59. Asking your customer these questions can prevent massive wasted effort

I noticed a pattern among founders I meet, and it is something I did too. We have an idea and immediately start working on it before validating it with our potential customers. In many cases, we have practically finished the product before we start showing it to people.

But, if we guessed wrong we have wasted a colossal amount of work.

I think I know why this happens. For technical founders, coding and development are our comfort zone. We're happiest when we're behind the keyboard in a dark room, banging out code and creating new software.

Creating that solution is why we founded the company in the first place. Also, for introverts, getting out and talking to people makes us uncomfortable. Also, we often feel that we already know what the customers want and need.

We know our customers and feel that we can stand in as a good model for them when designing our solutions.

Unfortunately, you're not a good model for your customers unless you're building a tool for people who are exactly like you. I made that mistake.

I was building the first stand-alone application version of Anonymizer. As a privacy passionate person, building for other similarly passionate people, I thought I could just make what I wanted for myself. The product was incredible. It provided very fine-grained control over all aspects of what information websites could collect and on which sites or pages they could collect it.

Our customers hated it, and even I rarely used most of the features. I was not even a good model for what I wanted myself!

After finally talking with our customers, the next version of the product had exactly one control: on/off. It was a huge hit.

My error had significant consequences. We spent many months focused on that first product, costing us money we could not afford to lose. It also significantly delayed our entry into the market with a solution people wanted to use. Once we realized the direction we needed to go, we had to scrap almost everything we had built.

It is almost impossible to get your app perfectly right the first time, and there is no substitute for the learning you gain when your product is in a customer's hands. But, the more you can learn, pivot, and iterate before you build anything, the faster and more efficient you will be.

What questions should you ask?

You can learn a nearly infinite number of things from customers. I cut that down to the seven most important things you can discover in these early customer conversations.

First, how significant is this pain point for your customers?

Just because what you offer is better than what they're using now, or it will save them money, doesn't mean it's worth their trouble to switch.

For example, almost any specialized tool is better than Excel for performing that activity. Yet, many companies continue to use Excel because they already have it, know how to use it, and it is "good enough."

Second, how does solving this pain point stack up against their other priorities? Even if the need is urgent enough to justify adopting your solution, are there other things they need to do first?

Companies, like individuals, have limited bandwidth to address nearly unlimited demands. They simply can't handle all of them, and you might fall into that category of things that get left undone.

If so, you can explore how you might alter your solution or capabilities to move higher on the list of priorities.

Third, are you building the right features for your customers? I thought my users wanted to dial in their individual privacy preferences, but it turns out they just wanted a "set it and forget it" solution.

I see many founders discover while talking to customers that, while they are vaguely interested in the proposed solution, if the company could deliver some other benefit, it would be a complete game-changer.

Fourth, what are the alternative solutions your customers could select? What is your direct competition, including the option of doing nothing at all? Are you substantially superior to all of those other options?

If not, you are in trouble.

As a startup, you are at an enormous disadvantage when competing against more established companies. Buyers will worry about your ability to deliver and support the solution. They may even question whether you will even exist in a year.

To overcome that, you need to be vastly superior.

Fifth, you need to understand their constraints and the environment in which you will deploy your solution. Are there existing systems and platforms you need to integrate with? Are there policies you might violate? Would you create more complexity within their networks?

You may find that some businesses would have no trouble implementing your solution, while it would be challenging to impossible for others. Knowing this may help you define your initial target market.

Sixth, talk to them about pricing. Your business model needs to make sense for them and the way they perceive the value of your offering. If you get this wrong, you will either price yourself out of the market or leave money on the table.

Finally, use these conversations to refine your messaging. How are your potential customers reacting to the way you describe your solution? Test out a wide variety of different approaches and watch how they respond.

Some capabilities might bring a "meh" while others make them sit up and pay attention. How you talk about your solution often matters as much as what it does.

Getting to statistical significance

As an introvert, I wish I could get away with having just a few customer conversations. It can be awkward and time-consuming to talk to dozens of people. But it's critical.

You need to get a statistically significant sample of your potential customers.

If you just talk to three people, and two of them say a particular capability is essential, it's entirely possible that if you had talked to twenty, they would have been the only two who thought that.

Make sure you're getting enough data to be confident in the patterns you see and to capture the full range of common answers.

These conversations can also help you identify your initial customer. What characterizes the set of people most interested in your solution?

There's a real danger when you're talking to potential customers, particularly your first paying customer. Don’t let them lead you around by the wallet. It is seductive to let them convince you to tailor your development roadmap to their requirements even if they do not represent the bulk of your likely buyers.

You might end up spending all your development time building for this one relatively small customer rather than creating a solution that will appeal to the majority of your customer base.

Who should you be talking to?

If you are starting a B2C company, then the question of who you need to be talking to is pretty simple. You need to speak to those consumers and define the persona of your ideal customer from that population.

But when you're contemplating B2B sales, particularly complex high-value sales, it gets much murkier. Typically there are a whole bunch of different constituencies within the target company.

So who should you be talking to? Obviously, you need to speak with the decision-maker, whether that's the CTO, the CEO, or whoever's going to write the check. You need to understand why they will write that check and how they measure a successful outcome.

But, there are often many other characters involved in the process. The CTO might be the decision-maker, but they might reach out to someone closer to the people who will be using your solution. You need to understand how those influencers are going to look at your offering.

There may be other gatekeepers involved, like people in the finance or procurement divisions, who will have thoughts on what to buy, how to structure that purchase.

In many cases, you'll find champions within businesses. They're not necessarily the decision-maker or the influencer, but someone who wants the company to acquire your product. Champions are usually your end-users or the end users' boss who will personally and professionally benefit from this solution.

Finally, who are the likely blockers? Talk to people in the IT Department to understand: What do they hate about their vendors? What frustrates them? What makes them say, "we are going to resist this with every fiber of our being, even though it might be good for the business because it will make our lives harder."

Special considerations for marketplace businesses

Most marketplaces bring together two sets of users: the suppliers and the customers.

Often, founders create their companies because they have a particular passion for one side of the market or the other. Either they understand the customer, their wants and needs, and are working to bring in people to supply that, or they know the suppliers and want to connect them to their customers.

Frequently founders focus primarily on just that one side of the market.

You need to balance this by spending at least as much time on the side you don't fully understand.

Get it mostly right before starting to build

The purpose of talking to customers in advance is to make sure that you build the right thing.

It ensures that you create the features and capabilities your customers will value before you put in the enormous amount of time and money required to build it.

Get as much of your pivoting out of the way before starting development because a pivot at the idea or wireframe stage is cheap. By the time you've written 100,000 lines of code, if it turns out that some of your fundamental assumptions about your product were wrong, you're really in a tough spot.

And your investors will want to see this understanding as well.

It's a huge red flag when a company pitches me and shows a finished MVP without that kind of validation.

I don't want to invest if there is a high likelihood that, as soon as they launch using the cash I gave them, we discover the product's totally wrong, and they need to trash it and start again.

Having this kind of insight and understanding informs everything. It tells you what you should build.

It informs how you pitch to investors.

It carries all the way through into your sales and marketing.

When you're talking about your product to potential customers, you can address all of their concerns and needs upfront, making them feel excited and comforted at the same time.

Shut up and take my money!

You need to keep having these conversations until when you talk to a prospective customer and explain what you're offering, you get to that "shut up and take my money!" moment. They want you to stop selling them and just let them place their order.

If you can't get to that point with a reasonable fraction of the people you talk to, you need to keep iterating.

If you can't get that excitement when it's just a conversation, with no pressure to close the deal, and they're talking to the founder, it's going to be exponentially more challenging when it's a hired salesman doing the meetings and asking for money.

You need to get to "shut up and take my money" so that your sales guys will be able to get a "Yes."