By Brij BhasinEvery startup exists because there is a gap in the market, there is an inherent need that an entrepreneur envisions, and then builds a business around it. Central to this concept are customers/consumers/users, and finding them is important. But, “truly” understanding them and their problems is paramount to the success of a startup.
Books have always had profound influence on me so when I decided to start something on my own, reaching out to this source of wisdom and inspiration seemed natural. Two books that I recently read are Boyd: The Fighter Pilot who changed the Art of War and Four Steps To The Epiphany: Successful Strategies for Products that Win. I will talk about the former another time, but this post is about Steven Blank, a veteran Silicon Valley entrepreneur, currently a professor at the Stanford University, and his philosophy of the lean startup model. Steve says that most technology startups follow a standard Product Development Model where they start with a product vision, market need, feature list and potential customers. They then work towards building alpha and beta versions of the product and when they have something to show the Sales & Marketing people, are expected to go out in the market and get feedback while trying to signup early customers. The problem with this approach is that too often the product fails to meet the expectations or there are some critical things missing from the business model or the overall solution. At this point, the startups have spent considerable time and resources; making idea pivots costly and lengthy affairs.
The Customer Development Model on the other hand expects that startups follow a two-pronged approach in building products. The Product Team, usually the Engineering Team starts work based on the vision of the founders and perceived market needs. At the same time, the Customer Team, typically Business Development/Sales/Marketing oriented folks go out and start talking to potential customers based on the same vision. What they are trying to do is validate whether those perceived problems are actually a high enough priority for which the early customers are willing to put money on the table. If not, in most cases these early adopters would probably tell you what works for them and in which situations your product could be useful for solving their "real" problems.
This is sometimes also referred to as the science of Ethnography where immersing yourself in the users environment where understanding them and their behavioral patterns is much more important than coming up with a Requirements Document in an office cubicle.
In the Customer Discovery step we build our initial assumptions on questions like: How well do we understand what problems customers have and how much will they pay to solve those problems? Do our product features solve these problems and have we found visionary customers? Is our product a must-have and are our sales/business plans realistic, scalable and achievable? What do we do if our model turns out to be wrong? Steve argues that we have to work towards building simple things like concept demos, product mockups, functioning prototypes and preliminary business model at this stage. The Customer Development model’s second step of Customer Validation is needed to properly work through the process of validating the above assumptions through customer contact/interviews etc., more on this in another post. During these two steps there is little need to come up with long-term feature plans, PR & Marketing blitz or focus on raising venture capital. In short, unless we "figure things out" there is no point moving forward.
I have been in these stages for the last couple of months and currently going through my second "pivot" which is a jazzy term for, I have fallen twice and going through the cycle third time around. I see these as learning experiments, part of the bootstrapping culture that is tailor-made for startups. Yes, it can be very discouraging at times, people don't see your vision, customer don't want to buy it and employees don't see the zing in your idea. German writer Von Goethe said, "Thinking is easy, acting is difficult, and to put one's thoughts into action is the most difficult thing in the world". But hey you are not in it for an easy ride are you? It's a roller coaster buddy, get in or get moving! At the end of the day, when the dust settles you should still be able to look back and say, "That was a lot of fun!" Oh and you can read the first 30 pages of the book here for free. I have an extra copy; email me if you want to borrow it.
Photo Courtesy: SliCePhotography