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Customer Development Checklist for My Web Startup – Part 1

Written by Ash Maurya

Customer Discovery for a Web Startup

Last year, Steve Blank threw out a challenge to Lean Startup Circle members to update his customer development checklist (Appendix B in his book) for their specific business. His checklist is built for Enterprise Software which doesn’t readily translate to other types of startups including web startups (especially when you get to Customer Validation).

After the talk, David Binetti pulled together a great group of people from Lean Startup Circle to create a Customer Development Checklist for web startups. I was honored to be asked. However, after a few exchanges trying to nail down the type of web startup to tackle first, we uncovered a number of tactical differences that made me come to the realization that defining such a model in a group setting is too hard to do. We would either end up with a highly generalized model or no model. I, for one, am not comfortable extrapolating a model from third-party accounts of what might have worked for other companies (like 37signals), and especially not without first-hand experience building a similar type of startup.

So I decided to take a stab at defining a Customer Development Checklist for my web startup.

First Some Background

This model is based on my experiences building and running 2 products: BoxCloud and CloudFire. Both use a subscription pricing model. BoxCloud was built using a release-early release-often development model and was initially launched with a Freemium pricing model – later changed to a free-trial only model. CloudFire is being built using a lean-startup/customer development model and was launched with a free-trial only model.

For a SaaS product like mine, I strongly believe you need to
a) charge for your service, and
b) validate pricing sooner rather than later.

Free trials, Freemium, free introductory periods, etc. are all tactics to lower sign-up friction and should be applied (split-tested) judiciously on a case-by-case basis. However, my key takeaway is that even if you’re considering Freemium, you should validate the premium part of Freemium first before giving anything away.

I’ll cover Customer Discovery in Part 1 and Customer Validation in Part 2. Hopefully, I’ll get to write Parts 3 and 4 one day.

Customer Discovery: What should I build and for whom?

Here’s my Customer Discovery Flow (you’ll probably want to click to enlarge and skim it before reading on).

Click to Enlarge

The 3,000 Foot View
For a web startup, the purpose of Customer Discovery is to identify a problem worth solving, defining the “right” minimum viable product to build, and testing the business model using 3 separate Build/Measure/Learn loops. Most web startups rely on a product website for distribution and blogs, SEO, SEM, for initial customer acquisition channels- leaving price as the biggest unknown in the business model.

Sidebar: There is a somewhat loose definition of how the term MVP gets used. Many have used it (myself included) to refer to anything (a landing page, a problem presentation, screenshots, etc.) that allows you to learn about customers with the least effort. Here, I am using the stricter definition of MVP to mean the minimum set of features needed to learn from earlyvangelists. In other words, Release 1 of your Product.

It All Starts With Stating Your Assumptions
State your hypotheses

Before you can test what you think you know, you have to write it down. It’s normal to try and short this step but I found it to be a very worthwhile exercise. Apart from minor terminology changes, most of Steve’s questions in his hypothesis worksheets hold up even for a web startup. I am not going to reproduce them here but if there is interest, I’ll make my versions available as a separate download.

Test the Problem
Test Problem

This will look very similar to Steve Blank’s flow. That’s because when it comes to Customer Discovery I haven’t found a more effective way for maximizing validated learning than “Getting out of the Building”. This is coming from someone who used to prefer to stay in the building and talk to customers over email. Now, I have an 800 number tied to my mobile phone and schedule for face-time opportunities with customers.

With my last product, I used a teaser/landing page with some pre-launch buzz to collect email addresses and measure interest. While it was encouraging to have interested users, it told me nothing about what problem they had, who they were, what I should ship first, or what I should charge. What does 10 email addresses a day tell me? What does 20, 40, 100? Why did the other 70% abandon my landing page? Was it the product, was it the copy, graphics, something else. What?

Building a good landing page is hard. Unless you have exceptional customer insight (or are your own customer), iterating without talking to customers is slow and painful as you split-test one page against another with very little initial test traffic. Yes, it feels like more legwork to find people who will have a conversation with you but a 15 minute unscripted conversation has more validated learning pound for pound than all the data you can crunch from web analytics.

I have never tried using surveys with my landing page registrations because I hate filling them out myself. Plus, to make them easy to fill, you have to be very specific which assumes you know exactly what you want to know, which is hardly the case.

The beauty of Steve’s process, is that it tests the problem separately from your solution.
To paraphrase Dave McClure:

Customers care about their problems NOT your solution.

During the “Problem Presentation”, you state the top 3 problems, then shut-up and listen which is key to getting it to work. It works because you aren’t asking customers to validate or design a solution which addresses the “Customers don’t know what they want” argument. It works because it isn’t a pitch. Actually, I take that back. It is a pitch. But it’s the customer that’s pitching their problems to you. I know I’ve hit the right “problem nerve” based on how passionate a customer gets during an interview.

I like to structure my “Problem Presentation” like this:

1. State the top 3 problems
2. Ask customer to prioritize problems and identify any higher priority problems
3. Have customer describe how they solve the problem today
4. Very briefly describe how you might solve the problem
5. Ask Customer whether your approach would solve their problem
6. Would they use your solution if it were free?
7. Would they pay $X/yr?
8. Ask for referrals to other customers

Build Your MVP
Build MVP

Unlike Enterprise Software, which can be chock full of features, web startups need to focus on the smallest feature set needed to learn from earlyvangelists or the MVP. After the first reality check, you should end up with a prioritized top 3 problem list which drives the features for your MVP. I stress the importance of then building out the MVP to the point where it’s demo-able. It will be hard for customers to visualize your solution without one. Screenshots and mockups may be used as stand-ins only if a demo is absolutely out of the question.

Test Your MVP
Test MVP

With the MVP built out, you then go test it against the original set of interviewees plus some.
I like to structure my “Product Presentation” like this:

1. State the problem
2. Use the demo to tell a story of how your solution solves the problem
3. Test pricing again
4. Ask for referrals to other customers
5. End with a call to action: sign-up, or commitment to sign-up

Tip: I practice delivering the demo using screencasting software which not only lets me iterate till it’s short and crisp, but I also end up with a video I can use later on the product website.

Iterate or Exit
Verify

The last step in Customer Discovery is to summarize what was learned and make a decision to iterate or exit.

What’s Next?

Next time, I’ll cover my flow for Customer Validation which I promise will look very different (from Steve’s) for a web startup.


Update: The workflow described in this post has been refined even further and turned into a book: Running Lean – with step-by-step guides, techniques for finding prospects, and field-tested interview scripts.

You can learn more here: Get Running Lean.

Translations

This article has been translated to Serbo-Croatian language by Jovana Milutinovich.

  • http://www.introspectrum.com Craig

    Great post, I think a lot of us would appreciate also seeing your hypothesis questions if you care to share them. It’s very helpful to see the process in action.

    Just a heads up – looks like a dangling sentence in Test the Problem: “This is coming from someone who would rather have”

  • http://www.ashmaurya.com/ Ash Maurya

    Thank you Craig.

  • http://www.ashmaurya.com Ash Maurya

    Thank you Craig.

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  • Joshua Ho

    Thanks for sharing Ash. Really look forward to your posts on customer validation, customer creation and company building.

    One question. In his book, Steve recommends speaking to at least 20 customers. How many did you actually speak to, considering that yours is a web startup?

  • Joshua Ho

    Thanks for sharing Ash. Really look forward to your posts on customer validation, customer creation and company building.

    One question. In his book, Steve recommends speaking to at least 20 customers. How many did you actually speak to, considering that yours is a web startup?

  • http://www.ashmaurya.com/ Ash Maurya

    Good question. I was going to cover that point but I guess I forgot.

    I had my “problem presentation” pipeline set up with 50 people but after about 30 I felt I wasn’t learning anything new so I stopped and waited to talk to the rest when I had the “product presentation” ready. As I’ll cover in the next post, you never want to stop talking to new customers and I am still doing a more later-stage variation of “product presentation” even today.

  • http://www.ashmaurya.com Ash Maurya

    Good question. I was going to cover that point but I guess I forgot.

    I had my “problem presentation” pipeline set up with 50 people but after about 30 I felt I wasn’t learning anything new so I stopped and waited to talk to the rest when I had the “product presentation” ready. As I’ll cover in the next post, you never want to stop talking to new customers and I am still doing a more later-stage variation of “product presentation” even today.

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  • http://www.steveblank.com/ Steve Blank

    Ash,

    Thanks for doing this. Unbelievably useful. Your slide is going to show up at my Haas class tonight.

    steve

  • http://www.steveblank.com Steve Blank

    Ash,

    Thanks for doing this. Unbelievably useful. Your slide is going to show up at my Haas class tonight.

    steve

  • http://www.recessmobile.com/ Vitaliy Levit

    Ash, great post. We’re going through a similar process for a new product right now and it’s good to have some validation for our own processes. We’ll have some lean posts coming up soon as well.

  • http://www.recessmobile.com Vitaliy Levit

    Ash, great post. We’re going through a similar process for a new product right now and it’s good to have some validation for our own processes. We’ll have some lean posts coming up soon as well.

  • http://www.ashmaurya.com/ Ash Maurya

    Thanks Steve. This one was easy. Wait till you see the next slide on Customer Validation. I’m still trying to make sense of it…

  • http://www.ashmaurya.com Ash Maurya

    Thanks Steve. This one was easy. Wait till you see the next slide on Customer Validation. I’m still trying to make sense of it…

  • http://www.ashmaurya.com/ Ash Maurya

    Vitaliy – We definitely need more practitioners sharing their stories. Looking forward to it.

  • http://www.ashmaurya.com Ash Maurya

    Vitaliy – We definitely need more practitioners sharing their stories. Looking forward to it.

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  • Dror Engel

    Great work Ash!
    Please upload the hypothesis worksheets …. :)
    did you collect your soon-to-be customers only by emails via landing page?

    Thanks
    Dror

  • Dror Engel

    Great work Ash!
    Please upload the hypothesis worksheets …. :)
    did you collect your soon-to-be customers only by emails via landing page?

    Thanks
    Dror

  • http://www.ashmaurya.com/ Ash Maurya

    Dror/Craig – Let me get my worksheets into a downloadable format. I’ll add a link to the bottom of the post when I’m ready.

    I used a landing page to gather emails for my last product. With the latest one, since it was targeted at new parents, I first hit friends and family, then my kids’ daycare, then referrals. Any event with kids, like birthday parties, are prime for casual customer development.

    A landing page can’t give you this level of micro-targeting.

  • http://www.ashmaurya.com Ash Maurya

    Dror/Craig – Let me get my worksheets into a downloadable format. I’ll add a link to the bottom of the post when I’m ready.

    I used a landing page to gather emails for my last product. With the latest one, since it was targeted at new parents, I first hit friends and family, then my kids’ daycare, then referrals. Any event with kids, like birthday parties, are prime for casual customer development.

    A landing page can’t give you this level of micro-targeting.

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  • http://www.PrintFriendly.com/ Taylor Norrish

    This stuff is great stuff. As an entrepreneur, I’m trying to embrace it… but still love to build first.

    I built PrintFriendly.com. I’m happy to find it on your page!

    Cheers

  • http://www.PrintFriendly.com Taylor Norrish

    This stuff is great stuff. As an entrepreneur, I’m trying to embrace it… but still love to build first.

    I built PrintFriendly.com. I’m happy to find it on your page!

    Cheers

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  • http://kissingfrogs.typepad.com/ Lucas

    Great post. One quick question.

    When you say state the top 3 problems and then listen, are you starting with your problem hypothesis and the 3 drivers you think are most important and then iterating? So for sharing photos (I believe this is the website you are discussing for this) would that be 1) Difficulty of upload 2) difficulty organizing 3) having to sign up to share?

    Thanks again for the great post.

  • http://kissingfrogs.typepad.com Lucas

    Great post. One quick question.

    When you say state the top 3 problems and then listen, are you starting with your problem hypothesis and the 3 drivers you think are most important and then iterating? So for sharing photos (I believe this is the website you are discussing for this) would that be 1) Difficulty of upload 2) difficulty organizing 3) having to sign up to share?

    Thanks again for the great post.

  • http://beebole.com/ Yves Hiernaux

    Not sure about the Build “MVP” block.

    While CD is going on, the product development is still happening from day one.

    Unless you are alone, there should be guys developing the software even when you start stating your hypothesis in a more formal way.

    I would say, it is more like a milestone/synchronization between CD and project development teams that has to happen at that time, because, as you rightly say, it will be difficult in a web startup world to create any real interest without a real demo during the MVP presentation.

  • http://beebole.com/ Yves Hiernaux

    Not sure about the Build “MVP” block.

    While CD is going on, the product development is still happening from day one.

    Unless you are alone, there should be guys developing the software even when you start stating your hypothesis in a more formal way.

    I would say, it is more like a milestone/synchronization between CD and project development teams that has to happen at that time, because, as you rightly say, it will be difficult in a web startup world to create any real interest without a real demo during the MVP presentation.

  • http://apps.facebook.com/refillrevolution aaron

    Steve is talking about this right now in his class at UC Berkeley’s Haas School of Business

  • http://apps.facebook.com/refillrevolution aaron

    Steve is talking about this right now in his class at UC Berkeley’s Haas School of Business

  • Dave Copps

    Nice Ash, Almost looks like a Rails dev methodology – build/test/validate, build/test/validate. Thanks for sharing.

  • Dave Copps

    Nice Ash, Almost looks like a Rails dev methodology – build/test/validate, build/test/validate. Thanks for sharing.

  • http://www.ashmaurya.com/ Ash Maurya

    Lucas –

    Yes that is correct. You want to pick the 1-3 most compelling problems you think customers have (ranked in priority) and have them re-rank them/change them. The point is to set a stage and get them talking.

    I detail the specific problems I started with and what I ended up with in my “How I built my Minimum Viable Product” post.

  • http://www.ashmaurya.com Ash Maurya

    Lucas –

    Yes that is correct. You want to pick the 1-3 most compelling problems you think customers have (ranked in priority) and have them re-rank them/change them. The point is to set a stage and get them talking.

    I detail the specific problems I started with and what I ended up with in my “How I built my Minimum Viable Product” post.

  • http://www.ashmaurya.com/ Ash Maurya

    Yves –

    I disagree. Building a product based on guesses is potentially taking you down the path of building features no one wants which is a form of waste. I would hold off coding until the customer problem and feature prioritization is identified. Being a technologist myself, I know this is hard to follow as we tend to measure progress in terms of what we build. If you do have a product development team already staffed during CD, have them start laying out the infrastructure for measuring metrics and continuous deployment. Once the first MVP is built, you need to constantly be building/measuring/learning. Most people only focus on the first part – building.

  • http://www.ashmaurya.com Ash Maurya

    Yves –

    I disagree. Building a product based on guesses is potentially taking you down the path of building features no one wants which is a form of waste. I would hold off coding until the customer problem and feature prioritization is identified. Being a technologist myself, I know this is hard to follow as we tend to measure progress in terms of what we build. If you do have a product development team already staffed during CD, have them start laying out the infrastructure for measuring metrics and continuous deployment. Once the first MVP is built, you need to constantly be building/measuring/learning. Most people only focus on the first part – building.

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  • http://www.ashmaurya.com/ Ash Maurya

    Cool – I’ll most likely be speaking at your class in April. Hope to meet you then.

  • http://www.ashmaurya.com Ash Maurya

    Cool – I’ll most likely be speaking at your class in April. Hope to meet you then.

  • http://www.ashmaurya.com/ Ash Maurya

    Thanks for reading Dave.

  • http://www.ashmaurya.com Ash Maurya

    Thanks for reading Dave.

  • http://beebole.com/ Yves Hiernaux

    Ash –

    Thank you for you answer. My comment is probably too “Enterprise” specific where developments are often longer and where the development of infrastructure and basic parts can start without even thinking about the added value features themselves.

    But, correct me if I am wrong, unless you are in a totally new market, you always have some guesses about the MVP looking around you for existing solutions.

    Look at your competitors, their messages, … it is already a point to start your hypothesis and developments.

    Based on your experiences, are your conclusions different ? Is it just “educated” guesses ?

  • http://beebole.com/ Yves Hiernaux

    Ash –

    Thank you for you answer. My comment is probably too “Enterprise” specific where developments are often longer and where the development of infrastructure and basic parts can start without even thinking about the added value features themselves.

    But, correct me if I am wrong, unless you are in a totally new market, you always have some guesses about the MVP looking around you for existing solutions.

    Look at your competitors, their messages, … it is already a point to start your hypothesis and developments.

    Based on your experiences, are your conclusions different ? Is it just “educated” guesses ?

  • http://visualwebsiteoptimizer.com/ Paras Chopra

    Ash, a somewhat naive question – but how do you get customers to *speak* to you? I have a feeling that there would be too much friction in getting them to fix a time for a meeting. No? Also, you briefly mentioned in your comment that you get some of your customer leads through a landing page. Can you tell how do you follow up with them to fix a meeting? Perhaps an example?

    The key concern of mine is how to get people to talk for customer validation. A case study or an example on this would be fantastic.

  • http://visualwebsiteoptimizer.com/ Paras Chopra

    Ash, a somewhat naive question – but how do you get customers to *speak* to you? I have a feeling that there would be too much friction in getting them to fix a time for a meeting. No? Also, you briefly mentioned in your comment that you get some of your customer leads through a landing page. Can you tell how do you follow up with them to fix a meeting? Perhaps an example?

    The key concern of mine is how to get people to talk for customer validation. A case study or an example on this would be fantastic.

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  • http://www.ashmaurya.com/ Ash Maurya

    Yves –

    I think the answer depends on market type and yes there are cases where you might be able to start laying out a foundation for the product because it is independent of CD but I would still exercise some caution there.

    For example, even if think you are in an existing market building a knock-off product for half the price, without CD you wouldn’t know whether price alone is really enough to win over customers. Chances are the existing product has a boat-load of features. Do you need to implement all of them, or only 20% to start? Which 20%? This is not always obvious.

    Before I went through CD for CloudFire, I thought everyone would want prints and even started researching APIs to print providers, pricing, etc. After CD, I found very few people cared that much about prints and even if we had it, it would just be a feature on a checklist and be no different from our competitors. Being able to share all your photos from a folder in seconds would be different.

    The ultimate goal of customer development is coming up with a unique value proposition that matters. Until you know that, it’s hard to start building an MVP.