It all starts with a vision. You are the startup founder, with this brilliant idea for a new product that will change the way people <insert something painful/inconvenient here>. You build it, promote it, and users flock to you shiny new product. And yeah, you figure out how to make money off of it once you get the users. Right?
It turns out there is a problem with this strategy. The problem is that all you really have at the beginning are educated guesses.
You are guessing who your customers are. Even what your product is.
Flickr started off as an MMO. Photo sharing was a side feature, and started picking up faster than the game. They fought for a while trying to stick with their original idea, but it soon became obvious where the real interest was (founders did eventually decide to come back to the root idea launching Glitch).
You are making guesses about what your customers value.
IMVU (an online 3D-avatar chat & gaming tool) started off by a 6 month coding marathon to make their 3D avatar chat run on top of existing chat protocols. It was a clever idea. Their initial guess was that people will never want to rebuild their chat buddy lists. So they developed a technology that allows them to hook into existing buddy lists of existing chat clients.
But guess what: their early users (primarily teenagers), did not want to invite their friends, as they weren’t sure if the thing was cool enough yet. This is what the young lads and lassies value: being cool. So IMVU threw away 40k+ lines of code. They then implemented a feature where the users could invite another random user for a trial chat session. It’s turned into a major feature. Read their tagline: “Play, Meet People, Have Fun”.
And are you really only building a product, or a complete viable (and hopefully scalable) business around it? And since your product is not the product, you are actually making guesses about the complete business model.
I borrowed the image above from Steve Blank, the father of of Customer Development. He proposes a different approach, treating entrepreneurship as a science. According to Customer Development, the founder goes through the following steps:
- Document their vision
- Identify the riskiest guesses (hypotheses)
- Define and carry out a series of rigorous experiments to validates the hypothesis outside of the building, with the actual customers
- Every time a hypothesis is invalidated, the founder goes back to the drawing board to adapt their vision
This process turns the startup into a learning organization. Steve’s definition of a startup:
Startup is a temporary organization designed to search for a repeatable and scalable business model.
The concept is very simple. Applying it in practice requires some creativity, and lots of stepping out of your comfort zone. That is why this blog is started: to share our experiences as we search for viable business models. We’ll try to make it as hands-on as possible.
You can see Eric Riese’s presentation about his lessons from IMVU in an invited lecture to Steve Blank’s students.