The missing piece from the puzzles of many failed start-ups

Start-ups are like puzzles. There are a lot of pieces that you have to put together, whether we talk about the business idea, market potential, competition or financial projections and resources. Having all these pieces together from the beginning is very important to the success of a start-up, but unfortunately many start-ups forget about the core, the piece that stands in the very center of the puzzle: the customer.

In the start-up ecosystem we keep saying this phrase used in the context of development, specifically, customer development. We say it often, we say it loud, we say it to the entrepreneurs that walk through our door, and today, we want to say it to you too.

But what is actually customer development?

“We have guesses about what’s good for the user, but we’re mostly wrong. No matter how good you are, you’re mostly wrong”. Adam Pisoni, CTO at Yammer

Let me start by giving a definition of customer development from my favorite author on this topic, Cindy Alvarez. She defines customer development as a “hypothesis-driven approach to understanding: who your customers are, what problems and needs they have, how they are currently behaving, which solution customers will give you money for and how to provide solutions in a way that works with how your customers decide, procure, buy and use” (Cindy Alvarez, Lean Customer Development — Build Products Your Customers Will Buy).

As Cindy Alvarez so clearly defines, customer development is about finding and validating the core of your business idea hypothesis, or according to Adam Pisoni, guesses, regarding the problem that you are trying to solve and the solution proposed by your start-up.

Steve Blank, the serial entrepreneur recognized for developing the Customer Development methodology, proposes a four-step framework that assembles the process of customer development: customer discovery, customer validation, company creation and company building.

Regardless of how you want to look at it, doing customer development should help you answer a series of questions that can save you a lot of time, effort and money, but most importantly, keep you from a sure failure with your start-up idea, such as:

- Is the problem you are trying to solve real?
- Who has this problem? Is there a clear group of people who encounter this problem out there?
- How big is that group? Is there a significant group of people who have the same problem?
- What are they doing to solve the problem now? What tools do they use, how satisfied are they with the existing solutions?
- Who else is involved in the process of resolving the problem?
- How often does this problem occur?
- How do your potential customers see an ideal solution?
- Are there any other factors to be considered in the problem — solution match identified?

But how can you answer all these questions?

“Get out of the building” Steve Blank

Well, the obvious thing to do is to talk with your potential customers. But let’s elaborate a little on the major steps you have to cover when doing customer development:

1. Form a clear hypothesis. This should answer the questions of who, what, when, why and how much.

2. Discover potential customers to talk to and reach out to them; they don’t have to be your friends, but people who experience the problem you are trying to solve.

3. Run customer development interviews; ask the right questions, listen and don’t try to influence the customer.

“If you haven’t found something strange during the day, it hasn’t been much of a day.” John A. Wheeler

4. Analyse the answers obtained and see if they validate or invalidate your hypotheses; if your hypothesis suffers modifications, go back to step 1 and do it all over again.

After you learn about your customers, their problems and needs, apply what you’ve learned in your product and don’t stop here; customer development it’s not just for start-ups and it can (and should) be done during the entire lifecycle of a product.

Instead of a conclusion I will leave you with a quote from Asif Khan Mandozai and I encourage you to get out of the building, talk to customers, validate your hypothesis and complete your amazing start-up puzzle.

“In the end, adoption of the very thing you’re creating is all that matters. Involve customers from day 1.” Asif Khan Mandozai

We’d love to learn from your experiences as well, so please feel free to share some stories or ask questions in the comments.