Here’s a great, short Customer Development primer extracted from a speech I made yesterday at North Carolina’s cram-packed, high energy CED Tech Venture Conference, an annual fete organized by the State’s Center for Entrepreneurial Development. It’s a short read and a great summary of the rules!
8 ways to build a business around your cool and awesome product
By Laura Baverman
This article first appeared on Upstart Business Journal
The UpTake: Sure, a great product is what woos customers. But learning about those customers and building the product around them is what makes that magic happen and what builds a successful business too. And that’s why startup gurus Steve Blank and Bob Dorf spend so much time preaching about it. Here are eight good reminders about building a business, not just a product.
We hear a lot about products these days and about the perfectionists that create them. But startup gurus Bob Dorf and Steve Blank are here to remind us that success is not so dependent on the product, but about whether—and just how badly—people want it.
And if people want it bad enough, then you’ve got a business. Dorf, who co-authored 2012’sThe Startup Owner’s Manual with Blank, shared their teachings with a crowd in Raleigh, North Carolina gathered yesterday afternoon for the annual Center for Entrepreneurial Development Tech Venture Conference.
We know this might be a repeat for some, but take it as a reminder that your product obsession should only go so far. It has to make business sense too.
Here’s the gist, in eight key points:
So you have an idea for a product. Start by recognizing your business is so much more than that product. It’s about solving a problem for your customers. But on day one, you have no customers. So acknowledge that you don’t know anything about them.
Think through how you’re going to search for answers to the problem. How are you going to reach these potential customers? Who could they be? Be as specific as possible. These customers should be your best, the people who will love your product so much that they’ll tell everyone about it.
When you do reach them, talk about the problem. Don’t sell. Just listen. Dorf calls it ‘the give-a-crap test.’ Find out if anyone gives a crap about the problem your product solves.
Once you’ve settled on the product, don’t write a business plan. Instead, follow a model like Alexander Osterwalder’s, which divides the new business into nine labeled blocks on a sheet of paper. The blocks target value proposition, pricing strategy, channel strategy, customer development, partnerships and more. Your goal should be to have solid answers in all nine blocks to have a prayer of creating something repeatable, scalable and profitable.
Test every element of your business with agility and speed, and without spending any money. If one part of the nine isn’t working, change something. The word pivot doesn’t just refer to an entire business model shift, it’s an action that should happen all the time at young startups.
Don’t test your idea with friends or family. You’ll only get positive feedback. And don’t pay interns or market researchers to do the tests and talk to customers. Do it yourself. Get to know your customers and build relationships with them.
Once you have a solution to the problem, create a minimum viable product. This is a very rough site or demo that gives your potential customers some idea of what you plan to do. Include as few features as possible. If feedback is positive and orders or sales come in, then your value proposition might stand the test.
Delay outside funding as long as possible by testing, scaling and testing again. The longer you go without taking capital, the more equity you’ll build as you grow the company and the more equity you’ll have when you do decide to bring on investors.