Archive for the 'Customer Development' Category

Startup Weekend Lesson Learned #2 – Customer Development

Ok…this is less of a lessons learned and more of an outright challenge.

At the last Startup Weekend (#swmobile) the team I joined was called KissMobs. As far as I’m aware, we are the only Startup Weekend team ever to finish the weekend cash flow positive. It could be there are others, I don’t have the stats and I’ll let Franck correct me on this one. We also didn’t pay ourselves any salaries and my dividend totaled enough for a cup of coffee. A bad cup of coffee.

Still, I think every team coming out of Startup Weekend should have this as a goal: A SALE

No Whining Allowed

My challenge relates to some of the snide anonymous comments I saw going across Floughter (I’ll explain later). There were a couple of people griping that the technical demos weren’t cool enough and it ‘looked more like a business plan presentation than a Startup Weekend.’

I half-heartedly agree and you can read some of the ways I flailed on the technical side at our own presentation in my last post. However, I’m am just as unimpressed by a great demo without customer development as I am at a business presentation with no demo. A product with no customers is not a product and it’s not a Minimum Viable Product either (sorry Eric). Regardless of how impressive your 54 hours of hacking were, you have failed.

Get Out of the Building

Steve Blank‘s commandment of “Get Out of Building” is exactly what Katherine Webster from our team did. We had an application designed to promote bars by creating a spontaneous flash mob singles scene. We didn’t have a working product, barely had a landing page with a survey, and no marketing effort. So how could we get a customer? She went over to a local bar and talked them into giving us $50 bucks to promote a Startup Weekend after party on Sunday.

She gave them enough of a pitch that they paid us $20 upfront. After we bought a domain name to put up our basic landing page, we were still up ~$10.

Floughter Wins by a Landslide

I am not saying we should have won the event. We shouldn’t have, we weren’t the best company by far. The company that won the weekend was clearly Floughter. Floughter is basically Twitter but completely anonymous, 70 characters, and local to within 70 meters. (Actually the geo-location didn’t work, but nice fake for the demo anyway.)

While they didn’t get an advertiser to pay for some tweets in their stream, they did rake up about 1500 tweets in the 45 minutes after their presentation. I would argue that those users paid for Floughter with their time, even if they didn’t pay cash. I think 100 of those tweets were Tony, Nick, and myself, but regardless it was very impressive user adoption for 45 minutes of uptime. They weren’t cash flow positive, but they won by demonstrating traction.

It was all the more impressive since the team didn’t have a single engineer among them. They outsourced the entire development to oDesk.

Summary of Lessons Learned

Revenue is Good
Whining is lame
Get out and sell something

Cheers,
Tristan

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Reverse Customer Development a.k.a. Thank God for Early Adopters

Published on June 24, 2010 in Customer Development and Entrepreneurship. 3 Comments Tags: alpha testing, Customer Development, early adopter, feedback.

This week I was incredibly excited to be ambushed at Startup Waffles by a couple of users who told me how many things we needed to fix in order to make the site usable. All of the points were right on.

What thrilled me about the conversation with Ron and Eugene was that they were passionate enough about the concept of startupSQUARE to put up with all the problems and open enough to talk to me about it. I can’t stress enough how important the feedback we keep receiving is. Our site needs a commitment to feedback and constant improvement in order to be a great resource for entrepreneurs.

Alpha is better than Beta

Our alpha users are valuable. Without them, we’d spend months building features no one really wants based on nothing more than our own wild assumptions. The best thing we could have done for our site is to release it to as many early adopters as possible to get a broad range of feedback.

Choose Your Customers Wisely

By “as many as possible”, I don’t mean to just anyone.

I know that there are many advocates for having an open site as early as possible. In many cases that’s probably correct, particularly if you have a consumer product. We don’t. Our customers are entrepreneurs and we’re not too interested in maybepreneurs.

A maybepreneur is an entrepreneur who might start a company if only they had more time. He/she could clearly strike it rich if he/she just had funding. A maybepreneur is someone who specializes in excuses rather than action.

It remains our mission is to increase the success rate of entrepreneurship, and we’d like to do that for everyone. Everyone out there can start a business and be successful. But that starts with the entrepreneur and their commitment to the process. We can’t force people to become entrepreneurs.

As a result, anyone who comes off in our application as a tourist just looking around has to go to the back of the line for a while. Sorry! We’ll open it up eventually to everyone, but right now we’re looking for dedicated entrepreneurs willing to share their ideas and their advice, not only with us, but with other users. We’re looking to build a community. That means sharing.

Selection Bias

This is going to give us a selection bias in our feedback. That’s clear. It’s a fine line between honing our demographic and only hearing what we want to hear. So we have to be very careful about not discarding negative feedback and claiming that it came from someone outside our target market.

We’re fortunate that our early adopters are the ones who are passionate enough to grab us by the collar if necessary and get us moving in the right direction when we go astray. So thank you to Ron and Eugene for putting me in my place!

Cheers,
Tristan

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$3.95? We’re Rich! First Revenue During Alpha Testing

Published on June 1, 2010 in Customer Development, Entrepreneurship, Sales and lean startup. 0 Comments Tags: affiliate marketing, Customer Development, Entrepreneurship, lean startup, revenue.

On Friday, I received this welcome email:

Subject: Sale – Entrepreneurs Guide to CustDev- ID:5777670 Entrepreneur’s Guide to CustDev eBook

You have earned an affiliate fee of 3.95 USD for the sale (ID:5777670-686=
2856) of Entrepreneur’s Guide to CustDev eBook on Thu May 27 2010 23:52:3=
9 MST.

Sincerely,
Entrepreneurs Guide to CustDev

startupSQUARE, having not yet progressed to beta testing, now has revenue! Granted, a very small amount of revenue. Why?

Confirm Every Hypothesis

After enjoying the Startup Lessons Learned Conference, we decided to simplify yet again and try and figure out how we could test every hypothesis, no matter how silly. One of those hypotheses was, “We can earn sufficient revenue from affiliate marketing to offset operational expenses.” (Translation: That we’ll make more money than we spend per customer.)

That hypothesis is too complicated to test right now and we actually hadn’t planned on testing anything until September or later. So we tried to pick something simpler we could test today. We settled on, “Entrepreneurs will click on affiliate marketing links.”

So we picked a couple products that we think are genuinely useful to all entrepreneurs and that we actually use. Then we threw a couple of links into the right hand column of this blog for “Four Steps to the Epiphany” by Steve Blank and “The Entrepreneurs Guide to Customer Development” by Brant Cooper and Patrick Vlaskovits. Result? $3.95

Get Rich Quick

Ok… $3.95 isn’t really a huge success story and I’m certainly not going to retire on it. (In fact, split three ways I was only able to buy a bagel with my share.) I’m just happy it only took two clicks to get a sale. Regardless, it does confirm that it is at least possible to make some money off a very specific target market (entrepreneurs) without charging up front.

We’re a long way off from really confirming that we have a viable business model with a revenue per user higher than our customer acquisition costs. However, it was important to us to develop a business model which helps entrepreneurs start their businesses. Charging entrepreneurs up front for the service seems…well…off.

When you’re trying to start a business, you’re short on time, money, and people. Charging $15-20 or more a month to offer a co-founder dating service is not a lot of money and people have largely indicated that they’d be willing to pay it if it works. Still, we’d like to do one better. We’d like to offer a free service to entrepreneurs and get paid by the people already in business.

Adblocker

Clearly we’re don’t want to run a site plastered with Google ads and certainly we’ll work hard to develop our premium model like everyone else. This was just a small test to recommit ourselves to the customer development and lean startup philosophy.

We’re still alpha testing and we’ll keep testing both our product and our hypotheses until we’ve created something that will sustain itself by helping entrepreneurs build businesses. I’m happy that we were able to take that first step towards real revenue now.

Now…off to earn another bagel.

Cheers,
Tristan

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First Dates and One Night Stands for Co-Founders

Published on May 25, 2010 in Customer Development, Entrepreneurship and Finding Co-Founders. 10 Comments Tags: co-founder, co-founder dating, first dates, open source.

Before you and your co-founders step up to the alter and say “I do”, it’s a good idea to get to know each other a little first. Maybe even play a little footsie.

I’ve been searching and searching for good advice on the subject and consistently come up empty. There’s plenty of advice on how to split up equity, qualities to look for in a co-founder, and even the occasional article on places to go to find entrepreneurs. Why is there zero information on how to vet them? The typical article seems to suggest a good conversation will do the trick, presumably because you’ve just dosed your co-founder with sodium pentathol and wired him to a lie detector.

While there’s no perfect answer for this, just as there’s no perfect first date, I’d like to suggest a few options. (For the record: The perfect first date is always in black tie. Everyone looks good in a tux.)

Open Sources Projects

You might think that an open source project is only for vetting technical guys and gals, but I can’t think of a better way for an MBA to prove their worth than contributing to an open source project. It may be a niche market of engineers with a low price point and low feature expectations, but it’s still a market.

When it comes down to it, the principles of customer development are the same whether you’re getting paid for a product or not. There is always a price tag that’s associated with user adoption even in free products. For example, Facebook and LinkedIn require a significant investment of time to get your profile looking nice. That time is the purchase price, open source is the product, and every open source project should be searching for product / market fit.

A keen business person should be able to significantly contribute to even a purely technical product by talking to customers, defining the minimum viable product, figuring out when to pivot, developing a marketing strategy to popularize it, etc. A really savvy MBA will find a way to turn your open source side project into a business.

Volunteer Work

I admit that I’ve only started giving back to society with volunteer work recently with the BUILD entrepreneurship program. Now that I have, I can’t imagine not doing it. Are your core goals and values aligned with your partner? Try ladling soup for a few hours with them and you’re sure to find out. They can’t deal with the smelly homeless guy? How are they going to deal with a pissed off customer?

Admittedly, this may not work if you’re in a pure for profit business and you want to find someone that is as cutthroat in business as you are. Then again, are you really going to be able to trust someone like that enough to work effectively with them in close quarters for a couple years?

There are plenty of volunteer opportunities that don’t require a long term commitment. Pick something for a weekend and see if your co-founder is willing to lick stamps for 48 hours. If not, will they have what it takes to sell door to door or do manual data entry when the going gets tough?

Hackathon

There are some great events like Startup Weekend which throw a bunch of people into a room together and let them experience the joys and heartbreak of a startup in 48 hours. It’s a sleep deprived and coffee driven bonanza with moments of brilliance.

Many people go to them to find co-founders and pitch their ideas. I think another idea is to try out your new co-founder. Take them to a Startup Weekend or other similar event such as Hacks and Hackers storytelling / hacking event and find out if you can really work with them.

You can join someone else’s project for a weekend and find out some very valuable information. Can your co-founder work in a larger group? Can they handle pressure?

Most importantly, can your co-founder work in a team towards a goal, even if they haven’t 100% committed to that goal? Because there will be times when your co-founder is staring at an empty bank account while you’re scrapping around for angel funding. Will your co-founder bail at the first sign of trouble or stick it out for the long run? If they can’t make it through 48 hours, you might want to keep looking.

Cheers,
Tristan

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Customer Development with Network Effects

Published on May 11, 2010 in Customer Development, Entrepreneurship and lean startup. 0 Comments Tags: Customer Development, Entrepreneurship, lean startup, network effects, pivot.

How does customer development differ with regards to products which require a network effect to be useful? Short answer: No one knows.

Companies offering services such as Skype, eBay, Facebook, and others have cannot really test their value proposition without having a critical mass of users. A telephone with only one person on it is pretty useless. Yet these are some of the most lucrative inventions ever. So how do you apply the principles of customer development to these situations?

At the Startup Lessons Learned conference, I asked a panel of people far smarter than myself this question and Sean Ellis‘ response was, “It’s a modified approach that really hasn’t been defined in a structured way as Four Steps to the Epiphany lays out.” He then invited anyone who can figure it out to write a blog post on the subject.

Well, I haven’t figured it out. I will however throw out some suggestions for testing and I’ll let you know if they work later.

Narrow the Market (Sean Ellis)

Sean Ellis did turn around and make at least one good suggestion such as, “The value proposition is a moving target.” He suggests trying to narrow the target market so you can test networking effects with less risk. For example, eBay could have tested auctioning in the pez dispenser market instead of allowing any product to be sold. (His example, not mine) Under Eric Ries‘ terminology, this would be a Zoom-In Pivot and it’s something we’re also trying with startupSQUARE.

We started out letting all sorts of people into our site in alpha state to test it out. However, we found that the level of interaction (people posting ideas and profiles) was very very low. Far lower than our conversion rate and customer interviews would predict. When doing follow up interviews we found that people would look for other users in a very small niche industry (we have an overly large industry list) and find no one there. With no one there, it sent a clear signal that posting a profile wasn’t worth the effort because no one else would read it.

Our solution to this is two fold. First, our industry list is horrendously complicated. Although some users have indicated they would like a more detailed list, we have to start with a simpler list. When the list has broader categories, users will be find more people in each category and thus have a higher level of social proof.

Second, we’re modifying our signup process to collect more information when signing up, including industry interests. This will allow us to let in critical mass groups from each vertical we want to target. We’ll also be able to test the size of the group necessary for the network to have value and better analyze any behavioral difference between users of different industries.

Test Interaction on a Smaller Level (Brant Cooper)

Brant Cooper offered the example of Jeff Smith from Sonicmule who built products to test specific things such as social applications. Behold: the SonicLighter. Without hearing the specifics from Jeff, it’s tough to discuss this. Still, sounds like a great idea. Try to simplify the amount of interaction necessary, potentially in a different context. If anyone has thoughts on this, I’d love to hear them.

Funniest Answer (David Binetti)

David Binetti had the funniest answer. He just shook his head with a grimace when Sean asked if any of the panelists had an answer.

There is Still a Problem

Although no one really has a definitive answer, I would propose that the general customer development thesis can still be tested, even with network effect driven products, for a simple reason: The customer still has a problem.

The telephone allows people to communicate. Ebay allows people to sell things in a marketplace. OkCupid allows people to get laid…err…I mean meet people. All these companies target established customer needs which have clear analogies in the real world. Facebook was based on…well…a facebook of people on campus. In many ways, customer development should have been easier for these companies since the customer problem was really already established. “Who was that hot girl in class today?” (Facebook’s initial customer problem.)

Nothing prevents you from establishing your hypotheses and verifying them with customers outside of the building via a good old fashion customer interview. “Do you have a lot of old junk you want to get rid of? Would you like to sell it? Where have you tried to sell it? What would make it easier to sell it?” Tada! eBay.

Fake It

Another tidbit that I think is valuable is faking data. That sounds bad. Let’s say, “Bootstrapping Data”. When you do your mockups, don’t use “Lorem Ipsum blah blah blah”. But in real names, real text, and real data. Get your friends to post things in your alpha. Post 100 times yourself. Farhad from Atracted.com bootstrapped his first few video personal ads by throwing a party, inviting a lot of cute girls, then sticking them in front of a computer to introduce themselves. Brilliant! Plus he got to have a party with a lot of cute girls!

The Real Video

In case you wanted the full video, here’s the embed starting Cindy Alvarez, Product Manager, KISSMetrics * David Binetti, Founder and CEO, Votizen * Brant Cooper, Principal, Market By Numbers * Matt Johnson, Grockit * Moderator: Sean Ellis. My question appears around 28:00

Watch live video from Startup Lessons Learned on Justin.tv

Cheers,
Tristan

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Top Takeaway – Startup Lessons Learned

Published on May 6, 2010 in Customer Development, Entrepreneurship and lean startup. 2 Comments Tags: Customer Development, entrepreneur, lean startup, startup lessons learned, steve blank.

On April 23rd I was able to go to the Startup Lessons Learned Conference and had my world rocked. I thought I was lean, I could be leaner. I thought I had a minimum viable product, I could have built less. Although Steve Blank, Eric Ries, Dave McClure, David Weekly etc. etc. all have written and spoken prolifically about their methods and thoughts, there is a powerful feeling to being the the same room as a thousand other people drinking the same kool-aid.

Sponsorship Helps

First off, I should mention that I wouldn’t of been able to go at all without the sponsorship of the Microsoft Bizspark program. Usually I’m not one to thank MS except sarcastically for bricking my hard drive, but there’s no way a bootstrapped company like ours could have gone. So special thanks to Adrian Perez, Joel Franusic, and Bizspark!

Top Takeaway

There are a number of great summaries, videos, and more like Steve Blank’s Keynote. I don’t think I can add much to that and plenty of people like Sean Murphy are already on the job so I’ll skip that and talk about teams.

We’re a team of three people. We agree on somethings and disagree on others. Fortunately most of our disagreements are the productive kind where we come up with a third, forth, and fifth solution through discussion and brainstorming. Still it takes us time to get in sync.

We’ve been talking about being a lean startup and customer development for months, reading and talking about Four Steps to the Epiphany. So I thought we were on the same page. Still, I was struck when Marcel turned to me in the middle of the conference and said, “So that’s what you’ve been talking about for months.”

Reasoning via Social Proof

Now, let’s be fair, there is a significant portion of the time where I’d describe myself as unintelligible. That’s my failing. However, I think there is always an element of social proof to reason. No matter how many times you might hear a cogent argument, it’s only when another guy chimes in with “I heard 2+2=4 as well” that we’re prepared to believe it. It’s true with facts and it’s more true with a paradigm shift.

Customer Development is a serious paradigm shift, especially for people who have been slugging away at product development in a big company like Manuel, Marcel, and myself. I may have gotten off the easiest since my last company was largely run like a startup (in the chaotic sense) and it has still taken me months to get into the spirit of lean. It takes a serious amount of un-indoctrination for us to even consider something as radical as questioning our own assumptions.

There is a value to sitting in a room with 1000 of your colleagues and realizing that you’re not the only one nodding in agreement. It’s a powerful reinforcement that is programmed into us by thousands and thousands of years of evolution. That’s a genetic trick that we need to take advantage of.

Of course we have to be careful that we’re not just monkey-see monkey-doing the latest business jargon and saying “out of pocket” like it not an incredibly idiotic phrase. We have to approach these things carefully and with thought. Still, we can take advantage of the great resources like the Startup Lessons Learned Conference and use our wired biology to our advantage.

We’re charged up. We thought of several ways we can chop functionality out of our product. We can test hypotheses that we thought we untouchable. We can explore revenue options months before we even considered it.

So my top takeaway from Startup Lessons Learned? Be a team.

A team working and thinking together under the same methodology can be efficient, learn faster, and achieve more.

We can make more value by building less. You can too.

Cheers,
Tristan

P.S.: Go buy Four Steps to The Epiphany if you haven’t read it yet.

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Pay No Attention to the Man Behind the Curtain

Published on May 4, 2010 in Customer Development, Entrepreneurship and lean startup. 0 Comments Tags: Customer Development, lean startup, Minimum Viable Product.

Wow I’m tired. Tired and energized. In the past few weeks we’ve had the typical ups and downs of every startup. We’ve let in a number of alpha users, got another hundred signed up thanks to a very minor TechCrunch mention, and realized our Minimum Viable Product wasn’t minimum enough.

We started building our site with a basic premise that entrepreneurs were willing to post their pitches to attract co-founders and investment. We confirmed this hypothesis through numerous customer interviews and surveys. We test drove our site with a limited number of alpha users and despite the clunky interface we were pleased by the results. We pushed people through a rather long survey and got an 82.9% completion rate, far higher than we would’ve thought. So we knew that people were willing to fill out some forms.

So you can imagine our surprise when our first chunk of 50 alpha users decided not to post any business ideas or pitches. Oops.

Behavior Matters

We now realize that social proof and user experience is going to be more and more critical for us. Without a few hundred people posting ideas and pitches, new people to the site won’t be bothered to post their own. A classic chicken and egg problem which makes our alpha testing more difficult. Also a classic confirmation of the behaviorist maxim: “I don’t care what you say, I care what you do.”

So aside from pondering whether or not our minds are epiphenomenal to our behavior (yes, I’m a philosophy geek), where does that leave us? Without getting a basic sense of how many people are willing to put in data, we can’t adequately test our other assumptions regarding interaction with the website. So we need to get more basic.

Pay No Attention

Aardvark allegedly ran for 9 months in Wizard of Oz mode (see their video at the Startup Lessons Learned conference here). Meaning that there were a number of employees sitting around looking up answers to questions manually and punching in the answers. A number of other services seem to do this as well using Mechancial Turk or a small army of outsourcers.

The point of doing things that way is to see if someone is willing to use or pay for your service before you waste a lot of time building something obscenely complicated. We thought we were doing that by testing our assumption with customer interviews, mockups, and alpha testing. We could have done less.

So we’ve decided to try and simplify even more and focus on the most basic type of co-founder matching. We’ve got a few hundred entrepreneurs. We’re going to match them up one by one. It may take a while.

We’re doing this to test out a basic assumption that we skipped before. We always asked if entrepreneurs were willing to post their ideas. What we forgot to ask is, “Is anyone willing to read them?” So far I’ve got a 90% “Yes”. Still, “fool me once…”

We’ll test behavior instead of survey responses by sending out pitches via email, directly to people who’ve expressed an interest. We’ll be measuring how many people open the mails and how many people actually click through and read the full story. We hope we’ll find the unsubscribe rate is as low as our monthly mailer (<1%).

I’ll settle for <10%.

Got a pitch? Want in on the action? Go to our home page and signup now!

Cheers,
Tristan

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The Taxonomy of the Lean Startup Pivot

Published on April 13, 2010 in Customer Development, Entrepreneurship, Strategy and lean startup. 2 Comments Tags: Customer Development, lean startup, pivot, Strategy.

(warning: this post may be highly theoretical / geeky)

Last week I was planning for the worst. Having gone through 51 iterations of my mockups and gathered as much as feedback as I could with our primitive alpha, I feel confident about our basic customer problem hypothesis. Still, I play a lot of chess and like to think at least five moves ahead in the five most likely futures. So I decided to make a list of my potential pivots.

(note: For those not familiar with the term, pivot is a lean startup vocab word that states in it’s simplest form: If your business model isn’t working, change something. More on this below.)

To do this, I started making a list of questions I could ask of my product/market to brainstorm other ideas. In the process, I wound up breaking up my list of pivots into categories based on the questions and posted the list to the lean startup google group. I was wondering, “is anyone else doing this? Is there was any established taxonomy for pivoting or any template? Are there other questions I should be asking?”

Here was my original list of questions and their associated pivots:

Product Pivots:
- Can we solve the problems of our target market with an partly or
entirely different product?

Use Case Pivots:
- Can we use the same tech for a different use case with the same
target market?

Market Pivots:
- Can we apply the same product / tech to a different market?

Narrowing stance:
- Can we narrow our focus to a smaller/niche market or use case?

Widening stance:
- Can our product embrace a wider market or use case?

I thought this list could be the start of a very rudimentary taxonomy of pivots. However, some of the responses I’ve received so far have tested my understanding of the basic pivot concept and made me realize I had tied the concept of pivot into “product / market fit.” As product / market fit is most basic hypothesis I need to confirm before knowing that I have a viable business, any business changes outside of product/market fit didn’t register as a pivot for me.

Expect the Unexpected

Others seem to have a different take on the term, including Brant Cooper who implied “Everything about your business is a potential pivot” and also Eric Ries who suggested the following types of pivots:

“Customer need pivot: same customer segment, different need/problem
Customer segment pivot: same problem, different segment
Business architecture pivot: ie from enterprise to consumer
Zoom-in feature pivot: remove features to focus on just one key feature
Zoom-out feature pivot: add features to become more of a holistic solution
Technology pivot: solve same problem but with different technology stack
Channel pivot: same problem, same solution, different path to customers
Platform pivot: open up an application to third-parties to become a platform (or vice-versa)”

(emphasis mine)

You’ll note that Eric’s list and Brant’s response both imply or include changes which don’t necessarily apply to product/market fit. In Eric’s list, I’m looking mostly at “technology pivot” and “channel pivot” which have nothing to do with who you’re target with what product, but instead focuses on how to make the product.

There is a lot of overlap between Eric’s list and mine and some of his terms are a lot zingier. moz screenshot The Taxonomy of the Lean Startup Pivot moz screenshot 1 The Taxonomy of the Lean Startup Pivot But for my current purpose of achieving product/market fit I need something combining both elements, so I merged them:

(Please note: I wouldn’t recommend taking my list over his, especially if you plan on speaking the same language as the rest of the lean startup gurus.)

Product Pivots:
- Can we solve the problems of our target market with an partly or entirely different product?

This one doesn’t seem to have a parallel in Eric’s list, which I found surprising. I’m keeping it in mine because I think it’s very relevant.

Use Case Pivots:
- Can we use the same tech for a different use case with the same target market?

This is “Customer Need” in Eric’s list.

Market Pivots:
- Can we apply the same product / tech to a different market?

I would group “Customer segment”, “Business architecture”, and “Platform pivot” under this. All of them refer to who you’re selling the product to. I would consider all of this under the broad category of Market although it’s very very useful to break it down further for brainstorming.

Zoom Pivots:
- Can we narrow our focus to a smaller/niche market or use case?
- Can our product embrace a wider market or use case?

This is a great term from Eric and is better than my “Narrowing / Widening Stance” term. The main difference is that Eric’s refers only to product features and I would also want to address the possibility of widening or narrowing the target market. (Although you could just as easily call those Market Pivots.)

Open Ended Answer

You may also note that in the list above I ditched Eric’s suggested categories of “channel” and “technology” pivot as they don’t help me with product / market fit, but rather refer to marketing and production techniques. That’s not to say they’re not valuable, just they’re not relevant to the problem I’m trying to focus on right now.

As such, I have no firm conclusion to this post. I started the taxonomy as a thought exercise and I’m continuing in that spirit. I realize I may be using the term pivot differently than the lean startup folk and I need to adapt my terminology. Speaking my own language is not particularly useful for communication purposes, although I do find it helpful to associate the term pivot with the product/market fit concept. Otherwise pivoting can be applied to everything and is synonymous with the word “change”.

That’s it for the geeky post. Next week I’ll try and share some of our user behavior maps.

Cheers,
Tristan

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Customer Development: Fight or Flight

Published on April 6, 2010 in Customer Development and Entrepreneurship. 0 Comments Tags: Customer Development, escapism, fight or flight, lean startup.

Motivations are unimportant if you happened to be B.F. Skinner. But since he’s dead let’s assume you’re not him. Here’s the obvious question, why do you want to start a business?

Let’s start off topic with a ridiculously simplistic dichotomy: Fight or Flight

Those are the two basic choices we all have when faced with a conflict situation and it’s deeply ingrained in our physiology. Even when faced with something as non-threatening as public speaking, our basic instincts can take over and flood us with adrenaline. Our instincts tell us we have to fight or run away. But as in so many modern day stress or conflict situations, fighting is useless (you cannot punch out a public speaking opportunity) so we generally go for the second option: escape the situation.

Run away! Run Away!

We can choose not to accept the speaking engagement, we can (consciously or not) miss our ride, feed our speech to the dog, or otherwise chicken out. We can avoid this situation and any other. We choose not to discuss our problems with our co-workers, spouses, or lovers. We can be sullen and withdraw. At the extreme end of the escapist impulse, we can distance ourselves from our own lives by building a wall of alcohol and drugs between us and everyone else. We can convince ourselves we don’t care. We can simply leave.

There are situations where running away is the right choice. When faced with a half dozen rifle toting grizzly bears with a penchant for human flesh, the correct choice is to run. But more often than not, we choose flight because we don’t see how we can possibly fight. If the bank has lost your wire transfer, yelling gets you nowhere and neither does yelling at the teller. Most times, stapling that memo to your asshole boss’ face is a poor choice of action.

There are other options.

We can choose to take that burst of adrenaline inspired energy and instead of fighting against our problems we can choose to partake of a solution. The most successful people I’ve met do this with aplomb. Terrified or not, they will approach a crowd of 1000 people and burst onto the stage brimming over with energy. They’ll speak with a passion and conviction that will convince their most antagonistic critic. They’ve changed to dichotomy from fight or flight to escape or partake.

Why are you starting a business?

I think most people start a business for one of those two reasons. They’re either running from something (i.e. a bad job, a shrinking industry, stress, etc) or they have a fervent desire to experience and partake more broadly of the world. They want to experience more, engage with other people, find solutions to problems. They want to travel, engage in esoteric sports, and most importantly, they love to talk to people with a different point of view. This second type of person has taken their fight instinct and channeled it into a creative and productive force.

It’s this second type of person that I want to be involved in. Those are the partners I want. They are the ones that aren’t interested in building something arcane in a basement for a year until it’s perfect. They are out of the building actively engaging with customers, trying to understand problems and build the right solution. They dream about how to improve their products and when they problem solve they never use the word “but.” Instead, they’ll use the word “and.” They’ll take one idea and use it to brainstorm another idea and another and another until you’re sitting on a mound of possible products waiting to be invented.

A Single Caveat

We don’t all start businesses for the same reasons.

Success could be profit. It could be the number of hungry children fed. Success could mean having enough spare time to spend with your family. It could be just getting out of your last dead end job. I won’t argue that any one of these goals in more or less important than any other. There’s plenty of other people who will argue that. I am suggesting that it is important that we know what our motivations are, and align our actions with that.

If you’re starting a business, you must know why you’re doing it. Moreover, the other stake holders have to be in line with that motivation or you’re going to have problems. If your investors are out to make money (hint: they are) and you’ve started a business because you just didn’t like working for your last boss, that’s ultimately going to be a problem.

I won’t pretend that I haven’t run away from an uncountable number of problems. I’ve had jobs I didn’t like, relationships I didn’t want to commit to, and large, wall like individuals that I realistically couldn’t beat in a fight. That’s ok.

Today I’m building a business. I’m talking to customers that hate my product to make it better. I’m engaged in the process and I’m learning. I think that’s what customer development is about. So let’s all get out of the building and start talking to the world.

Cheers,
Tristan

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Clever Hans and Photoshop Iteration

Published on March 30, 2010 in Customer Development and Entrepreneurship. 0 Comments Tags: entrepreneur, iterate, lean startup, Minimum Viable Product, MVP, startup.

It’s been over two weeks since we released a bare bones alpha of our site and started letting people in one at a time. Since then we’ve been through approximately:

10 iterations of our “view idea” page
6 iterations of “browse ideas” page and 3 of “browse people” page
10 “profile” pages
8 of our “p-home” page (this is the page you see when you log in)
3 “search result” versions
and a whopping 14 basic template revisions

That’s a total of 51 revisions in 18 days, almost all of which are iterations based on feedback from users without writing a single line of code.

Photoshop Development

We’d been very slow to engage in real customer development. Despite getting a number of signups to our alpha, we made some early choices in platform which slowed our development down to some degree and made it difficult to get to our minimum viable product (MVP). To compensate for that, we searched for ways to get customer feedback without actually having a product.

As an interim fix, we created a number of photoshop mockups detailing exactly what information would be shown on what screen with REAL text (none of that “Lorem ipsum dolor sit” stuff). The mockups were heavily layered such that we could demo the “prototype” via screen sharing and demonstrate mouseovers, ajax calls, and other effects by showing/hiding a single group layer. (For those not photoshop savvy, this just means we could show on screen actions with one click.)

Alpha Hordes

We then took those photoshop mockups and put them in front of real users as often as possible (trying for twice a day) mostly via screen share and let the users look/play with them. In doing so, we got a ton of great feedback that led to so many revisions, but have certain difficulties:

Mockups are not clickable and must be controlled by the presenter

This has turned out to be a bit of a blessing in disguise. Our initial supposition was that not having a working prototype would reduce the quality of feedback. Instead, we’ve found that when the user can’t control the action directly, they’re forced to talk to us in order to get the mouse to move, scroll down, and click on things. This helps encourage the user to speak out loud. This includes exclamations such as “This page is overwhelming”, “I have no idea what this button is supposed to do”, and “I’m lost.” All of which is useful information for knowing what’s wrong with our site.

The feedback is confusing

As Dr. House says, people lie and they sometimes don’t know it. They’ll say they want more information. Then when you give it to them, they’ll want less information. Then you’ll revert to the original and they’ll say “perfect!” I write down every idea a user has, but I’m trying to listen more for what they’re talking about rather than what they’re saying. If they’re talking about the “post idea” button, it means they’re seeing the button. That’s good if you want them to post an idea and bad if the intended Call-to-Action is elsewhere.

Risk of asking leading questions

As I’ve written before, I have the habit of asking leading questions about items I think should be in the foreground, thus bringing them to the user’s focus. That leads to me feeling perfectly satisfied that the user is talking about the items I think they should be looking at, when they wouldn’t have even noticed them if I hadn’t brought it up.

Screen shares have been helpful here since people seem to ramble on and on when talking on the phone. Awkward silence just encourages them more. Even when they stop, all you have to do is ask “What are you thinking now?” and they’ll keep talking. The lack of physical presence also eliminates the possibility that the user looks to your body language for the “right” answer to a question. (See Clever Hans for a great example of this.)

Live Demos

We’ve also done a number of live demos which present a different type of information.

Body language and eye motion of the user is available

An obvious advantage of the live demo is that we can directly observe where on the screen the user is looking and in what order. This is perfect to observe the “F” pattern and if your intended focal point is accurate. It’s also great to see user body language and if they’re getting uncomfortable or frustrated it’s quickly evident in their seating posture or how they’re holding the mouse.

Users can “click” on things

Even though the photoshop images are not clickable, you can give the users the mouse and watch where they move it. If they’re getting into it, they’ll click on the image a couple times before remembering that it won’t work and then you’ll get the added bonus of seeing what the gut reaction of the person is.

No Substitute

Although I’m very happy with the results and think our designs have improved tremendously, this is no replacement for real development. It could easily be argued that the time spent on photoshop could have been better spent on writing code. Fortunately, as I have two partners who are far more technically savvy than I am, they’ve been able to develop the site in parallel while I focus on the user interface. This may have slowed us down in the short run, but it’s saved us a dozen coding iterations and allowed us to build up a more robust back end.

Even as a solo developer I think this approach has some benefits, particularly if your site will depend more heavily on user experience than any particular feature. My only qualm is that I cannot interview enough people to have a statistically relevant sample size and therefore need to take it to the next level in order to tie our results to actionable metrics. So this week and next, we’ll be putting our new knowledge on-line and seeing if our new user experience drives the behavior that we want.

Cheers,
Tristan

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Archive for the 'Customer Development' Category

Startup Weekend Lesson Learned #2 – Customer Development

Reverse Customer Development a.k.a. Thank God for Early Adopters

$3.95? We’re Rich! First Revenue During Alpha Testing

First Dates and One Night Stands for Co-Founders

Customer Development with Network Effects

Top Takeaway – Startup Lessons Learned

Pay No Attention to the Man Behind the Curtain

The Taxonomy of the Lean Startup Pivot

Customer Development: Fight or Flight

Clever Hans and Photoshop Iteration

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