How to startup….blog 2 of 11 – in-depth observe 5-10 potential customers

How to build a successful start-up
I started this series a few weeks ago with the 1st blog on Generate an idea (but remember that it’s worthless). I have copied the intro to the series directly below and you will then find part 2: “In-depth observe (not interview) 5-10 potential customers, including 2-3 “extreme users” – the subject of this post
Original intro to the series:
The goal of a founder who wants to create a big company is to find product/market fit in a large market – one that is at least £0.5B/$0.75B in size. Much smaller than that and a venture investors won’t be confident that he or she will get 10x on their investment (and note that it doesn’t matter at which stage you’re working, as if an early stage investor like us, we need to believe that we will be able to sell you onto a Series A/B investor who also has to believe he or she can get 10x and so on). It’s not right all the time, but it’s a rule of thumb.
The Lean methodology, thought up by Eric Ries and then evolved by many others, is the best way to work through the early stages to product/market fit.
We like Running Lean by Ash Maurya for a clear outline of what this entails.
What Ash excludes from his thinking is in-depth customer observations, as developed by IDEO, the design firm founded by David Kelley in Palo Alto, right next door to Stanford University, my alma mater, and a clear definition of “strategy” for the start-up.

(Overly) Simply put, we think a founder needs to take the following steps:

  1. Generate an idea (but remember that it’s worthless) – the subject of the last post by me
  2. In-depth observe (not interview) 5-10 potential customers, including 2-3 “extreme users” – the subject of this post
  3. Document your Plan A
  4. Identify the riskiest parts of your plan
  5. Systematically test your plan
  6. Get to Release 1.0
  7. Reach product/market fit
  8. Define your strategy (Goals, Scope, Competitive Advantage, Logic)
  9. Scale

I will write a barebones explanation for each of these 9 steps with as many links and references as I can so you can read better writers’ thoughts on the subject.
And please note that at some point on this journey you need to find a co-founder. It’s pretty rare for a solo founder to manage it all on his or her own. It happens, but it’s rare. I’ll write about that as an additional point 10:
10. How to do the co-founder thing
And the last thing that you absolutely need is a great culture.
11. What is a great culture?

Here we go:
1. Generate an idea (but remember that it’s worthless)
2. In-depth observe customers, including “extreme” users
In order to create a solution to a problem you have to empathise with your customer (to both ensure that you are solving the right problem and that you are working on a solution that fits into their life). The best way to empathise with your customer is to (a) be your own target market and (b) spend a lot of time observing (not talking to, especially in the artificial environment of a focus group) your target customer, especially extreme users in that market (if you can satisfy them, you’ll wow the average customer, and they’re more likely to uncover a greater number of relevant needs than an average user. And they will be the average user of tomorrow).
You should observe 5-10 people in your target market for at least an hour each whilst they naturally (i.e. part of their everyday activity, not in an artificially constructed way) work at the problem you are trying to solve. The 5-10, if done right, will cover almost every problem/solution combo you will need to deal with. The hour each is a minimum. Ideally you spend many hours so the observed forgets you’re even there.
The problem with asking customers questions is that you are automatically closing yourself off from the majority of information that user can convey to you. Your questions are biased and finite and often the wrong questions. Observing them with an open mind (harder than you think – you need to remove your own biases and beliefs) allows them to go about their business without being constrained by narrow questioning.
Deep engagement with a user can produce surprising and rich insights to both the observer and the customer. People often don’t consciously know what they’re doing since so much of our behaviour is automated – our brain spends most of its time working under the control of System 1 in Daniel Kahneman’s language. And peoples’ memories are crap – they remember what they want to remember, not what happened.
A fantastic design approach is taught at the d school at Stanford University. You can see a simple outline of the approach, including the “empathise” stage outlined above here.
As long as I listen to my customers, I never need to have another original idea.*
Through this process you will also build strong relationships with early customers who will tolerate missteps and changes in the product. This is invaluable for on-going feedback.
*Neil Robertson in Do More Faster by Cohen/Feld; Wiley. Page 35

Adrian Lloyd
Half Swiss. China obsession at Oxford. Tech obsession at Stanford GSB. Strategy consulting to Venture Capital. Tennis, skiing, Cresta riding. 4 young children, a boxer. Fabulous artist wife, Print-maker.



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