Customer Development with Network Effects

How does customer development differ with regards to products which require a network effect to be useful?

Short answer: No one knows.

Companies offering services such as Skype, eBay, Facebook, and others have cannot really test their value proposition without having a critical mass of users. A telephone with only one person on it is pretty useless. Yet these are some of the most lucrative inventions ever. So how do you apply the principles of customer development to these situations?

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Top Takeaway – Startup Lessons Learned

On April 23rd I was able to go to the Startup Lessons Learned Conference and had my world rocked.

I thought I was lean, I could be leaner.

I thought I had a minimum viable product, I could have built less.

Although Steve Blank, Eric Ries, Dave McClure, David Weekly etc. etc. all have written and spoken prolifically about their methods and thoughts, there is a powerful feeling to being the the same room as a thousand other people drinking the same kool-aid.

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Pay No Attention to the Man Behind the Curtain

Wow I'm tired.

Tired and energized.

In the past few weeks we've had the typical ups and downs of every startup. We've let in a number of alpha users, got another hundred signed up thanks to a very minor TechCrunch mention, and realized our Minimum Viable Product wasn't minimum enough.

We started building our site with a basic premise that entrepreneurs were willing to post their pitches to attract co-founders and investment.

We confirmed this hypothesis through numerous customer interviews and surveys.

We iterated on nothing more than Photoshop mockups.

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The Taxonomy of the Lean Startup Pivot

(Warning: this post may be highly theoretical / geeky. If you're looking for the more amusing Taxonomy of the Lean Startup Anti-Pivot, it's here.)

Last week I was planning for the worst. Having gone through 51 iterations of my mockups and gathered as much as feedback as I could with our primitive alpha, I feel confident about our basic customer problem hypothesis. Still, I play a lot of chess and like to think at least five moves ahead in the five most likely futures. So I decided to make a list of my potential pivots.

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Customer Development: Fight or Flight

Motivations are unimportant if you happened to be B.F. Skinner. But since he's dead let's assume you're not him.

Before we can talk about customer development, here's the obvious question: Why do you want to start a business?

Let's start off topic with a ridiculously simplistic dichotomy: Fight or Flight

Those are the two basic choices we all have when faced with a conflict situation and it's deeply ingrained in our physiology.

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Clever Hans and Photoshop Iteration

It's been over two weeks since we released a bare bones alpha of our site and started letting people in one at a time. Since then we've been through approximately:

10 iterations of our "view idea" page 6 iterations of "browse ideas" page and 3 of "browse people" page 10 "profile" pages 8 of our "p-home" page (this is the page you see when you log in) 3 "search result" versions and a whopping 14 basic template revisions

That's a total of 51 revisions in 18 days, almost all of which are iterations based on feedback from users without writing a single line of code.

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How to Practice Shutting Up (Customer Development Practice)

I've discovered a great new method of growing bigger ears. Ready? Wait for it... go listen to sales pitches from startup consultants.

If you're an entrepreneur, then you probably don't like being bossed around and you might think your own opinion is pretty damn good. If you didn't, you probably wouldn't be starting your own company.

(I'll admit it, I have both of those flaws to varying degrees.)

Given those two features, you may or may not have a tough time (like me) really shutting up and listening to your customers. It's always tempting to interject your own opinion, and even if you think you're just asking a clarifying question, you're probably adding some spin to it to try to nudge your customer's responses the way you want...the way you expect...the way you know your customers ought to be thinking.

But if you do that, you're not getting real customer feedback. Instead, you're just stroking your own ego and validating an opinion rather than validating a hypothesis.

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