Today I met with the current batch of 10 startups at the Moldovan XY Accelerator program, answering questions and giving feedback.
Thank you Traian Chivriga for inviting me.
It’s that time of year again when Digitalhub Aachen kicks off its next batch of incubated startups – and true tradition, I’m off to support them for the duration of the program!
We’re running the 10 early-stage startups through the Lean Launchpad (LLP) model from Stanford by the father of the Lean Startup movement Steve Blank, for 4 months, meeting weekly to report progress and receive peer review.
Yesterday, I was honored and delighted to be invited to join the panel for the presentations of the Hacking 4 Recovery at Stanford, hosted by Steve Blank.
Hacking 4 recovery is a summer series of 5-day pop-up classes at Stanford University creating new businesses and reinventing existing.
Great teams presenting impressive progress after only 5 days of intensive work!
A first time founder of a very early-stage startup asked me recently about how to do customer interviews (aka doing the Customer Development part of the methodologies collectively known as The Lean Startup) properly.
I get asked this question a lot. Because doing customer interviews is for many like Justin Wilcox puts it, “a special kind of torture”. And also because of the book by Eric Ries that popularized the Lean Startup methodologies. On the one hand it is great on agile engineering and building Minimum Viable Products – but a lot of people don’t know that Customer Development is an integral part of doing The Lean Startup right, as the book only mentions it in passing. So we need to make more entrepreneurs understand how to use it and how to profit from it.
And the name in itself doesn’t really help; “Customer Development“. WTF does that mean, anyways? Well, to me it is helpful to think of it as meaning a better and faster way to minimise wasting your time and money and minimising the risk of failure by developing your product, your solution, together with your customers from day one.
At the end of this article, you’ll also find a bunch of resources to help you conduct customer interviews like a boss.
But first, let’s take a look at what this Customer Development thing is, why it is so important and how to avoid the usual mistakes.
In short, Customer Development is basically a simple methodology and a process for getting out of the building and talking to potential customers, the market – before you start building anything. Because inside of the building, there are only your fantasies. Outside in the market is where the facts are – and it is your job as a startup founder to start testing your fantasies, your guesses about the market, as soon as possible. Because you want to find out today – not tomorrow or in a year from now – when you’ve wasted a lot of time and resources, a lot of sweat and tears, on building the wrong things for the wrong people. Furthermore, it might be a far more convenient option to look for consultancies that can advise you on HR and employment law, whether it is about new employment, settlement agreements, holiday entitlement and pay, or anything else related to employees.
And you have to go out of the building at least twice.
So you have an idea about a solution? Great! But let’s take a minute to find out if we should actually build it first. In this first phase, we are trying to find out if our hypothetical solution, our product yet not built, will solve an actual problem for customers, if potential customers actually feel and recognizes the problem or need.
Yes, that’s right. We are in fact not even talking about our hypothetical product in this phase. We’re not showing or selling anything. We’re just listening to people explaining how they dealt with similar situations, solved similar problems in the past and today. The point of this “customer discovery” phase is to actually test if there is a need in the market before building anything. Further more, is it the types of people (customer segments) that we believe have the problem or could it be that someone else actually needs it more?
Do they have the problem or need? Do they know that they have the problem or need? Have they been actively seeking for a solution to the problem or need today or in the past? If the answers are yes to all three questions, you might have found the right customer segment for you to address – your early adopters.
And we keep at it, interviewing customers until we can either:
Oh, and BTW – We don’t need to interview customers to test if people have fundamental needs like getting fit, communicating with other people, find romantic partners, and so on and so forth. It should be obvious to you that these kinds of needs already exist and don’t need further verification. In those cases, we’re interviewing customers to find out if our solution – our exact value proposition, our unique promises to the customer, is what actually resonates with the customer segment – to the point of paying for it. All of this data can be managed by using customer experience management platforms like those found at Qualtrics.
In the second step of Customer Discovery, after actually finding confirmation of a real and felt problem or need, we get out of the building again to test if our hypothetical solution. We want to not only confirm that we understand the problem or need – we also need to confirm that our interpretation of a solution is actually one that the customers would use to solve it. So we get out of the building to talk to the people who indicated they actually have and feel the need or problem a second time.
And no, we don’t test for the viability of our proposed solution by selling it to them. We are not trying to convince them why they should use it in the solution interviews. This is not the time. And no, we don’t start building elaborate solutions before we first go out to test our hypothetical solution. Sketches and mockups are what we start testing with. Click Dummies and PowerPoints are more than enough at this stage.
Again we look for significant signal and we iterate (small incremental change) or pivot (big change that affects your business model) using the feedback we are getting and go out of the building again to show the changed hypothetical solution.
If, and only if, we can find significant signal we start to build it. This is when we start with building an MVP – Our first Minimum Viable Product. And it is at this stage in our journey the “Lean Startup” book by Eric Ries becomes a very useful guide. And we start to try selling it – because we have now moved on to the Customer Validation phase of our startup journey.
So we see the Customer Discovery phase is never about selling. No selling is allowed. Period. Not when testing for the problem and not when testing for the solution. Not ever. Of course, this is hard to do for startup founders – we all want to bend the world to our will – so we need to practice holding back the sales pitch. Why is no selling allowed? Simply because you will then be coloring the feedback you’re about to get and you as a startup founder don’t scale – Once you’re out of the room, you’ll never know if they would buy it (and what they’d say about your potentially crappy solution). And no, a survey is not a customer interview – it has to be in-person so you can actually feel the emotions of the interviewees as they talk about the problem and your proposed solution. Companies such as Reputation.com can help with survey collection, especially if time is a factor and businesses need to keep ticking over and do not have the spare time.
You can also think of Customer Development as an unfair advantage, a super fast and cheap way to becoming a domain expert in your potential customer’s pains, gains and jobs to be done. No technical skills, no engineering required. And if you’re doing it right, it will also work as your secret marketing weapon as the customers are going to literally hand you the best sales arguments, your perfect sales copy on a platter in the interviews. Furthermore, if you’ve been doing this right, you now also have your first customers – and that even before you built the product! And, as those in the know at Ewa-Ha know, it only takes one super-passionate client, and then the rest will follow. How about them apples?
To learn more, first of all you should take this free course with Steve Blank , the father of Customer Development and the Lean Startup. It’s more or less the Stanford curriculum called Lean Launchpad – but for free. It will teach you everything you need to know about building a startup (at the early stages):
For more in-depth information on Customer Development, read the book “The Four Steps to Epiphany” that started the whole Lean Startup movement.
Read these presentations from the entertaining and actionable Rob Fitzpatrick on how to actually do customer interviews:
(And you also might want to pick up his book, The Mom Test)
These videos with Steve Blank on customer discovery and customer interviews you can use as a checklist and fallback reference on how-to conduct interviews:
And check out Justin Wilcox – He’s a great resource on practical tricks and tips like how to select your customer segments to interview and b2b and b2c interview scripts:
Did I forget something? What would you add to your list of Customer Development resources?
This Wednesday evening saw the very first meetup with 9 regional non-funded early-stage startups attending the very first Lean Launchpad Düsseldorf powered by PwC.
Here are some impressions from our first meetup:
The Lean Launchpad (LLP) is a highly experiential educational program created by the father of the Lean Startup, Steve Blank at Standford and Berkeley. It helps startup founders gain a crucial base of entrepreneurial skills and knowledge to be better prepared and to build more successful startups.
It’s the world’s premier pre-accelerator program rooted in the scientific methodology, driven by mentors and unique educational content aims to make early-stage startup ready for applying to an accelerator, a first seed investment round, setting them off on a healthy self-financed (bootstrapped) path or launching their first Minimum Viable Product (MVP).