Customer Discovery

10 minute read

Customer Discovery – Prioritizing your Ideas

Everyone has ideas, but few execute on them. Some of us are blessed, or cursed, with having too many ideas. Usually ideators have a notepad, or several, logging their ideas. Those who don’t have as many will advocate for executing them as soon as you have them, but I suggest this is the worst option. Some will advocate for creating a landing page and testing the market. Some of us face the paradox of choice, not knowing which one to work on, which can cause paralysis.

I propose the smartest solution is to have a matrix model process for evaluating your ideas to help with prioritization. Ikigai is a great starting place, as well as thinking through a reasonable business model you’re ready to (in)validate, and don’t forget to include emotional drivers that will help your decision making, the more you love your product or solution, the more it will drive you for the long term.

The traditional model for taking your idea to the next step is to build a business plan, but to me this is an archaic business model if you’re planning on going to traditional investors with traditional (old) values. The current industry standard would be to map out your idea on a business model canvas, and from there, evaluate product market fit (PMF). It is worth noting that even Steve Blank suggests in this process you get out of the office, and I will emphasize this as the most valuable priority if you don’t have an established network of influence.

I feel the most underrated next step for validating your idea is customer validation. We love to share our ideas with friends and family, who are likely to encourage us, or be devil’s advocates with the best intentions, but it’s worth noting that as you hear “I would pay for that” and even more dangerous, “If you built that, I would pay for that” and that’s a trap most technical entrepreneurs get caught into. You don’t want to spend time and money building something out that never gets to PMF, or even enough customers to stay afloat.

So what is customer validation? This is both an art and a science, you want to find people willing to pay for you to build your idea into a business. This can happen by providing a gain, and I mean a notable gain – like 10x better than the existing solutions they’re familiar with today, in either time or money. The holy grail however is solving a pain point for your target market. If you’re truly solving a pain point for your potential customer, you want to hone in on where their pain point is, and adjust your idea accordingly. It’s entirely plausible what they need is completely different from your idea, and so this is where the secret lies – customer validation is about listening.

This is counter intuitive when we’re excited about our new product or service idea, we move into sales or marketing mode, trying to convince the potential customer how great it will be for them, and this is a rookie move. An expert at customer validation, one of the most underrated roles in the entrepreneurial ecosystem, is an expert active listener.

I’ll share my best case example of this, I had an idea for a service based on my expertise, and I thought it would be great for larger organizations, or a business-to-business (b2b) idea. I reached out to a dozen organizational leaders of fortune 500 companies at different levels and asked for an “information meeting”, I wanted to make it very clear I was not attempting to sell anything. I also only asked for 15 to 20 minutes at most, as I wanted to demonstrate I respect their time. For the information meetings I asked for warm (personal) recommendations, and for those I did cold outreach out, I included my successes to validate I’m hopefully worth those 15 minutes of their time.

I lucked out and had the CTO of one of the most well known tech companies in the world agree to an information meeting from a cold outreach as we’d been at the same conferences a few times where we both spoke. He was one of my dozen initial contacts, and so I reached out to a local expert on customer validation to ask for assistance as I didn’t want to miss the rare opportunity. I was lucky enough to be able to afford this expert’s rates, which were lawyer level fees which in hindsight got me to write this years later.

He taught me a few key things, most notably being the value of how to ask questions to invalidate my idea without ever mentioning my idea. That was a take a breath and pause moment, how do you validate or invalidate an idea without ever mentioning it? In order to determine gains and pains you need to be in ask mode, not selling mode.

I will pause for a moment to separate different types of ideas – some might not be business ideas at all and that is great (I have a lot of community building ideas for example). In the business idea category, there is what Peter Thiel has coined “Zero to One” which take a lot of privilege to execute, they are ideas so big people aren’t likely to have even thought of the ramifications, for example Henry Ford and vehicles when everyone is riding horses, or more recently, Elon Musk building Tesla, and SpaceX. The intention here is to focus on what I call iterative ideas, which are ideas that will iterate the customer past their pain point or provide that notable gain, in a fashion that resonates with them immediately.

So I’m almost ready to get on a call with this CTO, after a lot of preparation on listing out some questions I’m going to ask without mentioning my idea at all, to invalidate it and find where the real pains and gains are in this area. As I had been coached leading in to the call, I was to ask if I could record the call, assuring the interviewee I would not share the contents with anyone, I just wanted it as a personal reference to listen back through as I was grateful for the opportunity – an agreement I made and held up.

My business idea revolved around my expertise, which was, and still is a hot topic, including with this CTO at the time. I brought up a quick two minute social intro, sharing some of my experience in this space to demonstrate some knowledge and competence on the topic. From there, I asked the high level questions about what they thought of the industry at the time.

Based on his experience in the space that he shared, I asked his feelings on the subject, it was fascinating to just listen as you don’t know yet if they’re responding personally or professionally. I’ll note here that this is where emotional intelligence really comes in to play – you need stay in curiosity mode and not be a seller or an interrogator, active listening is the secret. I then asked based on where he saw the landscape, what his company planned on doing over the one to five year horizon to solve for the issues he highlighted. This was art and science as he’d mentioned many of the big issues we’re aware of, so I focused on the one that was closest to my idea, and asked about that. He responded with more of a professional tone to which likely felt as a reminder the recorder was on, and so I transitioned to the next important part of interview, which is what he would personally do instead. Everyone loves to be heard, and an industry expert like him, I was grateful for any insights. This became tricky again, as he mentioned several things, and perhaps I’d handle it differently if given the chance to do it again, but this worked out well in the end for the learning experience.

The summary from here was I effectively asked the five whys, in a more conversational tone, to get to the root. “I think this might be one way to solve for this” I said, surprisingly catching myself going off course from my idea but where he was leaning, and listening to him expand from there. Our 15 minute interview got to almost an hour, where he had to end it as he was late for his next meeting even though we were clearly both enjoying the discussion, and he ended with saying “[Company name] (one of the top 20 tech companies in the world at the time)” is excited to partner with you on this venture. I didn’t even have time to process this one in a life time opportunity, but I was grateful for the time and insights he shared, and the call was over.

I had one of the biggest companies in the world, an executive, agreeing to partner with me, a relative unknown, on a product or service that I’d never even mentioned, he clearly described the pain point, what he would want to see to solve it, and there was a strong enough repertoire established that he trusted I could execute on it! This is where I learned the value of customer discovery, and I’ve been an advocate an evangelist for it ever since, as the most underrated and most important of acting on an idea.

One other thing I loved, which I was nervous about changing the experience of the interview, was having a recording of the conversation. I listened to it a couple of times, and when asking him about what he would do differently, I caught the biggest nugget and learning lesson of all, which was the intonation of his voice changing with one of his suggestions which I didn’t catch during the live interview. Between respecting his time, focusing on the interview, sticking to the technical facts, I missed the most important thing, which was the emotional change, and emotions are where I likely could have likely gotten to the root of an even bigger pain point or gain even though it was minuscule in words and technical merit at the time. Several years later, this is why I emphasize customer discovery is an art and a science, as you need to have a technical understanding of your original idea’s subject matter, but you also need to catch emotional drivers.

The last thing I’ll suggest is paramount in deciding to move forward with an idea is the size of the opportunity, and the size of the market. I’ve seen an animal metaphor used elsewhere, so I’ll suggest you pick a value target, let’s say one million dollars in 2 years as an example. If it’s an elephant of a client like this one, I could likely get to a million dollars in a year or two, but they would likely be my only client of the people I interviewed with that scale of budget and ready to pay for a solution, which is a dangerous position to be in for a business. This is why you want to validate that several of your interviewees articulate the similar pain point that your solution resonates with several clients. If you’re in the business-to-customer (b2c) space, or more of a mosquito sized client, you need to think how many customers you need to reach your one million target – if my solution is b2c and making $2 per customer per year, I need at least 250k customers per year to make my target, so I need to interview a lot more people, and this is where you need find influencers or excel at the attention economy to validate that level of customers at scale.

So you have an idea? My recommendation is to think through customer validation, you want to have people willing to pay you out of pocket right now for your idea if it’s truly solving a pain point or providing that notable gain over existing solutions. For mosquito sized ideas, you can use tools like Amazon’s mechanical turk or have influencers help, for most in the middle, you can spend the time yourself or find others to help you out, and for the elephant sized clients, you should bring in customer discovery professionals and/or do it yourself.

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