Occam’s razor states that the simplest solution is usually the correct one. When you ask the question, “why do most startups fail,” the simple, and often correct answer is, “because of a lack of customers.” The main message of John Prendergast’s session on “Dodging Bullets that Kill Startups” was to focus on your customer as early and as much as possible, so that your business can avoid that common cause of death. John is a disciple of the “LEAN Startups” principles created by Eric Ries, which acted as the basis for the tenants he covered during his session of the unConference.
Create an “MVP”
An MVP, or Minimum Viable Product, is the absolute minimum features that would satisfy your customer’s most basic needs. As a LEAN startup, your goal is to quickly and effectively create your MVP, so that you can deliver it to your customers. However, the reason for this is not to drive early revenue; rather, you’re releasing your product at this point in order to learn from your customers.
When you release the MVP, you’re accomplishing 2 key goals. First, you’re getting customers to not just talk to you about your product, as you would in market research, but also open their checkbook; you don’t really know anything about your customer until they make the decision that your product is worth paying for. Second, because you and your customer know it is an MVP, they understand it will be improved based on their needs. With this in mind, you will have an open channel to designing the full product they want and will continue to pay for. It is often easy to develop your product in a bubble in your offices or labs. By creating the MVP, you avoid creating a feature intensive, expensive product that doesn’t actually satisfy your customer.
Facts Live Outside the Building
At the center of having a LEAN startup is bringing the customer into the development process. This means delivering them the MVP and then having in place the proper communication and metrics to properly assess their responses to the product. You need to ask them, “what are your pain points?” and evaluate their behaviors in using your product. Most customers are ineffective at describing the product they need, because they don’t always know what is at the heart of their problems. By watching their actions and understanding their key obstacles, you can tailor your product to what they need most.
Scaling a Company is your Last Step
In the dotcom era, you often heard about companies growing as quickly as possible in the hopes of gaining immense market share. Given the success rate of those companies, LEAN Startups likely has a point in suggesting that staying small and agile initially is best. When you are small and dealing with only your core customers, you can focus on learning from them and perfecting your product; your burn rate will be lower due to fewer employees, and the smaller customer base will be more manageable for maintaining communication.
This harks back to some of the concepts found in the book, Crossing the Chasm. Author Geoffrey Moore suggests using those early adopters, who are anxious to be a part of the development process, to better position your product before reaching the early majority of customers. It is in reaching those early majority customers, which represent significant sales that requires scaling, that creates the “chasm” companies often fall into.
Test, Analyze, Iterate, Repeat
In the end, the principles of LEAN Startups is about bringing the scientific method to the business side of the equation. You need to measure everything you’re doing related to your product and understand what works, what doesn’t and what is needed. The only way to know this is to test. If you’re product is a website, that means trying things like an A/B test. If you’re creating a physical product, you need to have customers using it and observe how they use it. Regardless of the product type, you should be giving them short surveys and calling them. As John said, “call God himself if you can get his number!” When you perform these tests you can then evaluate the results and improve and reshape your product; you can add features that are needed, while avoiding mission creep.
LEAN Startups is all about your customer. Get them involved and you’re much more likely to create a product that will satisfy and maybe even delight them. Through this process you will also build a personal relationship with them, which is quite likely to improve the chance of continued revenue from them; your product will be exactly what they need and they may even feel some ownership and loyalty to you because of how the product evolved with their input.
There is a lot more to learn about LEAN Startups. John was kind enough to tweet additional resources, which you can find here:
Lean Startups Meetup Group, Lean Startups Google Group, Steve Blank’s Book & Blog, Eric Ries’s Blog & MIT Event, and another blog