Building a startup is not easy because no startup is the same. No matter if you are creating a new product on an existent market, or creating a new market, your final goal as a startup and as a business is to find customers and sell.
So then, if everyone is aware of this, why are startups failing, why do people keep pushing money in this direction? The reason is simple, because, the startup development includes a linear product development process which follows four classic steps: concept, product development, alpha/beta test, launch/1st ship.
When this model started 40 years ago, it was used exclusively for product development. However, since then, things evolved and today, using this model alone can create issues with your customer process. Following only this roadmap will block you in creating a product for an imaginary audience, which might be or not interested in your business and which will get in contact with your product only on the last step — 1st ship. Because of this model, the sales and marketing departments don’t get involved in the project creation until Step 3, when the project is already in beta.
What companies usually do in this situation is that they create have a vision, then they take this vision and transport it into a concept and start working on product development. I believe you already noticed that just by describing the first two steps I didn’t mention a single word about customers. That’s because until this point, the regular startup using this model has a clear picture in their business plan, just some hypothesis and probably a solution to a possible problem which they think will affect an unknown target customer. Every startup has limited resources and doing a deep analysis of your customer and market, especially by engineers, or even sales people, is impossible at this point of the creation.
So, what should we do about it? Is there any alternative, any better option? Well, before starting the work on the actual product development, you should consider alternating the product development with the customer development process. For that, you have to first split your customers into four categories: technology enthusiasts, visionaries, pragmatics, conservatives and skeptics. First two types are the target of your customer development initial process which will help you identify the customer target base and pass through the chasm.
You see that little gap between the customer categories? That’s a chasm and whenever you are developing your business you should never forget, as you discover the business process, that these are four different and independent types of clients. Every time you switch from one group to another, you need to reanalyze your customer target, preferences, objective and try to understand their needs.
How does customer development work? Easy, it has four simple circular steps: customer discovery, customer validation, customer creation and company building. It’s a process of trial and error and at the end of each phase, you need to stop, analyse, revisit and understand if your goal is achieved. If it is, you can move to the next step. If not, start all over again.
- Customer discovery — find who your customer is, and whether the problem you believe you’re solving is important for them
- customer validation — build a repeatable sales road map for the sales and marketing teams
- customer creation — create end-user demand and drive it to the company’s sales channel
- company building — transition from informal, learning and discovery process into formal departments of sales, marketing and business development.
These are four simple steps that will help you validate your business idea, save money and understand your client and requirements. However, besides these, there are some clear rules you have to follow:
- Identify your startup type — enter in existing market, create a new market, resegment existing marketing as low cost, resegment it as a niche player.
- leave your office and meet your customers, learn and discover your market, before you start developing a product
- state and test your customer hypotheses
- this is a process which should involve the product development team too.
- develop the first product for the few, not for the mass market. Find your earlyvangelists — customers willing to take a risk on your startup idea because they envision its potential
But most important, don’t forget to have fun. It’s going to be a very long journey.
This concept is not something new and can easily be found in the 4 Steps to Epiphany book by Steven Balker