[Excerpt] Is Your Startup a Valid Vision or Just a Hallucination?

Editor’s note: This is the first in a two-part excerpt from the book The Startup Owner’s Manual, a step-by-step, how-to guide for entrepreneurs. In this excerpt, authors Steve Blank and Bob Dorf explain the Customer Discovery Philosophy.

A startup begins with the vision of its founders: a vision of a new product or service that solves a customer’s problems or needs and of how it will reach its many customers. Customer discovery lowers the odds of spending zillions and getting zeros in return. So the No. 1 goal of customer discovery amounts to this: turning the founders’ initial hypotheses about their market and customers into facts.

Get Out of the Building

Facts exist only outside the building, where customers live, so the most important aspect of customer discovery is getting out of the building, in front of customers.
And not for a few days or a week, but repeatedly, over weeks if not months. This critical task can’t be assigned to junior staffers and must be driven by founders. Only after the founders have performed this step will they know whether they have a valid vision or just a hallucination.

Sounds simple, doesn’t it? But for anyone who has worked in established companies, the customer discovery process is disorienting. All the rules about new-product management in large companies are turned upside down. It’s instructive to enumerate all things you are not going to do:

understand the needs and wants of all customers
make a list of all the features customers want before they buy your product
hand Product Development a features list of the sum of all customer requests
hand Product Development a detailed marketing-requirements document
run focus groups and test customers’ reactions to your product to see if they will buy

What you are going to do is develop your product for the few, not the many. Moreover, you’re going to start building your product even before you know whether you have any customers for it.

For an experienced marketing or product management executive, these ideas are not only disorienting and counterintuitive but heretical. Why aren’t the needs of all potential customers important? What is it about a first product from a new company that’s different from follow-on products in a large company? What is it about a startup’s first customers that make the rules so different?

Search for the Problem/Solution Fit

The customer discovery process searches for problem/solution fit: “have we found a problem lots of people want us to solve (or a need they want us to fill)” and “does our solution (a product, a website, or an app) solve the problem in a compelling way?” At its core, the essence of customer discovery is to determine whether your startup’s value proposition matches the customer segment it plans to target.

Problem/solution fit is virtually identical to what’s sometimes called “product/ market fit,” as the previous paragraph indicates. Realize, however, that in multi-sided markets, there may be multiple value propositions and multiple customer segments. But problem/solution fit is only achieved when the revenue model, pricing, and customer acquisition efforts all match up with the customers’ needs.