As entrepreneurs, we identify problems in the market, think up potential solutions, and jump right into building a product. Sadly, we often skip the most important part of building a startup — customer validation.
As entrepreneurs, why do we make this mistake over and over again?
Our instincts are to focus on tactical work that is within our control. Building a product is heads-down, tangible work that can be done day and night without any outside dependencies slowing us down. We open our laptops and start designing and coding. But, we get so caught up in our passion for building that we lose sight of the target customer’s perspective.
Many founders brush aside the importance of early customer validation because we mistakenly prioritize the launch of an MVP (minimum viable product). We romanticize and prioritize the MVP as a pseudo finish line. However, we may lack any evidence that customers need, or are willing to pay, for what we are proposing.
Often, the hardest part of building a startup is knowing what to build in the first place. Customer validation exercises can be uncomfortable, awkward, time-consuming, and, are probably not our strong suit. But, bypassing this critical learning process can be catastrophic. Startups fail if their solution doesn’t solve a real customer problem.
To begin the customer validation process, start by doing whatever you can to become an expert in your field. Stop guessing, theorizing, and assuming you know what customers want. You don’t. “You know nothing, Jon Snow.”
Interview thought-leaders in your field. Read anything and everything on the topic. Scour the Internet for published market research. Ask your peers for their feedback on your theories. Prepare for any question you might get from potential investors about the reality of the problem you are researching. Listen to the advice of those who have failed before you. Open your mind to the possibility that your original hunch was wrong.
Here are five steps every entrepreneur should take to before building a product:
1) Use competitor’s products regularly.
To the extent that it’s possible, use competitor’s products religiously. Identify every great feature; find every flaw. Create an expansive list of direct and indirect competitors. Gain experience by using every solution in the market. Develop theories on what’s missing in competitor’s solutions based on your personal experiences with them.
Walk a mile in your customer’s shoes.
2) Get some skin in the game.
Researching an e-commerce concept? Buy and sell a bunch of items on eBay. Researching a ride-sharing concept? Drive for Uber for a few weeks. Researching a new garment line? Get sales experience in a retail shop and learn to sew. Build credibility.
Get in the trenches.
3) Talk to potential customers.
Talk to as many target users as you can. Run informal focus groups that explore the way customers think about the problem. Have a solid focus group script, wrap it up in under an hour, and provide Starbuck’s cards (or equivalent) for anyone generous enough to help you. Focus groups are fantastic for inspiring discussions and perspectives about a problem that you hadn’t yet considered.
Talking to potential customers is traction, but remember it’s just anecdotal evidence. The sample size is too small to draw conclusions. Don’t assume that talking to 10–20 customers makes you an expert on the market.
4) Do custom market research.
Based on conversations with potential customers, what questions can you ask of a larger audience to validate your unique insights? How will the answers to those questions inspire solution hypotheses? Consider deploying a statistically significant web survey to 400 respondents. Your goal is to confirm theories you’ve been developing in qualitative discussions.
Your survey should focus on specifics of the problem. Do not ask leading questions about potential solution hypotheses. It’s not productive to ask customers about their impressions of hypothetical solutions that don’t exist.
“A lot of times, people don’t know what they want until you show it to them.” — Steve Jobs
5) Get feedback on a prototype.
If your customer research is starting to uncover a secret and hint at potential solutions, spend your energy cobbling together a prototype and testing it informally with users. Use mockups, templates, and shortcuts as much as you can. “Fake it ’til you make it.” The goal is to get early feedback on many solution hypotheses, not to invest your time developing new technology. Throw out bad ideas quickly.
Keep in mind that building an actual prototype is not traction. Getting customer feedback on the prototype is traction. As described by Bill Aulet: “you can’t build great products in the dark, without a well-defined customer. And you can’t develop the right product for your customer if you fall in love with a prototype that nobody wants to buy.”
If your prototyping process is showing promise, form a group of 10 beta users that are willing to try your prototype and give feedback. Keep up a constant stream of communication with them. Listen to their requests and make changes and adjustments for them. The goal is to get them to the point where they can’t live without the prototype. Talk with them. Thank them. Reward them. Learn from them. Make changes for them. And don’t tell them they’re wrong if they don’t agree with your original product hypothesis. When learning from customers, it’s important to swallow your pride and be open-minded.
Now you are starting to discover a secret about the future that no one else knows. Per Peter Thiel’s book Zero to One: “the best entrepreneurs know this: every great business is built around a secret that’s hidden from the outside. A great company is a conspiracy to change the world.”
Don’t confuse launch milestones with customer validation.
Many startups confuse company milestones with progress. Examples include: deciding on a company name, designing a company logo, having business cards printed, and wearing company t-shirts. Startup culture is fun, but don’t forget your top priority — to show proof that your problem solving hypothesis is right.
Garry Tan provides excellent color on the importance of being right:
“I’ve seen too many really really talented, brilliant teams march off in the wrong direction and never switch direction that, now I do believe it takes both a fantastically talented, hard working team that has a true north — an internal product compass that allows them to build and ship product and then BE RIGHT. Being right is important. Too many great teams march off saying: “if we build it they will come”, and then never are able to change the idea towards something that people really want.”
As an early-stage startup, your most important skill is the ability to learn as quickly as you can. Learning quickly means being open to feedback, collecting data constantly, and throwing out bad ideas quickly — before you build anything. Don’t be married to your original hunch and assume the market will come around to your way of thinking. Listen to your data. Be a student first and an entrepreneur second. If customer feedback is inspiring you to build a solution, now you’re ready to think about building.