We talk about Lean Startup methodology, how to build a minimum viable product and why it’s so important, asking the right customer development questions, and his favorite hack for getting 100 customer development interviews for $5.
I’m a big proponent of LSM’s weekend workshops. I think the best way to learn just about any skill is by doing and startups, entrepreneurship, customer development, Lean Startup, etc. is no exception. I took one probably about three years ago and since then I’ve mentored a couple of them in New York which has been awesome.
You can read some of the highlights of the interview below and/or listen to the compete interview on Stitcher or iTunes.
Lessons Learned Helping Start Companies in One Weekend All Over the World
Mike: you guys are doing these seminars, helping people start companies in one weekend, all over the world, it’s pretty amazing. So, I’m sure you’ve learned a lot about Lean Startup and customer development and about startups in general. So what do you think are some of the biggest thing you’ve learned just from doing these startups over the course of the weekend?
Desi: One of the biggest things is that you need to be open to pivot your idea. And when I say pivot, completely change your business model if it doesn’t fit with the customer, there’s no demand with their idea of customer demographic.
One of the most fundamental things that we teach within Lean Startup methodology is that usually first time entrepreneurs think first in terms of solution. So, they pitch a solution. But, the problem with that is that that solution may not apply to a specific problem, and that problem may not apply to a specific customer. So, you’re kind of thinking backwards. So, you know what your solution is, but you don’t know what specific problem that solution solves and you don’t know who the customer is.
So that’s the first thing that happens in the workshop, people are pitching all these solutions, but they don’t know who their customers is. And, one of the brainstorming exercises is brainstorm who your customer is and what you’re assuming their problem is. And the first thing that they do is they get out of the building, they do the customer development, they try to find their customer demographic. And when they’re actually interviewing these people, they’re finding out that their ideal customer demographic has a completely different problem than what they assume.
So, to reiterate, a lot of entrepreneurs think backwards from solution to problem to customer, when you should be thinking in terms of customer first. So, figure out who your customer is really specifically, who is your customer demographic, what are actual problems that these customers have, and then start to build the solution around that.
And, that’s the biggest aha moment that entrepreneurs see in our workshops is that they start to interview these customers and whatever assumption that they are making that they have a specific problem, they might not have that problem. But, all of a sudden, they see a pattern and that these customers have this other problem they’re looking for solution for and that’s where you see that an opportunity.
Mike: Yeah, I can definitely relate that in things that I’ve done in the past and helping startups with their customer customer development and even actually in the customer development that I’ve documented on this podcast, the listeners who have listened to previous episodes will know that, I was assessing out an idea for authors and I did have an idea of mine, but with the interviews, I was going in trying to learn about their problems rather than trying to just validate or think about my solution.
And so, in fact, I did invalidate the solution, but I learned about a new problem that customers have and I also like what you’re saying about sort of discovering customers. So you’re not always talking to the right customer. But, by going out and talking to different customers you can better figure out where your solution could be applied or better yet where the problem could be applied.
Desi: And when you do it really intensely over three days, you learn a lot. You learn a lot about who your customers are, what actual problems that they have and you learn a lot about yourself and business. So, I think it’s important for people to understand how to build in terms of the customer and to go back about your question about some of the other things we learn, another thing that I learned was, again going back to the pivot, being open to pivot your business idea. And it’s interesting because a lot of these ideas become something completely different.
Over the weekend, I’ve seen teams that pivot their ideas up to seven times. It’s pretty crazy. But, the ones that fail, it’s because they don’t want to pivot. And you see that with teams that come in with a pre-established idea. They’ve been working out for six months to a year.
And then, when they actually start talking to a customer about their problem, the customer might just say to their face, yeah, I don’t have this problem, I don’t think your solution will solve my problem. And that entrepreneur is so married to their idea, they don’t want to give it up and I think that that’s a big problem a lot of entrepreneurs have and I think that leads to failure.
So, I think that doing customer development early on to really figure out who your customers are and what problem they’ll have and what kind of solutions they’re using now, is extremely important because you don’t want to get to a point where you’re six months down the road, you’re a year down the road where you build out a solution especially if it’s a software, you spend all this time, resources and money, and then maybe a year down the road, now you’re starting to get that feedback from your customers saying this doesn’t really solve my problem. I don’t see a need for this product. So, again, it’s really important to do the customer development early on.
Mike: Absolutely. And I like to think about it at a really basic level. It’s the job of an entrepreneur to solve a problem and deliver value to customers. And if you’re not doing that, then nobody’s going to use or buy the product and you won’t have a business at all. And so, by doing that customer development, it enables you to figure out what they do want and to solve that problem and deliver value.
Using a Minimum Viable Product to Get Faster Feedback and Validation
Mike: So, let’s say the customer development is going well and you’re on track, you feel like you have something that people may want. I know you guys have a product called Quick MVP and there’s this concept of developing a minimum viable product as a way to kind of get faster feedback on the product idea and to get some more validation. Can you talk a little bit more about the MVP and how Quick MVP kind of fits into that?
Desi: Yeah, so I kind of answer in two parts. The second part of our workshop is once you validate the customer actually has a problem without pitching them a solution, you go back and you pitch them a solution. So, the first part is called customer problem validation. The second part is called problem solution fit, right.
So, now that you know that a certain customer demographic has a specific problem, you go back and try to pitch your solution to them. What we teach over the weekend is how do you deliver that product without building it out, without building out technology. We like to teach what’s called the manual concierge where if it’s a service product, you deliver the service without building out technology. You don’t need to have a website; you don’t need to have a software.
For instance, we had, in our Lean Startup machine New Jersey workshop, one of the teams was kind of an AirBnB for dog sitters, right. And they didn’t build out a website. All they did was post on Craigslist and social media who needed a dog sitter and who was a dog sitter. And they connected the two over the weekend. He did it about 10 to 15 times. And most importantly, he charged for the service.
And I think that’s one of the most important things is being able to collect and charge and prove that there’s a business model. Because if you can collect currency, especially if its cash from your customer before you built a product, right there, it proves that you have a business model and you have a business. And I think that once you’re able to collect the cash from a customer, everything changes, you really have a business there.
So, that’s what we teach, how to deliver the service without the technology and without building anything, so you can really figure out if you have a business model within two days or three days, without spending any money on building out a product, if that makes sense.
Mike: Yeah, a few points there, I just want to reiterate. One was the sequence of validating a problem and then validating a solution and then following up with those customers. An then the idea of the concierge MVP. And I think that that can be an extremely valuable strategy and I think it works more often than people think.
So, I think people like us and probably most of the listeners, we’re entrepreneurs, we’re techies and we’re thinking technology first. But, I think the reality is that most people, like the average person, they’re not buying technology, they’re buying value, they’re buying something that is going to make their life better. And so, it doesn’t really matter how they’re getting that value. They just want that value.
So, the dogs sitting marketplace example is great. So people don’t really care how they’re getting the dog sitter, they just want a dog sitter. And so, by doing it manually first you can get faster feedback, and validate that business model. So, I like that you guys have built a product to streamline an MVP and that validation process. It’s called the Quick MVP. So, can you just talk a little bit about what the product does exactly and how can it help entrepreneurs with their ideas?
Desi: So, we’ve had probably over 20,000 entrepreneurs that have taken our workshop around the world, so we have a pretty extensive alumni network. And we practice what we preach. We’re Lean Start-up practitioners ourselves and we listen to our customers. One of the things that we found is that a lot of our entrepreneurs who have taken our workshop, they know how to quickly build out a website for whatever their product is. They don’t know how to drive traffic to their website. That’s a huge problem.
You can easily build out a website. There are tons of easy website builders. There’s logtract.com, there’s Wix, there’s Weebly, there’s probably tens, even hundreds of different website creators. So, we created a very quick and easy landing page generator where you can literally set up a website within minutes, put what your product is, put a picture of it, put a background image, put the value propositions, three things about whatever the idea is, even put up testimonials and the call to action, whether it’s click here to buy it now or sign up by email.
So, you have all the essentials of the landing page. The most important thing is that the landing page allows you to drive traffic to the website via Google Adwords. So, we’re probably the only website out right now that connects automatically to Google Adwords where you don’t need a Google Adwords account. We kind of have like a house account where you set up the website, you put in whatever your keywords are.
So, the point is to validate the idea really quickly. So, let’s say you want to set up this dog sitting business, right. Within 24 hours, when you set up a budget of, I don’t know, a hundred dollars, and within 24 hours, you get a thousand website visits to your site, and a hundred people signed up via email. So, if a hundred out of 1000 people signup via email, you know you have a 10% conversion ratio, which is actually pretty good.
It’s a really quick and easy way to validate a business idea.
Drinking the Lean Startup Kool Aid
Mike: It seems like some people really love the Lean Startup methodology and some people don’t. Overall it seems like Lean Startup methodology has spread a lot. So what do you think it takes for Lean Startup methodology to become even more prevalent than it is? For people who reject it to accept it?
Desi:: It’s interesting that very large companies are starting to use Lean Startup methodology within the enterprise, so a really good example is GE. They’re a huge company and they consider themselves Lean Startup practitioners and it comes from the top. So, the executives encourage the entire company to practice Lean Startup methodology. They actually have a system within the company where they have Lean Startup mentors and he wants all of his employees to become innovative.
So, if somebody has an idea within GE, they can go to a Lean Startup mentor and push the idea. And what they can do is run an experiment on the idea because they find that they validate the idea. So, the idea is that, as you grow as a company, when you come really large, the company stops being innovative. The idea with larger corporations and incorporating Lean Startup is how do you capture the innovation within the organization instead of where potentially, somebody can have a really good idea and then walk away from the company and start their own company.
I also wanted to follow up on another interesting thing you were saying before which is about how, it’s kind of growing into popularity and while it’s kind of this new, it’s a new brand, but from what I found talking to a few entrepreneurs who have started multiple companies and are kind of “older entrepreneurs,” they’ve really been doing this stuff for a long time. They just didn’t really have a name for it. So, I don’t really think it’s like a gimmick or anything like that. I think it’s a process that has been used and been proven.
Do Customer Know What They Want?
Mike: Nonetheless, I still meet entrepreneurs like particularly younger entrepreneurs who are kind of sceptical of the process. They either don’t want to do it or not sure how viable it is. And I guess one of the most common things here is like customers don’t know what they want until you build and show to them. So, what do you think about that, what do you say to people when you hear things like that?
Desi: Yeah, I mean that’s a really good point. It really depends on the product. And then, I always tell people that Lean Startup is not the right or wrong answer. Really, it’s just a framework to help you, to guide you. And I agree. Depending on the product, customers may or may not know what they want, but you can use Lean Startup to kind of figure that out and test it. You really want to figure out what type of problems that they have and how they solve those problems.
And the million dollar question is will they pay for the product. And you can use Lean Startup to validate. I think that’s what Lean Startup is most useful for, to set up experiments and show you evidence that a potential customer will use your product, but more importantly will pay for it.
I like using Lean to kind of prove that you have a business model before you have a business. So, prove that you can take payment, maybe pre-sell your product to a customer because once you changed the currency, once you take cash from the customer, you’ve proven that you have a business model and everything kind of changes from there.
I think that the most important part in regards to Lean is to prove that customers will use it and more importantly pay for it.
Mike: That’s a really good point there about just getting some real validation and probably in the form of currency and I definitely think there’s some validity to the argument that customers don’t know what they want. But, I think it’s a consideration for entrepreneurs to make — do they want to go down that path, without any validation, continueing to build something.
I think it comes down to goals and risk tolerance. I know for me, I like to make sure that I’m doing something that people want, so I like to get that hard validation.
Desi: I love the Ford example. People were using horse and carriage to get around — they might say they want more horses to go faster. But, who would’ve thought that somebody would invent the car. Probably, when you ask that in that time frame, nobody knew what that was.
I think there’s really extreme circumstances where you can build something that is so innovation. So, I like using Lean to kind of check, to kind of validate your problem and validate what the customer’s looking for. But, I think that you should always keep an open mind and always be innovative.
Mike: Yeah, for sure. Though the car was at least solving a validated problem. People were already using horses, so it validates a need for transportation. I think where you can get into trouble — build something no one wants — is trying to create a new experience. When you’re trying to solve a problem that people aren’t already solving in some way. I think that’s when it can be pretty risky.
Desi: When the car was invented, I’m sure there was not a lot of mass adoption there, and it took a lot of time before people would accept the car was a viable means of transportation or the technology was completely built out where it was safe. So, people were still using horses to get around for a while. That’s the challenge when you become super innovative and you come out with super innovative technology that you need to get that mass adoption from the public.
Mike: Yeah, that’s really a good point that it can take a while to adopt. The thing about that, I’m sure people did have hesitations — driving around this motorized vehicle that’s a brand new experience. It probably had to be pretty scary.
How to Find 100 Customers to Interview
Mike: I want close it out by getting your favorite customer development advice or your favourite customer development hack.
Desi: Yeah, so I had a really good customer development hack that I use all the time. It saves me a lot of time from surveying customers. So, as an entrepreneur, I come up with a ton of ideas and I’m sure a lot of people have different ideas. I usually have a list. So, I write down all my crazy ideas. I probably have a list of over a hundred things on there. And the ones that I think that are really good, I like to challenge myself and use Lean Startup methodology to validate it or invalidate it. I’m constantly thinking about whether or not this could become a viable business and what I can do with this idea in the future.
I like to run customer interviews and customer surveys. I think that when you’re trying to validate an idea, a face-to-face interview is always the best because you get the best feedback and you can read facial expressions and that you could see that persons emotions one when they answer the questions. Right underneath that are phone call interviews and then the last is surveys where they’re just filling out a survey online and you’re not really having that face-to-face contact with them.
So, a real quick way that I do customer development is if I have an idea, I set up a real quick 10-question survey. And then, at the end of the survey, I ask “would you be willing do a phone interview?” And you’d be surprised, a lot of times that when people fill out the survey, they say yes and they put their phone number.
So, usually, it will take you a long time to get 100 people to fill this out. Instead I use the website fiverr.com. And you can literally pay somebody $5 to get a hundred people to take your survey for you.
And at first, you think well, what if they’re fake answers. I’ve done it so many times and when I leave the questions open ended and you actually read through the responses, you can tell that somebody didn’t just sit there and make up the responses.
You can filter out the respondents that you want and if they leave their contact information, you can set up a phone interview. I think that’s a really quick and easy way to get interviews.
And a lot of the ideas that I invalidated, I’ll read the responses from the survey and I can just tell right away that these customers don’t have a problem or my solution is not a fit for them. But, for the surveys where I see that it is a problem and I think my solution maybe a fit, I’ll take the next step and do the customer development and do the phone interviews.
Mike: That’s an awesome hack. I think it’s great because first you get the survey results where you can actually gain some insights. And then, I love that at the end, you’ve asked them to put in their contact information so you can follow up, so you can also do the follow-up interview.
Desi: As you’re going through the customer development cycle, if you decide, you validated the idea and you want to build it out in the future and you want to pursue this business venture, these people could be your first 10 customers or your first 100 customers.
Connect with Desi on Twitter.
Listen to the complete interview on iTunes.