Conventional wisdom says that startups are at a disadvantage when building their customer base, because they don’t have the same manpower behind their efforts. But Steve Blank asserts that it is this perceived weakness that actually sets startups apart from—and ahead of—their larger competitors. It’s counterintuitive, but true!
At large companies, employees are sent out into the world to find and talk to customers, reporting back with their findings. But if that employee reports back that the target customer isn’t interested, the passionate founder will undoubtedly believe that the fault is not with the product, but with the employee’s tactics.
At a startup, on the other hand, the founder is the one out pounding the pavement and talking to actual customers. Each of these conversations is an opportunity for the founder to test his hypothesis and gather data—and not just data, but insight into who the customers are and what they’re looking for in a new product. This direct feedback allows the founder to pivot (either on strategy or with the product) and improve.
To sum up: as a startup founder, instead of firing your employees when revenue falls short of projections, you’re able to adjust your strategy in the early stages of your company’s development based on firsthand feedback.
Startups’ ability to nimbly pivot is another huge advantage over large companies. Traditionally, large companies would specify the entire feature set as they go into development.
This made sense to some extent, because typically they were developing v2.0, v3.0, etc. and product managers had a general understanding of what their customers were looking for.
But at a startup, like it or not, you’re essentially guessing what your customer wants. It simply doesn’t make sense to spend a bunch of engineering time and money to build a product without testing your hypothesis. Instead, startups are perfectly positioned to build a minimum viable product (MVP)—essentially a simple version of your product that satisfies your customers’ basic wants and needs. Once you’ve built those minimum features, you can gather feedback to inform future development.
MVP’s can be as simple as a wireframe or PowerPoint slide for a web product, or a mockup or single working part for a physical product. Feedback can take the form of early orders, suggestions for future features, or opinions on the existing model.
The point is that as you gather this feedback, you are able to tweak your product, add more features, and more closely align your strategy with your customers’ desires—all with minimal investment.
Now here’s an exception for those rare founders who are truly building a business in a new, untapped market. If you’re Steve Jobs building the iPhone or Henry Ford building the first automobile, you can’t expect your future customers to know what features to ask for.
But as Steve puts it, “You do want to understand how their day in the life is different today, versus the day after you give them your new product. How does their world change?” Simply put, there’s no way you could know that holed up in your office—at every level, customer development requires getting out there and talking to customers.
Steve Blank has shared a wealth of information with us regarding customer development—we highly recommend watching all of his lessons.
Steve Blank is a serial entrepreneur, author and customer development expert known around the globe not just for his successes but also his willingness to mentor the next generation of entrepreneurs. Named one of the 30 most influential people in tech in 2013 by Forbes, Steve has a wealth of wisdom to share.
If you have a few minutes, see how Steve diagrams the customer development process, and hear firsthand how founders can succeed in building a product customers will want. Otherwise, we’ve summed things up below for your perusal.