Preface
We have guesses about what’s good for the user, but we’re mostly wrong. No matter how good you are, you’re mostly wrong.
—Adam Pisoni, CTO of Yammer
In a startup no facts exist inside the building, only opinions.
—Steve Blank
In 2008, at the startup I was working for, my manager dropped Steve Blank’s The Four Steps to the Epiphany on my desk. “You have to read this book,” he said. “It’s brilliant and we need to learn from it.”
Blank wrote about the failures (and successes) he’d experienced in two decades and eight technology companies. Through his experiences, he recognized a process that was missing from startups, which he called “customer development.” In reading his book, I recognized both mistakes that I’d made and mistakes I’d observed in companies around me. We were not verifying that we were building something customers would buy. Too often we substituted our internal industry and product knowledge for customer input.
I also recognized some of the techniques in the book. I had already been using them in my career—not because I’m as smart as Steve Blank, but out of necessity as a user experience professional working in companies with a lot of uncertainty, no budget, and no dedicated team.
It was with The Four Steps in my head that I walked into my first meeting with one of our early customers. It was an easy meeting; they liked us and nodded in approval as my manager talked about our upcoming product release. As the hour drew to a close, people around the table made the universal gestures of a meeting wrapping up: snapping laptops shut, gathering papers, fishing business cards out of their wallets.
I asked a question: “I know we’ve shown you what’s coming in the next release—but I’m curious... If we could add anything to the product, how could we make it more useful and valuable for you?”
I wasn’t really expecting an answer.
The project manager on the customer team paused. “Well...” she said, “your recommendations widget gets us more engagement, which makes us more money, which is great. But not all of the pages on our site are monetized equally. Some pages are 10 or 20 times more valuable to us, and we have specific page-view commitments for them. If you could specifically help us promote those pages, you would help us make a lot more money.”
As we walked out the door, my boss said, “I can’t believe we’ve been working with them for almost a year and we never asked that question.”
Over the next couple of weeks, I talked to more customers. I listened as they described how they worked with business partners, what helped them make money, and who made purchasing decisions. What I learned from those conversations spurred us to change our product and triple our price.[1]
This short conversation is a great example of what I call lean customer development. Just one question posed to a customer. Just one shift in perspective—away from building a better product and toward building a more successful customer. It led us in a new direction, saved us time, and brought in a lot more money.
It’s a simple formula. Learn what your customers need, and use that knowledge to build exactly what they’re willing to pay for.
Who Is This Book For?
If you are a startup founder in the San Francisco Bay Area, this book is not for you.
Why? Because you’ve probably not only read Eric Ries’s The Lean Startup and Steve Blank’s The Four Steps to the Epiphany (or at least tried to get through it), but also many of the other books in the O’Reilly Lean Series. More importantly, the Bay Area is full of speakers, bloggers, and peers who embrace change and experimentation. Even your prospective customers have an above-average tolerance for the new.
This book is for the entrepreneurial product person who isn’t in such a supportive environment.
Maybe you’ve read The Lean Startup. You’re thinking, “This sounds great—but how do I actually do it?”
You may work in a startup or in a large organization where you think you can’t get away with using tactics that work for startups.
I built my career in the Bay Area, but I’ve spent most of my time working with people like you. I’ve worked in startups where our customers were in conservative or change-averse industries like finance, publishing, healthcare, legal, or construction. In 2012, the company I work for, Yammer, was acquired by Microsoft. Since then I’ve been evangelizing lean and training Microsoft employees on how to adapt to a faster, more hypothesis-driven culture.
In other words, I feel your pain and I can show you how to apply these tactics, whether you’re working at a startup or in an established company.
This book is for product-centric people in technology or offline businesses, service businesses, big companies, conservative industries, and even heavily regulated industries. This book is for:
Product managers, designers, and engineers who want to increase their next product’s chances for success
Product-centric people in large organizations who are struggling to help their organizations move faster and work smarter
Entrepreneurs seeking to validate a market and product idea before they invest time and money building a product that no one will buy
In this book, I’ve provided lots of examples to help you see customer development in action. You’ll find a variety: examples from startups and examples from established companies. There’s also variety in the kinds of products: products aimed at consumers, products sold to businesses, software products, services, and even food products.
Because the simple approach to customer development that I present can help you no matter what your product focus or the size of your organization, I’ll ask you to read all the examples, not just those that fit your industry. The principles you’ll learn will be worth your time.
Who Can Practice Customer Development?
What do you need in terms of background and skills to practice customer development? All you need are three qualities:
- Ruthless pursuit of learning
It’s uncomfortable to ask questions that might prove you (or your boss) wrong. It’s also essential to success.
- Comfort with uncertainty
Customer development isn’t predictable; you don’t know what you’re going to learn until you start. You’ll need the ability to think on your feet and adapt as you uncover new information.
- Commitment to accepting—and escalating—a reality check
Some of your team’s assumptions will be proven wrong. You’ll need to convince people to change their minds and their plans based on what you learn.
If you’ve got these three qualities, this book will give you the background to start practicing customer development immediately. You’ll also gain an understanding of the social psychology behind the tactics I show you (i.e., why they work). Because every company is different, you’ll want to adapt the techniques from this book to make them work for your situation. Knowing why they work will empower you to do just that.
You might also wonder how many people you need to do customer development. In fact, even one person can drive this change.
If you’re the founder of a new startup, you may be that person.
In my experience, even in organizations with multiple people practicing customer development, one person coordinates and consolidates what everyone is learning. That’s why throughout this book I’ll be talking straight to you.
How Does This Book Fit into O’Reilly’s Lean Series?
This book is part of a series of books inspired by Eric Ries’s The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. Each book expands on one of the ideas in Ries’s book and provides a deeper guide to putting those ideas into practice.
You don’t need to have read The Lean Startup or any of the other books in this series to read this book.
Because customer development is a core element of the lean startup, you will find mentions of it in other books in the series. However, lean customer development is unique in that it focuses entirely on how to get out there and start practicing customer development today. It’s also unique in that it is explicitly directed at both startups and mature, existing companies, in recognition of the fact that lean tactics are now being used in companies of all sizes and types. You don’t have to work in a startup to use this book—in fact, enterprise companies may well need it more!
Why I Wrote This Book
Customer development is critical to success, but grossly underutilized. Here are the top four reasons I believe this is so:
We’re biased toward our own great ideas.
We feel that our industry knowledge entitles us to skip validating those ideas and jump to creating products.[2]
We don’t know how to find customers before we have a product.
Most of the information to date on this topic is long on telling you why you need customer development, but short on telling you how to do it. As a result, most people don’t know where to start.
I don’t want to see more companies make the same mistakes I and so many others have made!
This book tells you exactly what to do, how to do it, and why you should do it, so that you reduce your risk and accelerate your progress from idea to profitability.
What You’ll Learn
This book offers a practical education in customer development. Figure P-1 illustrates an overview of the process and serves as a guide to where each step is covered in this book.
In Chapter 1, we’ll arm you with the facts you need to overcome initial resistance from your organization about doing customer development.
In Chapter 2, we’ll get you started with identifying assumptions, writing a problem hypothesis, and mapping your target customer profile.
In Chapter 3, we’ll describe how to find your target customers and get them to talk with you.
Chapter 4, details the types of questions that effectively identify customers’ existing behaviors, pain points, and constraints—and explains why these questions work.
Chapter 5, gives you a play-by-play for successful customer interviews. You’ll learn how to introduce yourself, get people talking, and get beyond shallow answers to detailed, thoughtful facts about customer behavior and needs.
Chapter 6, shows you how to synthesize the valuable insights you’ve gained and use them to drive product and business decisions.
Chapter 7, describes the different kinds of MVPs and what situations each one works well in.
In Chapter 8, you’ll discover how to set expectations appropriately and reassure customers. For those of you in large enterprises, in conservative or regulated industries, or constrained by long sales cycles, this chapter will reassure you that you can make customer development work in your organization.
Chapter 9, gives you strategies for fitting customer development into your everyday routines and piggybacking on existing customer interactions to continuously gain insights. By the end of this chapter you’ll have new ideas for creating more opportunities to talk with your customers.
The appendix, Appendix A, offers tried-and-true questions to ask and describes when to use each question, as well as what you can expect to learn from asking it.
A Word of Thanks
First of all, thanks to the people who trusted me to try out all of the tactics and questions in this book on our customers over the years: Hiten Shah, Peter Hazlehurst, Tim Sheehan, Jim Patterson, and Pavan Tapadia.
Justin Lin deserves a lot of credit for figuring out exactly how much to nag me to keep writing. Serena Lin was less subtle: “When you going to be done writing, Mommy?”
Thanks to Maureen Be, Vanessa Pfafflin, Grace O’Malley, Jamie Crabb, and Priya Nayak—my amazing research team at Yammer—who have been refining these ideas and using them to make our product teams and our product better.
So many of you were helpful in various ways: making introductions, offering suggestions, reviewing outlines, vetting my references, and recommending me for the speaking engagements that inspired me to write this book. Thank you to all of you, and especially to Henry Wei, Trevor Owens, Bhavik Joshi, Andrew Wolfe, John Petito, Eugene Kim, Sarah Milstein, and of course Eric Ries and Steve Blank. Thanks to my editors: Mary Treseler, who greenlit this book, and Deb Cameron, who helped bring shape and structure to a bunch of ideas and footnotes. To my reviewers, Tristan Kromer, Marcus Gosling, Robert Graham, Phillip Hunter, Chuck Liu, Matthew Russell, Tom Boates, and especially Lane Halley. Your thoughtful suggestions and criticisms helped evolve this book in a great direction.
[1] Wouldn’t it be great if this anecdote ended with the company reaching unprecedented heights of success? It didn’t. The product pivot that came from this conversation did directly boost revenues and win additional customers, but failure to understand the business model ultimately doomed the company. If only I’d been able to read this book back then! I would have realized that we were dependent on a key partner—advertising companies—that probably saw the bottom falling out of their market before we did.
[2] It doesn’t matter that you’ve got a team of smart people who know the industry. There is no shortage of failed products built by great teams with strong track records and industry expertise. As Ries puts it, “Most likely, your business plan is loaded with opinions and guesses, sprinkled with a dash of vision and hope.”
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