20 Tips on Customer Development by Steve Blank

For entrepreneurs interested in learning how to build bootstrapped products the right way.

The book, The Four Steps to the Epiphany, is highly recommended for entrepreneurs interested in learning how to build bootstrapped products.

Four Steps to Epiphany Key Takeaways


A legendary hero is usually the founder of something—the founder of a new age, the founder of a new religion, the founder of a new city, the founder of a new way of life. In order to found something new, one has to leave the old and go on a quest of the seed idea, a germinal idea that will have the potential of bringing forth that new thing. — Joseph Campbell, Hero with a Thousand Faces


Most entrepreneurs travel down the startup path without a roadmap and believe that no model or template could apply to their new venture. They are wrong. For the path of a startup is well worn, and well understood. The secret is that no one has written it down.


Startup companies have traditionally used a Product Development model to manage and pace all these non-engineering activities. The misnamed process is merely a hint of the ten major flaws of the Product Development model.


Premature scaling is the immediate cause of the Death Spiral.


The Technology Life Cycle Adoption Curve, popularized and refined with the notion of the “chasm” by Geoff Moore. Instead of dreaming up ways to cross the chasm, the first step for a startup is to focus on learning and discovery processes, from starting the company to scaling the business. Through trial and error, hiring and firing, startups that succeed have invented a parallel process to Product Development that is customer-and market-centric, I call “Customer Development.”


The Customer Development model of a startup starts with a simple premise: learning and discovering who a company’s initial customers will be and what markets they are in.


General goal of Customer Discovery amounts to this: turning the founders’ initial hypotheses about their market and customers into facts.


Earlyvangelists are a special breed of customers willing to take a risk on your startup’s product or service because they can actually envision its potential to solve a critical and immediate problem—and they have the budget to purchase it. Unfortunately, most customers don’t fit this profile.


If you’ve ever sold a product, whether it’s to a consumer buying a stick of gum or a company buying a million-dollar telecommunications system, you’ve probably discovered every sale has a set of decision makers who get their fingers into the process. So the first question to ask is “Are there different types of customers we should approach when we sell our product?”.


An alternative to going head to head with the market leaders in an existing market may be to resegment an existing market.


What if a customer tells you that the issues you thought are important really aren’t? Learn that you have gained important data.


“You need to pick up the phone and call the top five accounts on your sales pipeline. Ask them this question: if you give them your product today for free, are they prepared to install and use it across their department and company? If the answer is no, you have absolutely no customers on your forecast who will be prepared to buy from you in the next six months.”


Many products are too hard to understand without some kind of demo. If a picture is worth a thousand words, a demonstration is probably worth a million.


There is no greater source of acrimony in a startup than finding out the company has sold something Product Development says it never committed to build. Therefore, it’s essential for both teams to review and agree on the facts in all the sales collateral.


Ensure key potential customers are on the “Customer Advisory Board.” These are people you met in Customer Discovery who can advise you about the product from the customer’s perspective. I always tell these advisors, “I want you on my advisory board so I can learn how to build a product you will buy. We both fail if I can’t.”


Common to all startups are four building blocks for customer creation. Just being able to articulate them is the first step in assembling a coherent Customer Creation plan. The four building blocks are: • Year one objectives • Positioning: both company and product • Launch: both company and product • Demand creation (advertising, public relations, trade shows, etc.)


If entering an existing market, the year one objective is to take as much market share as possible from incumbents. Consequently, all the Customer Creation activities must singlemindedly focus on demand creation and customer acquisition.


If you are creating a new market, company positioning cannot be about how different your company is, since by definition in a new market there are no other companies to compare it to. Therefore, in a new market company positioning is about communicating a vision and passion of what could be. It answers the questions, “What is wrong with the world that you want to make right? What is it that your company is trying to change?”


At times startups confuse evangelists with customers who will give a reference. They are not the same. A customer reference is something you have to arm twist to get; an evangelist is someone you can’t get off the phone. By launch time, earlyvangelists need to be happy enough with your company and product to stand up and happily tell others about it.


For companies entering a new market, the function of demand creation is to educate customers about the market and drive the early or niche adopters into the sales channel.


At the heart of the mission-centric organization is the corporate mission statement. Most startups put together a mission statement because the executive staff remembered seeing one at their last job, and somehow it felt important.

by Daniel D'Alonzo

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