3 Ways to Fail at Customer Development
For the last few weeks, I’ve been auditing Steve Blank and Eric Ries’ Customer Development and the Lean Startup class at UC Berkeley. I’ll discuss the class as a whole in another post but I wanted to share a great talk we heard tonight from the co-founders of Flowtown: Ethan Bloch and Dan Martell. They shared customer development mistakes they’ve made and what they’ve learned from them. The following are my notes from their talk.
Don’t Talk to Customers
“Get outside the building” sounds easy when Steve Blank mentions it on a weekly basis but is really hard in practice. Not only is simply reaching out to people, cold calling, and swallowing your pride by questioning all your hypotheses really difficult, you have to do it over and over and over again.
Ethan and Dan brought up one case where they were faithfully doing customer interviews but then got seriously sidetracked. They noticed a customer problem and simply went off and built a solution. What’s wrong with that? No one would buy it! Why? They didn’t validate the problem with the customer first. Customer Development, especially the first step, Customer Discovery, isn’t just a series of interviews or focus groups with your target market. It’s a continuous learning experience where you state your hypotheses and go out in the real world to (dis)prove them. So no matter how much you think you know about your target market or their problems (even if you are in your own target market like I am with my startup, Outspokes) you still have to validate, validate, validate the problem.
Solve Problems You’re Not Passionate About
What do you really care about? What problems do you want to solve? Answering these questions for the product Ethan and Dan built when they simply noticed a customer problem and decided to solve it (#1) helped steer them back on track. They said that even if they had paying customers or could flip the company after a short period of time, they wouldn’t pursue it further. Why would you do a startup just to work on something you don’t enjoy or believe in? You could do the same for a lot more money and a lot less risk anywhere else.
Sell Your Solution Before it’s Validated
Trying to sell a solution before you have validation is a dangerous game because you’re working in abstract concepts instead of concrete ones. If you sit down with a potential customer and walk through a paper prototype or screen shots, you might walk way with a lot of deceptively good feedback. The customer might even tell you feature by feature what it would take for them to buy but you can’t simply listen and add all the requested features to the product. Your job, as Steve and Eric have stressed many times before, is to find the minimum viable product (MVP) that solves the customer’s problem and leads to a sale.
So what exactly is an MVP? Screen shots and paper prototypes are obviously not enough to solve anyone’s problem (they’re too minimal of an MVP). Building out a full solution for a given customer isn’t it either. Not only does that take too long but it probably won’t lead to something you can use with any other customers. So where’s the middle ground?
Before you try and sell customers on the vision, you have to give them something tangible and listen to their feedback. Most of them won’t get it and that’s OK! 1/10 or even 1/20 is a good ratio of those who get it to those who don’t. Everyone else isn’t worth listening to yet because you haven’t gotten to the chasm (i.e. the mainstream). And how do you know when to actually listen to those inevitable feature requests? If multiple important customers request it and it’s not just a one-off thing to get one new customer, then it’s worth adding or at least seriously considering.
Ethan and Dan also shared a few tips:
Charge from Day 1
If those crazy early adopters won’t pay for it, who will? But if that really doesn’t make sense for your product, at least measure retention.
Prototype Furiously, Even After You Have a Product
I found it inspiring that Ethan and Dan keep building MVPs to test new concepts and of course, keep talking to customers to help shape everything Flowtown is working on. Don’t let one success make you lazy. Startups have to keep innovating!
I’m looking forward to more guest speakers like these! Thanks to Ethan and Dan for some great practical tips on implementing Customer Development. Check out their progress: Flowtown.