Customer Development with Network Effects

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?

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Top Takeaway – Startup Lessons Learned

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! Continue reading

Pay No Attention to the Man Behind the Curtain

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. Continue reading

No ‘Buts’ – The Most Dreaded Word of All

Last week I started avoiding the word “but” in all my communications. It’s harder than you’d think. I’d thought I could just replace it with “and” but and that just doesn’t cut it. Sounds weird. It requires a total rewrite of every sentence you put to paper and forces you to think constructively.

No: I’d love to come, but I already made plans.
Yes: I’d love to get together with you some other time. I have plans that night.

No: I would have finished, but it was just too much work.
Yes: My bad. I’ll finish it now.

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The Taxonomy of the Lean Startup Pivot

(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.) Continue reading

Customer Development: Fight or Flight

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. Continue reading

Clever Hans and Photoshop Iteration

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. Continue reading

How to Sell Me (Not), I Dare You to Try

“Thanks for the meeting, no I don’t want to hire you to consult for my company.”

Having to sit through an increasing number of sales pitches from startup consultants these days, I thought I’d summarize the points that worked in selling me and what just turned me off. At the very least, next time someone tries to pitch me, maybe I’ll just send them a link to this blog before the meeting. At best, I’ll formalize some points to improve on my own sales pitch. Continue reading

How to Practice Shutting Up (Customer Development Practice)

I’ve discovered a great new method of growing bigger ears. Ready? Wait for it… go listen to sales pitches from startup consultants.

If you’re an entrepreneur, then you probably don’t like being bossed around and you might think your own opinion is pretty damn good. If you didn’t, you probably wouldn’t be starting your own company. (I’ll admit it, I have both of those flaws to varying degrees.)

Given those two features, you may or may not have a tough time (like me) really shutting up and listening to your customers. It’s always tempting to interject your own opinion, and even if you think you’re just asking a clarifying question, you’re probably adding some spin to it to try to nudge your customer’s responses the way you want…the way you expect…the way you know your customers ought to be thinking. Continue reading

Impending Doom and Early Releases

This week we’ll be letting a few users into our early release of startupSQUARE.com and we’re rather embarrassed about it. It’s buggy, it’s ugly, and it probably just won’t work. But we’re going to throw it out there anyway for a few select people who can mock us about it to our face so we can get early feedback.

Improvement via Trauma

One of the things we’d like to achieve with this early alpha release is a bit of trauma. Continue reading