Customer Development and Product-Market Fit — Why It’s Critical and Why I Created an Online Course
I’ve taught customer development and lean startup principles for 10+ years and I finally built an online course. Here’s my story.
I’ve been building startups and helping entrepreneurs for most of my career. One of the most important skills I’ve learned over the years is how to use customer development to find product-market fit.
In short, customer development means talking to potential customers of your business to learn whether or not a problem exists and if your solution might actually solve it for them. Moreover, customer development must be done at the idea stage, not after building and launching your product or service.
The customer development concept was developed by Steve Blank and has been used by millions of entrepreneurs to help them build products or services that people actually need. The practice is also a major aspect of the lean startup movement popularized by Eric Ries.
So while I certainly didn’t develop the principles of customer development, I’ve had a ton of practice implementing them in my own businesses and with the hundreds of entrepreneurs I’ve worked with throughout my career.
And, I’ve been teaching a high school entrepreneurship course for six years for which customer development is a major emphasis in the curriculum.
My initial introduction to learning this work was what you would call “the hard way”. I started my first company in 1998. At that time I had no experience with business building and had no idea about product-market fit, problem-solving, and certainly no concept of customer development. I was by all accounts a newbie to entrepreneurship.
Cool Ideas Don’t Always Sell
I had a cool idea, that used some cool tech, that I thought would think was cool. I was young. I learned the hard way that just because something is cool, doesn’t mean people will use it — even if they also think it’s cool. That’s the trap. People aren’t good at telling you what they want. So when you ask someone if they think your idea is good and if they would use it, or pay to use it, they will often say yes. But after you launch, they say no.
I’ve probably got a whole post about why people say yes when they actually mean no, but that’s another topic. The point is, you can’t count on asking people what they want. And while customer development is in large part “talking to people” the big difference is what you talk about.
Doing customer development is an art form. It’s about asking the right questions to ascertain, with some level of confidence, what problems and needs a customer has so you can develop a solution that meets those needs. Even if they can’t articulate them.
It wasn’t until my first startup failed that I realized I hadn’t done any of that. I assumed that because my product was cool, and that my friends thought it was neat, that others would want to use it.
For the next decade, I practiced listening to people and understanding what their true needs were. First I built a software consulting firm and essentially built exactly what people wanted. This is a little different in the sense that they came to me and asked for help. But I quickly realized that even then, they knew they had a problem, and they were willing to pay to solve it, but they still couldn’t articulate the real need. I became a master of extracting the need and building the solution. Thus began my career as a product-centric entrepreneur.
A Startup That People Actually Need
Eventually, I became bored building other people's products and I had an itch to once again build my own startup. This time I was smarter. Instead of just guessing what people wanted, I did two important things:
- I talked to my past customers to see if they had any common needs in the tools I had been building them.
- I looked at everything we built over the past 7 years to find common functionality within those products.
I realized that we had a lot of similar clients and that many of the tools we built were generally solving the same pain point. In a nutshell, that pain was
“I am not converting the sales leads I have”
Most of my clients had some form of a sales team. And while many of them had a CRM or other tool to manage their customers, they didn’t have a tool designed to help them convert leads into customers. And they were getting a lot of leads.
We built an MVP of Velocify in 2004 and sold the company in 2017 for $128 million. A lot of things went right (and plenty went wrong too), so I can’t say that success was entirely attributable to doing customer development. But it was a significant contributor to our success, particularly in the early years.
Incidentally, customer development as a term wasn’t even a thing until years later anyway. But the practice of customer development and the principles of the lean startup — a systematic approach to learning what customers need, building, testing, and iterating — was a real thing, and we did that, and it worked.
After the Velocify exit, I began working with more entrepreneurs on their own startups. I co-founded a startup accelerator in Los Angeles called Amplify.la where we’ve invested in 100’s of startups across 5 funds now. And developed a curriculum for high school students to learn the principles of entrepreneurship and customer development much earlier than I did.
Having had first-hand experience with the power of customer development. And having taught the work to hundreds of people. I figured it was time to build a course on the topic to see who else I could impact.
Launching My New Online Course
Today I released my first online video course on Udemy titled Startup Customer Development — Finding Product-Market Fit and I’m pretty excited. I’m excited because I know it’s valuable content. And I’m excited because I know people need it. But I’m also excited because I put a lot of work into it and it just feels good to create something of quality.
The video above is the preview for the course. It will give you a sense of the production quality and content that I’ve incorporated. I’d like to share a coupon code for 66% off.
Contact me for a coupon code for 66% of the normal pricing.
And more importantly, I’d love your feedback and a review on Udemy if you are feeling it. Here is the syllabus:
- Learning Objectives
- Course Introduction
- Why This Course?
- Why Am I the Right Teacher?
- Why are you the Right Student
- Course Prerequisites
- Why Customer Development?
- Case Study — Ouya
- What is Customer Development?
The “Problem Hypothesis”
- Case Study — Audiojoy
- Start with the Customer
- What’s the Problem?
- What’s Your Solution?
- The Root Cause
- Case Study — Toyota
Connecting with Customers
- Talking to Real People
- Building an Online Survey
- The Survey Questions
- Case Study — Markup Hero
- Finding People to Complete Your Survey
- Example — Quick Dry Clothing
- Choosing the Right Facebook Groups
- How to Request to Join a Facebook Group
- How to Post Your Survey in a Facebook Group
- Example — High School Teachers
- Review Survey Results and Contact Users
- Contact People Quickly
- Setup Phone or In-Person Interviews
Preparing for Interviews
- Develop an Interview Framework
- Listen, Don’t Talk
- Ask Them to Be Brutally Honest
- Don’t Be Afraid of Bad News
- Behaviors, Not Feedback
- Stories, Stories, Stories
- Ask Open-Ended and Leading Questions
- Drill Down, Dig Up, and Lean In
- Parrot Back to Clarify and Expand
- Define a Significant “Problem Context”
- Breaking the Ice
- Lead with Your Own Story
- The Ultimate List of Questions
- Common Responses and Misconceptions
- Taking Notes
- Excuses for Not Doing Customer Development
Validate, Iterate or Pivot
- Compile Insights
- Analyze and Evaluate
- Revise Problem Hypothesis
- Assess Solution Viability
- Pivoting vs. Iterating
- Recapping Customer Development
- Never Stop Learning
- Next Steps
What’s Next for Me?
I love customer development. I love startups. I love building software. And I love working with entrepreneurs. So whether you buy the course or just clap for this Medium post (hint), I want to be helpful. I’m working on SaaS application now called Markup Hero. And I’m having a blast again with a crack team of 3.
Building this course was a labor of love — a ton of work. But I think I probably have another one in me at some point.
Best of luck with your startup.