Did you know that most startups die because no one needs products they are building? Ignorance is the worst thing any entrepreneur can stumble upon. It’s ok to see people disliking your product, at least there’s some reaction. Launching to crickets is really heartbreaking. Why it happens so often? I think it’s because we, entrepreneurs, are too focused on the building part. We simply don’t care much about the people who are supposed to use the product until we’ve built the thing.
We’re like kids building a pillow fort in the living room — all we can think about is how cool the fort is and how stable is its structure. But when parents come home and see that the living room is a mess, we have to face the harsh reality — the fort is cool, but we got too carried away. Same way, we get carried away with our products.
We need to change our focus
What if we could do better than building a product and then figuring out what to do next? What if we could know for sure that people really have the problem we are trying to solve? I was astonished when I first learned that you can actually build a tech company knowing for sure that you have product-market fit since day one.
Some time ago I was working with John (I’ve changed the name). When John hired me as a software development consultant, he was pretty sure about what kind of application he wants to build. He showed me a PowerPoint presentation outlining 70% of the user scenarios for the app and even a rough mockup of how the UI should look like and behave. When I started asking him how he came up with all that, he smiled and said — “my users told me.”
Turned out that John pre-sold the product while it was just an idea to a group of b2b customers. They wanted the solution so badly that they were keen to pay for early access to the app. Their prepayment has financed almost 30% of future software development. Plus, these first customers participated in brainstorming sessions where they gave feedback on John’s ideas, told what they would love to see in the final product, and provided feedback on the rough mockups John created. By the time I started working with John, all was needed is turning PowerPoint mockups into the real application. Success was guaranteed — the users were waiting to start using the product and paying for it right away.
Customer development to the rescue
A lot of early-stage companies do what John did. This approach is called customer development. Customer development is used to learn more about the target audience and the needs, problems, and ways to solve problems of the people who will become users before doing anything else. This approach works well with the “Lean Startup” methodology that Eric Ries popularized. The goal of “Lean Startup” is to make small steps that don’t require a lot of effort to learn about the market and the product. And the very first thing you need to learn is who is your customer, and what he or she wants.
Here are a few things I learned when I was working with John.
You don’t need to build a product to talk to people.
In fact, having a product will skew the results of the interviews because you will start asking about the product. Questions like “Would you use this product for X?”, “Does this product solves Y problem?” will yield biased responses.
People are polite in general, so they’ll tell you that your product is awesome and will never use it. You don’t want that. Instead, you should ask questions about the people themselves and their world. Everyone loves to talk about themselves.
If there’s really a problem, people are dealing with it somehow.
If you ask, they’ll tell you how. Don’t worry that your product isn’t the only solution — you’ll hear a lot of reasons why what they’re doing now isn’t perfect. Those imperfections are your opportunities. Let’s say you are building a tool for barbershops to manage finances. Talk to few barbershop owners and ask how they track finances right now. Do they have any issues with the process?
You might notice they forget to track all cash received or receipts of recent purchases because current software isn’t doing a good job reminding them to do so and stay on top of tasks. It can turn out that they don’t have the problem you are trying to solve but have another you had no idea about. Your goal is to listen and learn.
The goal is to solve a problem, not build a product.
Tech entrepreneurs (including myself) are too focused on building things. But we need to remember that people couldn’t care less about us or the product we create, they care about themselves — making their own life easier, saving time to spend it with the loved ones or saving money to buy their kid a gift for Christmas.
Software isn’t the only way to solve people’s problems. Sure thing, it scales well, but at the beginning, we need to do things that don’t scale to make sure we don’t waste time building a scalable business solving nonexistent problems. If you don’t trust me — read what Paul Graham thinks about it.
Don’t wait for a perfect moment
I think you’re starting to get an idea of what customer development is and why you need to do it. Don’t wait for a perfect moment to get started, start today! Think about the audience you are trying to help. Do you know who they are? Try to pick a particular group of people that share common goals, backgrounds, and beliefs.
Traditional advertising was using demographics when defining their audiences. “Our product is for middle-aged men or women in their 30s with two kids”. Sorry, this doesn’t work anymore because we’re too different now. A middle-aged man can be a fan of videogames, a Crossfit athlete working out three times a day, or an avid fisherman. You need to know who exactly you want to go after. If you want to learn more about why demographics don’t work, be sure to check out Seth Godin’s book “We Are All Wierd”.