The more one adopts these principles, the more one can find ways to adopt them in all areas of life — they become “meta,” as Patrick Vlaskovits would say — and this event was no exception.  It was Lean Startup Machine’s Minimum Viable Product.

By all accounts (that I’ve heard), the event was a rousing success.  Here are some more or less random thoughts about the weekend, some of which I hope to cover in more depth soon:

1) I’m blown away by the people who attended: smart, opinionated, creative, dedicated team-players with some really interesting ideas.  And they all want to be startup founders.  Many will scoff at whether this is a good thing or not, but I think it’s great.

2) Customer Development is a great conflict resolution tool.  When you reach a loggerhead, formulate opposing opinions as hypotheses and go test them.

3) While there was reluctance among some and a few Engineers stayed inside completely, whole teams hit the streets of NYC to engage customers.  It was awesome to see!  I can’t wait for the video.

4) Clearly enterprise B2B ideas are at a disadvantage when it comes to weekend customer development.  But B2C rocked it and B2SMB took advantage of New York’s vast number of local businesses.

5) Good team balance was essential.  Those teams with naturally social members kicked customer development butt.  People were making phone calls to business owners across the country, setting up Craigslist ads, conducting surveys, interviewing by telephone and pounding the pavement for person-to-person discussions.  There was more combined customer development in one weekend than most startups do in a year!

6) Customer Development is hard.  Several assumptions were crushed over the weekend and for the more brutal failings, there were no easy follow on steps.  It’s one thing for a market segment to fail, it’s another when a core idea is roundly  rejected.  But it happened.   It’s easy to become demoralized by negative validation, but the teams pressed on.

7) We saw some amazing pivots, product mockups that reflected the changes, and then customer validation of the pivots!  That’s pretty amazing for a weekend’s work.

8 ) Some people had a tough time understanding the difference between seeking evidence for their idea and testing their assumptions.

9) This event has great potential.  There were some rough spots, but no major problems and the learning that went on was tremendous.

10) It will be interesting to hear more feedback, but my general impression is that this was the first real encounter with customer development for most of the participants and that the experience they gained was invaluable.  My belief is that to truly grok customer development, you must “get a win;” meaning you need to experience first hand the empowerment that comes from customer validated ideas.  I think we had a lot of that!

If there’s something in particular you’d like to hear more about the weekend, please let me know in comments.

The size of your sales force, the money you make.

Lean is not how much money you spend,

That you like your product and so does your friend.

To test your guess and iterate,

To kill your favorite feature your customers hate,

To exercise ideas, removing the sheen,

That is what makes a startup lean.

Figure 2. My interpretation of Ries' Lean Startup: Customer and product development interrelatedness

*CPS = Customer-Problem-Solution

As shown in Figure 2, customer development and product development are two distinct, but interrelated and iterative processes. As Eric Ries describes, the Customer Development team works on testing the problem-customer-solution assumptions, while the Product Development team tackles the solution.  The product development process receives input from customers indirectly through customer development, and (in the web world) directly through measurement of product usage.  The product development process actively iterates on the product, releasing new or different functionality directly to the customer as quickly as possible.

The customer development process receives input from customers indirectly through product development reports on feature usage, but also directly from customer development processes and analytics.  The customer development process iterates on core business assumptions, product functionality, and acquisition and conversion assumptions, resulting in updated hypotheses, honed messaging, positioning, marketing tactics, and feature requirements.

In the Customer Discovery context, a lean startup is not one that necessarily uses lean manufacturing precepts per se, but rather one that uses fast, iterative development practices in conjunction with customer development methodologies in order to:

1)       Validate core hypotheses (customer-problem-solution),

2)       Produce an MVP,

3)       Achieve Product-Market fit,

4)       Produce a development and marketing roadmap for scaling.

Creating a proper iteration loop requires you to predefine success and failure for each stage, and a means to measure your progress.  For example, in the web-based world, Dave McClure’s AARRR metrics (Acquisition, Activation, Retention, Referral, Revenue) might be applied to measure the stages from concept to product-market fit.

(BTW, if you are interested in being notified when the book is published, sign up here.)

1) The Renaissance Salesperson  — This individual can sell anything to anyone, e.g., ice to an Eskimo, water to a drowning man, aluminum siding to a brick house owner.  The quintessential salesperson, as depicted in Tin Men, Glengarry Glen Ross, et. al., is driven by the confidence that despite all odds, he or she can close.   Product is merely a milestone in order fulfillment.

Quote:

After selling vaporware for 25 years for large vendors like Oracle & Peoplesoft, believe me, I can sell this…

These highly successful sales people turned CEOs sell their trackrecord to raise funds, an exercise deemed a necessary evil to afford hiring the sales team.  This path is clearly fraught with danger.  Ethics aside, it’s one thing for a billion dollar company to promise first and deliver later and quite another for a startup to depend on these tactics to get going.

2) Speak-softly and carry a big Product — This individual believes product development solves market shortcomings.  There is at least some altruism here, in that these individuals believe in building high-quality products that customers want.  Unfortunately, the believe system is often typified by the “if we build it they will come” mentality, whereby products are magically discovered by their customers through the luminance of their high-quality sheen.  Quote:

We can provide the depth of content Google can’t.

In Field of Dreams, Kevin Costner had a magic spirit or baseball god to ensure the players indeed came.  This tactic may work for you, too, assuming you have a marketing god filling the stadium for you.

3) Madison Avenue Marketer — These people recognize that a “Field of Dreams” is pipe-driven. Their answer: a really big megaphone.    In the past, this has meant heavy advertising and lots of PR, topped off with, perhaps a Superbowl ad.  While this method might be right for some (Go-Daddy comes to mind), for most startups, not so much.

These days most startups won’t get enough funding to take this tact, but there’s a smaller version that is equally pernicious. Quote:

What we need to do is create a blog, a Facebook fan page, keep the updated, tweet, max-out SEO, create backlinks, etc., and make as big a splash as possible.  It’s not cheap.

This strategy reminds me of the movie, Wag the Dog, where a political spin-doctor teams with a Hollywood producer to create a false war to distract the population from other matters.   While the analogy doesn’t exactly fit, the creation of a huge spectacle is really a marketing strategy and anytime you are attracting attention you are necessarily distracting, as well.  The point to startups is : 1st) The attraction/distraction are typically transient in nature, even if you have the money to sustain the programs; 2nd) While “wagging the dog” is a purposeful diversion to hide something, “wagging the startup” results in internal diversion away from what you should be doing.  What if your buyer doesn’t tweet or read blogs?

(See Steve Blank’s market type discussions to learn when a big megaphone might be the right approach.)

4) You Can’t Handle the Truth! — I’ve mentioned this before, but one of the most difficult predicaments for entrepreneurs is handling the truth that a market doesn’t exist.  If  you don’t want to hear the answer, don’t ask the question.  In “A Few Good Men,” Lt. Kafee asks the question.

Denial is a powerful human defense mechanism.  Rationalization protects the denial.  Quotes:

The answer was close enough, I phrased the question wrong.
You don’t get it.
All my friends say I’ve nailed it.
They don’t realize they need it yet.
I only need 1% and that’s a no-brainer.
I’d pay for it.  There’s gotta be lots like me.
It makes too much sense.
Their boss will make them buy it.
…

The passion that drives entrepreneurship often hides blind spots.   The point is not to not “go for it,” but rather to make “going for it” refer to proving the market exists, rather than assuming a market exists and building a business based on untested assumptions.

*****

I’m sure there are plenty more, but these are the most typical anti-lean startup archetypes I encounter.  These people don’t necessarily overtly reject continuous deployment, minimum viable product, or customer development, but rather mentally morph the concepts to fit into their existing beliefs of how things “should be done.”  Truth be told, I even recognize some of these traits in myself!

What about you?  Have you encountered these?  Do you recognize yourself in any of these archetypes?  How have you overcome them?

Words are powerful and and the intent of catchy phrases can be lost when removed from their original context.  I brought this up before a few weeks back, when the “Fail Fast” meme was cruising through Twitter and among some cheerleaders, it seems, failing itself had become the best means to success, as if it were the end objective, as if tripping your way to finish line will ensure you are the winner.

So it goes, IMO, with this quote about the customer’s vision:

Early customers are often more visionary than the startup they work with for that product.

I’m not so sure.  So while the initial intent of the phrase is not to misplace ownership of the vision, I fear (perhaps unwarrantedly so) that upon oft-repeats or retweets, that the wrong message emerges.  Not to repeat myself, but one has to treat customer input carefully.

Customers are inherently egocentric and have a limited view.  Their motivation is to solve problems that will increase their market share, increase revenue, or decrease expenses.   They certainly don’t wish to solve their competitor’s problems, though you would be happy to solve both.

“Visionary” customers make up a statistically insignificant portion of your market.

Visionary customers likely understand the problem you’re trying to solve better than you.  They may be working internally to solve the problem.  But the objective of their solution is to solve their internal issues, not achieve your greater market vision. (If they are trying to solve that, they are a competitor, not a customer.)

This is not wordsmithing or semantics, but rather is an important distinction.  The right visionary customers for you are ones who illuminate the path toward achieving your vision.

Is Google’s vision better than Yahoo’s because Google ceded their vision to their customers?

The danger in relying the customer’s vision is that in truth, the customer is not always right.  Their limited perspective and selfish (rightfully so) objectives means they will, if it is in their best interests, change your product to fit their needs.  If you have several customers doing this, and you opportunistically give each customer what they’re asking for, you will face an untenable situation that will prevent you from scaling the business.

Facts Exist Outside the Building, Opinions Reside Within

Your vision.   Your assumptions about your vision.  Test your assumptions.  Validate the vision.  Allow customers to shape your vision.  (This is really tough!  Are speaking with the right customer?)

Non-visionary customers know the features they want.  But customer development is not about gathering feature requirements.  So early on, you must be speaking with early adopters or if you can find them, visionary customers.  As Sean O’Malley says,

[Vision] should be built by triangulating as many inputs as possible.

Here lies the intuitive and creative part of being an entrepreneur.  You are the pied piper, who plays snippets of music you hear customers humming.  You need to select — all through product development, not just at startup time — the minimum features required to keep existing customers satisfied and acquire new ones within your defined segment, while heading toward fulfilling your vision.

Intuit didn’t know that printing checks was going to be the “killer feature” that would win the day (until they talked to customers), but they did envision that a financial management system that made it easy for home computer users to pay bills could be a big winner.

At SuperMac, desktop publishers bought their graphics cards because they solved their application problems.  But Steve Blank had the marketing vision to implement a strategy to target desktop publishers.

Friends & family, employees, partners, customers, investors, analysts & media will all attempt to alter your vision based on their personal experiences and needs.

In The Four Steps to the Epiphany, Steve Blank writes:

[Visionary Customers] are a special breed of customers willing to take a risk on your startup’s product or service because they can actually envision its [your product!] potential to solve a critical and immediate problem]

Your product.  Your vision.  The customer is the expert about their problem.  You may need to shape your vision as you learn more about the problem.

You must skate the fine line between holding onto your vision, while receiving input that helps shape the vision and providing the path toward achieving it.

Comments are welcome!

I am pleased to report our first failure.  : )

According to our surveys and interviews, our assumptions regarding who will be willing to pay for what appear to be wrong.  (I might add, too, that the feedback seems to be running exactly opposite of the expert advice the company heard while going through a local mentoring process.)

So now that we’ve got our answers, we’re ready to go to market, right?

Just kidding.  Customer Development principles dictate that upon failure we iterate.  So I am now rewriting our assumptions and we will start a new round of interviews.  With respect to the “who,” it’s clear to me we have not found our early adopters. Unfortunately for the “in-the-building,” “I think I’ll build an online survey,” aficionados among us, we have to put on our business development hats and hit the pavement.

I like the fact that the necessity of reaching beyond his impressive array of friends and families makes the CEO a bit uncomfortable.   In a great talk, Seth Godin says (h/t Dan Martell):

If you’re not upsetting anyone, then you’re not changing the status quo

Albeit in a different, #leanstartup context, I’d argue:

If you’re not upsetting yourself, then you’re not challenging your assumptions

With respect to the “what,” we have struggles there as well.  As a self-taught product manager working with a traditional Engineering executive, we are constantly fighting the propensity to become enveloped by the feature miasma.  We spent a couple of weeks investigating platforms, while in parallel, defining and creating mock-ups for developing from scratch, in-house.

I won’t go into the debate here, but suffice to say, it’s quite difficult to evaluate platforms without delving into feature minutiae.  The fear is, of course, that the wrong decision is going to screw us in the future.  The reality is likely to be, however, that success of the product will force a future decision and we will be happy to be in that position, even if we have to rebuild.  In other words, the platform decision we make now will not determine failure or success of the product, because either path will work to create the product.  The current objective is minimum viable product (MVP), not scalability, best-of-breed, most features, ease of development, best product support, etc.    The decision today needs to be made based on today’s objectives.  (These are not impromptu, however, but rather are defined (MVP) and tied to larger business objectives.)

In the end, we believe that time and money dictate that the  opensource platforms will best provide the best path to minimum viable product.  We will need to stitch them together, make them look good, and build the ability to monetize.

As we begin to make features public to “friends of the company,” our primary challenge is to figure out which functionality to monetize.   Based on our last round of interviews, we have some pretty good ideas.  The primary challenge we face here is the understandable, but misguided (IMO) feeling among some to offer for free, what can potentially be monetized.   The idea is driven by the fear that we need to create participation to provide value and forcing users to pay will dampen participation and therefore lessen value.

There is certainly truth in that.  But I’ve always found it more difficult to charge for something after it was first offered for free.   Someone somewhere wrote about the huge gap between Free ->1$ and 1$ -> 2$.

In a freemium business model, however, success depends on free, as well as paid.  You have to offer compelling value for free.  Making paid content free doesn’t change that equation.  So in the final analysis, making paid content free tests neither free nor paid!

Proposed solution is free version vs free trial (x months, w/o taking credit card).

Unfortunately, decision-making is often driven by fear.  Fear of making the wrong decision can lead to making no decision at all.  Typically only the latter is a death knell.  There’s an old sales adage that says the worst answer a customer can give is maybe.  When facing decisions, the worst action is not making a decision.  More on decision-making here.

Thoughts?

Updated: In comments, Sean Murphy kindly provides the post I referred to above regarding the gap between Free ->1$ and 1$ -> 2$.  Please go read Josh Kopelman’s excellent post.

The two key principles that tie the threads of my career together are customers and project management. (One could probably look at all of life this way, too.)

Two epochal moments happened in my career at one company, Tumbleweed (now part of Axway), that helped me consciously acknowledge the two principles.

• I learned from CFO Joe Consul that what I had been doing for years was actually called project management.  (Yes, some of us are slower than others.)  I was able to structure and formalize what I was doing, which allowed me to become more efficient, teach others, scale, etc.

• I learned from marketing that although I was an IT Manager, my views on how to sell to IT Managers (our target market), was not necessary.

(I should mention a third moment, because it was a pivotal for my learning.  I learned from CEO Jeff Smith that passion is a key (though not sufficient) ingredient to success.  Jeff was out to change the world and he in infected us with his enthusiasm.)

Tumbleweed was an interesting ride; it reached the highs and suffered the lows that all businesses that last 10+ years endure.  A lot of mistakes were made, and a lot of lessons learned.   There were many success stories, too, and, unsurprisingly, lessons learned there, too.  I saw evidence of certain elements of Geoffrey Moore’s  Chasm, as well as in retrospect, a lack of customer development.

Not to fault anyone, but the late 90s saw a lot of customer defumblement.

Steve Blank’s presentation of Customer Development is persuasive.  Eric Ries’ Lean Startup, combining customer development and agile development principles is even elegant.

The simplicity of necessity masks the complexity of execution.

Whether internal or external, formally defined or not, no matter what you are doing, you have a customer.  Whether explicitly defined or not, you also have at least one objective associated with your customer, e.g., make them happy, accept their money, increase their market share. To reach objectives, you must execute on a carefully-crafted plan; a carefully-crafted plan that you must defenestrate the moment you conclude it doesn’t work.  Hopefully your plan includes post-defenestration steps.

Steve Blank @ startup2startup joked that, to put it mildly, The Four Steps to the Epiphany, is a difficult read.   But customer development isn’t hard because Blank’s book is difficult to read.  Customer development is hard because the answers to the questions that will test your assumptions are difficult to come by.   As any project manager who has ever had to “gather requirements” knows, customer don’t know what they don’t know.

The customer is not always right, but they do have the last word.

It’s your job to empower and persuade customers to act in a way that achieves your objectives for them.  But how do you know how to get them to act? You can guess. You can hard sell. You can ask. You can lie.

If you go about empowering and persuading the wrong way, you will lose your customer. You will lose your customer because of some combination of:

• You never actually located your customer.
• Your objectives for the customer were not clear.
• Your tactics for achieving the objectives did not match the  customer’s behavior.
• Your process for “listening” to the customer was wrong or incomplete.
• You failed to execute.

A disciplined approach for web-based products allows for faster learning, but for “offline” products, customer development is a particularly meticulous and  time-consuming process.

Here are some customer development hurdles entrepreneurs and executives need to overcome:

• Dislike of “cold-calling” potential customers;
• Selling, not listening;
• Requirements gathering, not learning;
• Over dependence on surveys;
• Reliance on focus groups, not interviews;
• Belief that past experience guarantees future;
• Basing conclusions on small samples.

I’m sure there are more; feel free to share in comments.