Working with four startups at the same time has steepened my customer development learning curve (and also explains why it has been a month since my last update). To help balance the load, I’ve brought on a conversion designer and a researcher; we’re finally firing on all cylinders.
Our customer development goal with every startup essentially boils down to a race to be able to focus on growing the business. But in order to avoid wasting effort and money on tactical growth drivers, the following steps need to be completed first:
- Validate the product/service is gratifying a reasonable percentage of users.
- Create a value proposition that will attract the right type of users and pull them through the conversion funnel to gratification (and ultimately a transaction).
- Eliminate friction from the conversion funnel.
- Fine tune a business model that supports scalable customer acquisition channels.
If these steps have been executed well it is relatively easy to grow a sustainable business. But many startups skip these steps and jump right into trying to grow the business – making their job much harder or even impossible. Some will get lucky, but most will fail.
Given the importance of getting customer development right, I’m certain that eventually most startups will contract a specialist to help them navigate the challenges of this pre-scale phase. I’m often asked how I plan to expand 12in6 to help more startups. Most people are surprised when I tell them I don’t have a desire to expand the business. I really enjoy being able to work hands on with two new startups per quarter. If I built a large team to fill the current void of specialists, I’d be too busy managing the team. This would mean less time learning how to improve my customer development approach.
As I explained in my last post, I’m now validating that a startup’s product is gratifying users before I commit to working with them. While I love to hear from as many funded startups as possible, I can barely scratch the surface of the number of startups that need help. If I don’t have the capacity to help you, here are a few others that specialize in customer development: (I haven’t dug into their approach enough to be able to endorse them, but I encourage you to check them out)
- Brant Cooper (San Diego)
- Rajiv Kapoor (New York)
- Sean Murphy (SF Bay Area)
If you are specializing in customer development or know someone else that you can recommend, please add names/recommendations in the comments. The main things to consider when evaluating a specialist is their track record building successful companies. And be sure to check references (especially around chemistry with the team).
I have been sharing discoveries on Twitter (follow me @ http://twitter.com/seanellis) and hopefully I’ll resume regular blog posts next week (after I get back from a short vacation in Hawaii).
Andrew Chen
Brant Cooper
Dave McClure
Eric Ries
Jamie Siminoff
Steve Blank
Forgive my ignorance, Sean – long time reader first time commenter.
If you vet companies based on whether the product is already gratifying customers, then isn’t a massive part of customer development already taken care of?
It seems like you’re talking about sales optimization rather than customer development. Sales optimization is a largely quantifiable game of metrics and analysis. I’d say that’s the easy part – you have tools and math to make the decisions for you.
The hard part of customer development is dissecting all the unquantifiable stuff, listening to the right customers and making sure they are happy, satisfied and that the product roadmap is aligned with their needs and your business parameters. That’s a stumbling block that a lot of startups never get beyond, I think.
Perhaps the blog post needs expanding (which I’m guessing you’ll be doing over the coming months) after which I’ll have a better understanding of what you mean…
@yongfook Thanks for the comment. I guess it all depends on your definition of customer development. Since Steve Blank coined the term, I’ll share what he said… He suggested that I’m entering at the validation stage, which is the second step in his “four steps to the epiphany”. At this point you still need to develop a customer acquisition/monetization approach that is scalable and repeatable. One of the key reasons that I don’t start earlier in the process is that revising the product often takes most of the six months that I commit to a startup. At no charge I help startups determine if the product has reached a level where I am a good investment. Otherwise they are better off keeping their burn low.
First, I really like the topics you cover on your site Sean . . thanks for sharing your thoughts, insight and experiences.
Second, I appreciate yongfook’s comments on this post as well and understand your point that you need to narrow your efforts to assure you deliver I high level of value to those startups you do work with.
Third, I specialize in value development, value validation, value communication, value pricing and value execution and monitoring. This enables smarter pricing decisions, improves value propositions and optimizes a company’s ability to create and grow paying(and profitable) customers.
Happy to start a conversation with those startups your schedule or focus is unable to accommodate.
Thanks again . . . respectfully,
Chris Hopf
BTW – based out of Seattle
Thanks for the comment Chris. Are you primarily focused on startups? I’ve had a few companies in Seattle ask if I know any good customer development specialists. Happy to recommend they connect with you.
Q: Sean, you asked, “Are you primarily focused on startups?”
A: Yes, startups and those existing companies that want to startup a new path . . . to discover, strengthen, communicate and fully leverage their competitive advantage and position their company for the best results – everyday – every transaction.
A proactive, focused, time-sensitive, “I hate missing opportunities” approach to getting where you want to go, faster. I am told their is a whole lot of value in that 🙂
Sean, I’ve been enjoying reading your, Steve Blank, Eric Ries & co’s customer development blog posts, tweets etc for a while now. Since I first heard the buzz about customer development I bought Four Steps to the Epiphany and it resonated with some of the things I’m doing with my startup, opened my mind up to some others and made a whole lotta sense.
However…I’m based in the UK where there aren’t so many people to talk to about all this. Have you come across any people in the UK (or anywhere in Europe) who you rate at both understanding and executing customer development strategies with startups?
As a founder I can put into action many of the things I’ve read but I can see significant additional value in getting external input using this methodology (as you have provided at Xobni, Dropbox etc).
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