Customer Discovery - Startup Academy workshop

CUSTOMER DISCOVERY
Or: How I learned to get out of the building and
start making what customers desire
Steven Sherman – info@customerdiscovery.ninja
Startup Academy
October 29, 2014

Introduction
WHAT
CUSTOMER DISCOVERY
Or: How I learned to get out of the building and start making what
customers desire
Fundamentals of customer discovery as a market research and
validation tool for early stage start-ups

Introduction
HOW
Awesome collaboration between multiple UM entrepreneurial
programs
Academic and real-world experience from Customer Discovery
Ninja team
Thank you:
Startup Academy
Master of Entrepreneurship program

Introduction
WHY
Goal:
Teach Startup Academy participants, MsE students, and other
attendees the fundamentals of Customer Discovery to better
validate their idea and build things people actually want.

Introduction
WHO
Steven Sherman
Co-Founder of Customer Discovery Ninja
Master of Entrepreneurship – 2013
Master’s in Energy Systems Engineering – 2012
Bachelor’s in Chemical Engineering – 2011

Introduction
WHO
Jack Dean
Co-Founder of Customer Discovery Ninja
Bachelor’s in Business Administration – 2011
@jackp_dean

Introduction
WHO
…the heck are you?
- One-line pitch
- One thing you want to learn tonight

Introduction
WHO
…the heck else is here?
- Make a new friend
- Take a picture together
- Tweet at each other
- Include: @jackp_dean and #customerdiscovery

INNOVATION + CUSTOMER DISCOVERY

What is Innovation?
“The process of translating an idea or invention into a product or
service that creates value or for which customers will pay”
- businessdictionary.com

What is Innovation?
“The process of translating an idea or invention into a product or
service that creates value or for which customers will pay”
- businessdictionary.com
Simply put:
The intersection of feasibility, viability, and desirability
Desirability
Feasibility Viability
Innovation

Desirability
Feasibility Viability

Desirability
Viability
(Hustlers)
Feasibility

Desirability
Viability
(Hustlers)
Feasibility
(Hackers)

Desirability
(Entrepreneurs)
Viability
(Hustlers)
Feasibility
(Hackers)

What is Customer Discovery?
A process used to discover, test, and validate one of your most
important business assumptions – you have a specific product that
solves a known problem for an identifiable group of customers

A process used to discover, test, and validate one of your most
important business assumptions – you have a specific product that
solves a known problem for an identifiable group of customers
Simply put:
Finding out if people care about what you’re working on before you
spend lots of time and money building it.

Steve Blank
“Get out of the building!”

“Get out of the building!”
Steve Blank
Father of Customer Discovery methodologies
Silicon Valley serial-entrepreneur and academic
Wrote the books on Customer Discovery and Development
University of Michigan student! (for one semester)

WHY CUSTOMER DISCOVERY IS SO
IMPORTANT

Why Customer Discovery is so important
Why do new ideas and inventions fail?

“The number one reason start-ups fail is not because they fail to
build what they set out to build, but because they spend too much
time, money, and effort building the wrong product.”
- Ash Maurya, Author of Running Lean

“The number one reason start-ups fail is not because they fail to
build what they set out to build, but because they spend too much
time, money, and effort building the wrong product.”
- Ash Maurya, Author of Running Lean
Simply put:
Most new products and services fail because not enough people
desired them
The team wasn’t able to empathize with their customers

An example: Webvan
- Online grocery delivery business founded in 1999
- One of the most electrifying new start-ups with an idea that
would potentially touch every household in US
- Raised over $800 M, backed by experienced venture capitalists

An example: Webvan
- Went bankrupt in 2001
- Largest dot-com flop in history

An example: Webvan
- Went bankrupt in 2001
- Largest dot-com flop in history
- What happened?
- Not a failure of execution – failure of customer understanding and
empathy

“Build it and they will come”

Only true for life and death products – cure for cancer, nuclear
fusion, transistor computer, etc.
Much more risk in feasibility and some in viability, not customer
desirability

Only true for life and death products – cure for cancer, nuclear
fusion, transistor computer, etc.
Much more risk in feasibility and some in viability, not customer
desirability
Not true for most other products – software, consumer, web, etc.
Issues are customer acceptance and market adoption

HOW TO GET THE MOST OUT OF
CUSTOMER DISCOVERY

How to get the most out of it
How do you “do Customer Discovery”?

Best practice:
In-depth one-on-one in-person interviews with your potential
customers to understand their problems, motives, desires, dialect,
purchasing power, etc.
Emphasis on learning and discovery before execution

Best practice:
In-depth one-on-one in-person interviews with your potential
customers to understand their problems, motives, desires, dialect,
purchasing power, etc.
Emphasis on learning and discovery before execution
A special kind of torture:
- Talking to strangers
- People are already busy and hate being sold things
- It’s very likely they will destroy your vision for a company

Bad practice:
Most entrepreneurs substitute this primary research with easier
alternatives that aren’t nearly as effective: market reports, friends
and family, pitching solution, surveys, etc.

Bad practice:
Most entrepreneurs substitute this primary research with easier
alternatives that aren’t nearly as effective: market reports, friends
and family, pitching solution, surveys, etc.
Trying to avoid
A special kind of torture:
- Talking to strangers
- People are already busy and hate being sold things
- It’s very likely they will destroy your vision for a company

Let’s try it!

Let’s try it!
Who is brave enough to interview me, Customer Discovery style?
(This will likely be very awkward)

Observations?
Learn anything?

Proper interview techniques are an art, not a science.
The best way to get better at Customer Discovery is to practice.
You can also read up on ethnography and many resources online
One of our favorites: www.customerdevlabs.com

1st Rule:
Do not talk about your idea

2nd Rule:
You want to have a conversation where your potential customer
does most of the talking

3rd Rule:
Minimize questions about future behaviors

4th Rule:
The more real examples and stories you can hear about, the better

5th Rule:
Always ask “WHY?”

6th Rule:
Understand how they’re currently solving their problems

Let’s try it again!

Let’s try it again!
I’ll give a quick demonstration
Who is brave enough to interview me, Customer Discovery style?
(This should be slightly less awkward)

WHAT ARE SOME OTHER BEST
PRACTICES

Best Practices
In-person is ideal
Do it with two people – one to guide the interview, the other to
take notes
Founders must do it!
Founder reporting bad news = pivot
Someone else reporting bad news = firing

Best Practices
Avoid friends and family – naturally biased
No surveys – good for scaling findings but too narrow for initial
discovery

Best Practices
Avoid friends and family – naturally biased
No surveys – good for scaling findings but too narrow for initial
discovery
No market reports – good to find large trends to leverage but not a
replacement for in-depth interviews
Not a focus group – good for fine-tuning a product, not for initial
discovery

Best Practices
Customer Discovery interviews give you the best marketing copy –
the words of your customer
“WHY?” answers are especially good for framing your unique value
proposition

Best Practices
Customer Discovery interviews give you the best marketing copy –
the words of your customer
“WHY?” answers are especially good for framing your unique value
proposition
Findings can destroy your vision – be humble, pivot when necessary
Much less expensive (time and money) than building something
that doesn’t solve a real problem
Use lessons learned with investors – build traction with real world
data; help prove your vision isn’t a hallucination

Best Practices
Audience Customer Discovery stories
Questions and Answers

CUSTOMER DISCOVERY NINJA:
A TOOL FOR CUSTOMER DISCOVERY
BUILT USING CUSTOMER DISCOVERY

Customer Discovery Ninja
Our Story:
Working on a few ‘start-up’ projects
Knew importance of Customer Discovery
Bugged all of our friends and family enough
A problem!
Needed more people to talk to

Our Story:
A hack!
Interview 100 customers in 4 hours
High quality, unbiased interviews for Customer Discovery
Big learning curve and rough user experience using the hack
Pieced together solutions that could be done better

Our Story:
An idea!
Live, on-demand customer discovery interviews for start-ups built
on the hack but with a much better UX and value-add tools
But do other people have this problem?
Would we be building a desirable product?
Customer Discovery about…Customer Discovery!

Our Story:
Before we built anything, reached out to our network of
entrepreneurs and start-up founders to better understand their
market and customer research problems

Our Story:
Before we built anything, reached out to our network of
entrepreneurs and start-up founders to better understand their
market and customer research problems
Heard things like:
- “I’m stopping people at the mall and it’s awkward.”
- “Customer Discovery is time intensive and there is a limited
window for it during the week.”
- “I spend a good chunk of time trying to interview more people.”
Heard enough evidence to build an MVP

Our Story:
Used the MVP to conduct more Customer Discovery interviews
about market / customer research and associated problems
Recruited early adopters from the interviews
Some people were begging to start using it
Worked closely with early adopters and used this early feedback to
refine the product further
Focused on “nailing it” then “scaling it”

Demonstration: Customer Discovery Ninja

The deal for you:
Just moved from alpha to beta, still private invite
Provide email address  Early access
Get 5 others to sign-up  50 free interview credits with early access
www.customerdiscovery.ninja

Customer Discovery Stories
Status Owl
www.statusowl.com
The Overdose
Change of Mind
Jack Dean

Get out of the building!
Innovation = Desirability x Viability x Feasibility
Customer Discovery = “Get out of the building” and understand
your customer and their problems before you waste time building
something nobody wants
For most start-ups, market risks are much greater than technology
risks

Customer Discovery Rules
1 – Do not talk about your idea
2 - You want to have a conversation where your potential customer
does most of the talking
3 - Minimize questions about future behaviors
4 - The more real examples and stories you can hear about, the
better
5 - Always ask “WHY?”
6 - Understand how they’re currently solving their problems

Suggested readings:
www.customerdevlabs.com

Customer Discovery Ninja deal for you:
Provide email address  Early access
Get 5 others to sign-up  50 free interview credits with early
access
www.customerdiscovery.ninja
Questions – info@customerdiscovery.ninja
Jack - @customer_ninja

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