“With my latest product…I used only customer interviews, HTML, and…mock-ups to understand the problem, define the solution, and sign up 100 paying customers before I started building the minimum viable product.”
— Ash Maurya, Running Lean
My article on getting paid to learn sparked the questions, “What is the actual learning method? How does a person or a team design the methodology of collecting the knowledge and processing it internally to get to the learning and insights?” and, “How quickly can I start charging people full price?”
I’ve been reading a lot of Ash Maurya, who makes the point that you can go out of business if all you do is learn, “While learning is key, turning that learning into results is what matters.”
By results he means traction, which “is the output of a working business model.” Maurya emphasizes the critical point that our goal as entrepreneurs is to create a working business model — not simply a product or service (I recommend checking out Maurya’s free Scaling Lean videos).
A business model creates value for your customer and captures value from your customer in return, at a profit. Maurya offers this equation (note that your customers need to feel like they’re receiving more value than what they’re paying — otherwise they won’t be interested):
Create Value > Capture Value >= Cost (Deliver Value)
So it’s not just about getting people to use your product or service. You need to get paid as well.
Great idea! I couldn’t agree more, and I see too many business plans that essentially say, “We want to raise money to build this cool app, but we don’t really understand who our customer will be or how we will reach them.”
I made it about halfway through a book called “Traction: How Any Startup Can Achieve Explosive Customer Growth” by Gabriel Weinberg and Justin Mares. The beginning is great, and they recommend that every startup put half its efforts into getting traction. This allows you to learn as early as possible who your customers are and how you can reach them, and it naturally puts you into conversation with them. It also forces you to test different marketing channels in order to create and validate your marketing plan. You don’t need to read the book, but I agree with what they’re saying.
It turns out that you can get to know your customer BEFORE you build anything. In fact, it’s critical to your success.
Leaner Than the Lean Startup
- Sketch out your business model (using a Lean Canvas) and run it past your friends, family, and advisors for an initial sanity check.
- Build a “disprovable hypothesis” for the problem you’re solving, your target demographic, and which solutions they’re currently using. Go talk to at least 50 actual people and run a 30-minute “problem interview” with each (yes that’s a lot of work, but now you truly understand your customer). Use what you learn to refine the problem you’re solving based on actual pain points, the definition of your target demographic, and your understanding of the competitive landscape.
- Next build a mock-up of your minimum viable product (MVP) and run 50 actual people through your “product interview” (yes that’s also a lot of work—but think of how much time and money you’ve saved by making sure you’re building something that people actually want). The great thing is you can test your pricing by getting as many of them as possible to agree now to buy your product—at full price—when you release it. Keep raising your price until you hit resistance. Refine your proposed MVP based on what you learn.
Guess what just happened? You have customers paying you to develop your product. Yes!
Putting the “Viable” into “MVP”
The next step is to build your MVP and take people’s money with a 30-day trial period. Now your startup has traction, a realistic marketing plan, and a product that solves an actual customer pain point.
Remember that potential investors see hundreds of business plans every year, but only invest in a few. So you need to be one of the best. Your conversations with potential investors just became easier because you’ve done the work—and the best part is that you may not need to raise money at all!
I’ve put together a short list of awesome books I’ve read recently on getting to know your customers (hint: I didn’t even include The Lean Startup).
And if you’re going to read one book, I recommend Running Lean: Iterate from Plan A to a Plan That Works by Ash Maurya because it offers a concrete method that’s straightforward to understand and execute..
What have you learned from interviewing potential customers OR why do you think you can skip this step? Let’s discuss in the comments below.