Customer Development

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The Engineer’s Conceit

In tech startups, The Engineer’s Conceit is thinking that:

a) you know what needs to be built

b) you create value by rolling up your proverbial sleeves and coding it yourself

Need a CMS? I’ll code it myself. Screw WordPress, Drupal, Joomla or any of thousands of CMS already built with massive developer communities.

Need an ad network? I’ll code it myself. Consider taking an off-the-shelf open-source version to test it?  Nah. That doesn’t create value.

Need a data-warehouse?  I’ll code the best fucking data-warehouse the startup community has ever seen — even though my startup sells Brony t-shirts through PayPal.

Until your startup has significant momentum and traction, you usually don’t know what needs to be built, you shouldn’t be building it and you probably aren’t creating value by coding — and The Engineer’s Conceit shouldn’t have you destroying value by coding commodity stuff that can be bought — get your self-actualization elsewhere.

A quick test to see if you or someone you know has fallen prey to the The Engineer’s Conceit is if they have built something that someone else could have installed in 20 mins — and has nothing to do with their core business.

Engineers, don’t fret — marketing folks have similar hang-ups about The Marketer’s Conceit.

The Marketer’s Conceit

In tech startups, The Marketer’s Conceit is thinking that:

a) you only have one chance to ‘make a good first impression’

b) your ‘brand’ matters (usually conflated with your logo)

Until your startup has significant momentum and traction, your brand doesn’t matter — and The Marketer’s Conceit shouldn’t keep you from aggressive experimentation.

A quick test to see if a ‘brand matters’ is to imagine the business in question shutting down operations permanently and then asking yourself, “Would anyone buy that company just for the brand?”

The answer for organizations like Coca-Cola and Harley-Davidson is “Of course, someone would.”

For the vast majority of tech startups, the answer is “No way”.

Marketers, most of the engineers you know have the same hang-up, just other side of the same coin with The Engineer’s Conceit.

 

Because the current criticism of lean startup and customer development is, for the most part, so markedly atrocious, so lacking concrete insight and usually amounts to no more than an annoying child playing with a noisy cap gun loaded with sour grapes and Freudian projection; I will happily provide the critics with some real, live ammunition with which they might be able to arm themselves.

The following are meant to be constructive critical observations of various facets of lean startup and customer development. I have provided a few brief thoughts about each one, albeit each one probably merits multiple blog posts.

In no particular order and surely not exhaustive:

PIVOT, PERSEVERE OR PORTFOLIO: Lean Startup may be optimized for investors, not entrepreneurs.

The startup then becomes nothing more than an option for a Jane McVentureCapitalist, who has access to data and information rights which inform her future investments, the ones she actually cares about. Even assuming the VC is not malicious, this could engender back-seat driving behavior.

NATURAL LIMITATIONS ON HYPOTHESIS TESTING: Some environments are too complex and too chaotic for meaningful hypotheses to be formed and tested.

Hypothesis testing is appropriate for a complex system where the decision-making process is: Probe, Sense, Respond. But in a chaotic system, the decision-making process is Act (quickly), Sense, and Respond to stabilize the situation.

If this seems familiar, then you likely know of David Snowden’s Cynefin framework.

Also, if you really wanted to pedantically quibble, one might be able to make the case that Talebian stochastic tinkering/bricolage is fundamentally different than Lean Startup trial-and-error hypothesis testing. Or not.  (See note 116 for further background.)

LEAN STARTUP ITSELF IS THE RESISTANCE: Coming up with perfect experiments is the perfect excuse not to take action.

If you are unfamiliar with The Resistance, buy The War of Art immediately.

PEOPLE VS PROCESS: Lean startup is just another battle in the never-ending People vs Process war.

Moreover, Lean Startup enthusiasts miss the point that fighting over People vs Process is mostly sand-in-your-eyes.

STARTUP CULT-BUILDING IS NEXT TO IMPOSSIBLE WITH LEAN STARTUP: Hard to get people fired up to fight in the startup trenches when upon a pivot, you decide that this isn’t a war to fight for.

Synching a romantic and adventurous raison d’être-cum-vision (“We’re gonna change the world or die trying!”) that motivates foot soldiers and investors with boring metrics is not trivial, perhaps harder with Lean Startup.

You are warned: all of the above are dialetheia, at some level, both simultaneously true and false. Also, most of the above are not exclusive to Lean Startup.

Critics, consider yourselves armed – so fire away, try not to shoot yourself in the process.

How Lean Startup helped a Skateboard Company

An entrepreneur named Nick Jones recently reached out to me after reading The Entrepreneur’s Guide to Customer Development. Nick is the founder of Lavish Longboards.

“Skateboards?”, you might be asking yourself? Yes, I might answer you, “skateboards”.

You might then ask, “But don’t Lean Startup and Customer Development only pertain to technology startups?”

While I could outline why I have a passion for applying Lean Startup thinking to all sorts of domains outside of technology startups — I thought Nick’s own words speak volumes.

(Nick has allowed me to share our conversation over Facebook, which I have annotated slightly.)

Nick Jones:
Hey Patrick–Thanks for putting the Entrepreneurs Guide to Customer Development out there! It’s helped me with both longboard customers, and growing a user base for my skate-app! Looking forward to your next book!

Patrick Vlaskovits:
awesome. great to hear. would love any specific stories about how it helped.

Nick Jones:
It helped me with the boards by pushing us to define our actual target customer, and getting a little more precise with our product-market fit.

We were under the assumption that our eco-friendly board was a “one size fits all” product, which was complete BS. We were using google/facebook ads and targeting everyone from teenagers, to age 40-50 athletic/outdoor men.

[This is the default belief upon which many entrepreneurs first operate.

Who wants my product? Everyone.  WRONG! 

With The Lean Entrepreneur we hope to stamp this out once and forever.]

After 18 months of basically shooting for every possible skate demographic under the sun, breaking even, and marketing to skate shops nonstop, we decided to drill down and only market to two key groups.

One was the new entrants to the sport, the other was ppl who liked #Longboarding or #Skateboarding, and #Recycling on facebook. So we hit those two groups hard with ads, and sales grew by 2.5x in a 2 month period.

[As Brant Cooper often notes, think 'small' to get big.]

Of course we realized that these were our 2 biggest segments based on returns from our previous ad spends, but we were skeptical about ONLY marketing to them. We haven’t looked back since, now we’re hitting them hard, as well as only marketing to small handmade/funky/quirky retail shops.

[A product and segment are a dyad. Like two puzzle pieces, they have to fit without being forced.]

Stings a little bit to not be killing it with skate shops, but having a high return with the quirky shops helps ease the pain. We estimate that 70% of our customer’s first board is a Lavish one, so moving forward we’re slowly rolling out more advanced models for the riders looking for a more intense experience (downhill/freestyle).

[This shows strong understanding of their segment.]

Whenever we design a concept board, we email just 10 cruiser-customers to hear their response on it, usually around 4 are interested and willing to pre-order. So I guess my major takeaway would be committing to segments, and not thinking our board is a one size fits all type product.

[Sounds simple, right? Certainly simple, but not easy. Kudos to Nick for getting this far. The future of Lavish Skateboards is a bright one.]

Brant Cooper’s and my next book, The Lean Entrepreneur takes Lean Startup to the mainstream. Expect more stories about how a Lean Startup approach moves the needle in businesses big and small.

PS You should order The Startup Pack so you can get video tutorials on how to segment your market properly.

 

Apple Maps Debacle and Minimum Viable Products

I am taking a quick creative break from editing The Lean Entrepreneur, and as I poke my head into my Twitter stream, I invariably come across tweets drawing an equivalency between the Apple Maps debacle and the concept of Minimum Viable Products.

This is a mistake, one that demonstrates misunderstanding of the term.

A Minimum Viable Product is a triad.  It is composed of:

  • The hypothesis/objective you are trying to learn
  • from the target market segment you are trying to learn about
  • and the form it takes to achieve that learning
These three have to align to be useful.  Otherwise, you are simply “throwing shit against the wall.”

 

It cannot be belabored:  the purpose is to learn some unknown specific thing from some specific group. This is because you have no reliable data about your objective, hence, you are creating experiments to “manufacture” the relevant data.

 

If you do have good data about the triad I listed above, then you shouldn’t be building MVPs. You should be building stuff that your market segments demands.

 

It should be clear that Apple has petabytes of data about how, why and who used Google Maps on the iPhone.

 

Pulling a good product for strategic reasons, and substituting it with a painfully, substandard product does not a  Minimum Viable Product make.  This is simply poor and sloppy execution of sustaining innovation.  Tim Cook has admitted as much, while Apple apologists have been providing covering fire with their convoluted “Apple is playing 17 dimensional chess on all of us and we cannot begin to comprehend their brilliant strategy” arguments.

 

Yeah, right. Meanwhile, people, like me, who like Apple products, are’t super-thrilled about using a device that become less useful, in my case, overnight.    Again, that is not an MVP, so don’t confused the two.

 

Here’s hoping my iPhone regains some its recently lost utility very quickly.

 

A Bit About The Lean Entrepreneur

TL;DR: Brant Cooper & I have a new book coming soon. Go buy The Lean Entrepreneur AppSumo Bundle while you can. It is 96% off, has a bunch of apps + pre-order of The Lean Entrepreneur.

 

Lean Entrepreneurs Surf The Wave

Surf The Wave Art by @FAKEGRIMLOCK for The LeanEntrepreneur.co

 

It has been too long since I last blogged. This blog post will update you as to what Brant Cooper and I have been up to for the last few months, namely: finishing our new book, The Lean Entrepreneur.

We’re excited about The Lean Entrepreneur. It is a wholly new book that takes what we wrote about in The Entrepreneur’s Guide to Customer Development to another level, demonstrates the application of Lean Startup-like thinking in anywhere one desires innovation: social entrepreneurship, automotive manufacturing (ironic, right?), tech startups, music and artist development, and finance and investing, to name a few.

All of that, in it and of itself, is deeply interesting. But what we are most excited to cover in the book is the context and landscape of Lean Startup thinking.

Many a time, Brant and I have asked ourselves, “Why Lean Startup now? Why not 10 years ago? Or even 50 years ago?” The answers to those questions are explained by the coming social, economic and cultural sea changes we are rushing into headlong…whether we like it or not.

Think of yourself sitting on surfboard a hundred yards offshore, and a set of massive waves are visible on the horizon as they build towards the shore.

These waves are powered by the mobile internet and mobile devices, by the read/write digital fabrication technologies such as 3D scanning/3D printing, by “cultural technologies” such as crowdfunding, crowdsourcing and of course, by *Lean Startup-like methods themselves.

Currently mid-2012, we have only begun to feel the power of these disruptive waves. And when they start to converge upon the shore, suffice to say, we will be living in interesting times.

In the Lean Entrepreneur, we interview amazing entrepreneurs who are living in this future, and are kind enough to report back to us.

But back to the you on your surfboard – you have two choices:

1) You can paddle back to shore and build a fortification to protect yourself. (Think music labels in the last +10 years or so)

2) You can swallow hard, paddle farther outside (ie away from shore) and position your board and yourself to surf. (Think Lean Entrepreneurs)

If you choose 1) — you will be obliterated and washed away. Maybe not immediately, but certainly very soon. And when you do, it will be ugly; kicking and screaming the whole way.

Let me give you a contemporary example:

Entrepreneurial education (and education as we now know it) has just begun to feel the cold spray of this wave, and entrenched stakeholders aren’t happy about it. Direct competition like MIT OCW, New.edu, Udacity, Udemy and other learning platforms are going to displace traditional education. Moreover, hackathons like Lean Startup Machine and Startup Weekend are also disrupting entrepreneurial education. As are incubators — incubators aren’t just at the bottom of the investment ladder but also they are the top of the education ladder. Why go into debt for MBA, when someone will pay you to take a crack at a startup?.

Online learning platforms, hackathons, incubators are all initiatives that are surfing these waves, ie they have chosen 2). Now, listen for the unsheathing of the knives as those (eg student-debt-financial-industrial complex, tenured faculty, textbook publishers etc etc) in their fortifications find themselves about to be washed away.

Personally, I am very bullish about the prospects of unlocking human capital and creativity globally vis-a-vis this sort of disruption in education. This will make the world a better place, but the transition to this will be painful.

Now back to you: WHO are you? Where are you relative to these coming waves? Are you paddling out into deeper waters? Or are you scrambling to get to shore?

More on this later….

BUT TODAY you should get go buy The Lean Entrepreneur AppSumo Bundle while you can. It is 96% off, has a bunch of apps + pre-order of The Lean Entrepreneur.

*Yes, that is an argument for endogenous effects.

The #CustDev T-shirts are here.

FYI your life is now complete: The Entrepreneur’s Guide to Customer Development t-shirts have arrived.


CustDev T-Shirt

Steven of CargoHawk has put together a suite of startup-themed t-shirts that I suggest you check out.

For example:

One of my favorite analytics tools, Crazy Egg, has it’s own shirt.

Notable investor and great blogger, Bred Feld, has Feld Thought t-shirts available too.

As well as a bunch more.  If you have a startup or startup themed project and want to promote yourself via t-shirts — get in touch with Steve.

I see dead startups

My buddy, Dave Binetti of Votizen came down this last Monday to present on False Prophets at LeanLA.com’s last meetup (a meetup I co-organize).  In his talk, about the subject of False  Negatives and False Positives came up.

In the context of startups, a False Negative means that while your startup is not getting any traction or love with the market, investors and talent and doesn’t appear to be inching close to Product-Market Fit  —–  there is a high probability that it is actually a really, really super-duper idea and you could exit for $100m in 3 years.  You don’t want to give up because you, in your heart of hearts, know this — even though no one else believes it.  The fear of the False Negative is giving up too early and letting a good idea die or worse yet, seeing someone else take it and blow it up in a big way.   IMO this is a very legitimate fear.

In contrast, a False Positive is a lot like the living dead, a zombie (Dave’s analogy) or even better yet, Malcom Crowe of The Sixth Sense*.

Cole Sear: I see dead startups.
Malcolm Crowe: On TechCrunch?
[Cole shakes his head no]
Malcolm Crowe: At Coupa Cafe?
[Cole nods]
Malcolm Crowe: Dead startups like, in books about startups? In textbooks?
Cole Sear: Operating like regular startups. They don’t see each other. They only see what they want to see. They don’t know they’re dead.
Malcolm Crowe: How often do you see them?
Cole Sear: All the time. They’re everywhere.

Remember, neither Malcolm Crowe nor the audience know Malcolm is actually dead until the end of the movie.  And that is the danger of the False Positive; the high probability that your idea really doesn’t have any merit but you limp along and persevere because you a) ignore or eschew relevant negative feedback b)  listen to false prophets that look and feel like progress but are anything but —- all the while, hoping for a positive Black Swan to stumble over.  And then when your money runs out, it all comes back to you, in a scary montage, about how you had ignored all the creepy signs of being dead.

Every startup founder has to ask oneself is:  How do I avoid them?  Which is more likely?  The probability of a False Positive or that of a False Negative?  They’re both real fears — but which is materially worse?

As always, there are no easy answers to questions like these.

However, you might guess that I (and Dave btw) think that the False Positive is orders of magnitude more likely, more insidious and more evil — and that one reason why Customer Development and Lean Startups make sense to me.

*Thanks to Robin Ahn for suggesting this analogy.  Brilliant.