. I am extremely grateful to both for taking an early risk on my program. We’ve made enormous progress, but you never really finish customer development, so I look forward to continuing to help both however/whenever I can. Going into these next two projects, I feel like I have a much clearer understanding of the customer development success hurdles and opportunities so we can make even faster progress.

On a personal note, I’m thrilled that I can make a viable business out of working with startups on their customer development. I couldn’t imagine doing a job that would be more fun. This is by far the most exciting time in the company creation process – watching the startup get validation for years of hard development work.

One of my biggest challenges these days is keeping focus on execution while still finding time to select the next quarter’s startups. I’m averaging 15-20 introductions per month for the two spots I have to fill each quarter. Of course in this economy, this is a much better problem to have than the alternative.

I’ve gotten fairly efficient at determining which companies are a good fit. We start with a quick 10 minute phone call to see if the company is too early, late or competitive with an existing/previous client. I then give the founder/CEO a quick overview of my background and the customer development program. If they are still interested, I ask if they would be willing to have their users fill out a brief survey. This gives me some idea about early user perceptions as to how well the product meets their needs, the intensity of those needs and potential substitute products. When I combine this with potential viable angles to approach customer acquisition and information about the business model, I can quickly narrow down the list. So for the two openings for May I have it narrowed down to 7 very good fit companies. But I’m reluctant to fill both spots because I’m getting several more interesting intros each week. I’ll probably commit one of the spots in the next couple of weeks and leave the other open through the end of March.

The whole process is pretty time consuming, but essential for finding the right companies.

I apologize to anyone who I’ve been introduced to recently if this seems a bit impersonal. Hopefully this blog post will help to put it in context a bit… If we do end up working together in the future, you’ll be happy to know that I’m not spending several hours per day with prospective new startups. Once it looks like a good fit, I’ll definitely spend the time to make sure we have the right chemistry.

One other quick request for anyone that is considering working together… Please wait until we both agree there is a good potential fit before reaching out to my existing/former CEOs. As you can empathize, they are very busy. Once we agree it’s a good fit, I feel very comfortable having you contact them.