“ Very few startups fail for lack of technology. They almost always fail for lack of customers”

I’m sure you are very busy and with so many things going on, there are tasks in which you invest minimum time and resources to get them done (hopefully reading this is not one of these tasks). That is what lean startup is about: Investing the minimum amount of resources to get things done successfully.

The traditional method for new product development is to sit down for 6,9 or even 12 months in a closed office and develop the most sophisticated and scalable system and then take it to market. The risk – you assume what customers like. Many times the result is tons of hours and money spent on something customers are not keen of: a feature, a product or a concept. There were other companies doing search engines before Google. There were other social network sites other than Facebook. Where are they and how much time and money did they spend before failing?

Every startup has an assumption or a theory. The lean startup concept is about developing the minimum, most basic product that tests that theory. The goal is to develop a minimum feature set that pares the features of the first product release to the minimum necessary for early customers. Instead of 12 months in a closed office, one spends 1 month to bring a very basic product to market and test his assumptions. If the product flies – you feel much more confident to move forward and enhance it. If the product fails – you failed cheaply.

The concept of lean startup is complemented by another concept: Customer Development. Customer development, led by Steve Blank, is about developing things that customers like. The concept is similar: instead of spending 3 months or 6 months developing your next version, making assumptions about what customers would like, develop something basic, get out of the building and test that out with customers. SaaS, for example, enables companies to upload new versions within seconds and so they can do that multiple times a day. Zynga, the leading online gaming company, for example, uploads new versions every 20 min. on average. That way they can even test the color of a new button and change it every couple of minutes to test how users react to different colors. Less time is spent on planning and making assumption and more time is spent on getting customer feedback.
Customer development, however, does not apply only to internet or software startups. It can apply to food, toys, consumer electrics and many other sectors.

At the end – It’s all about developing products your customers like (vs. products you like). To develop product customer like, and minimize risk, one needs to get a something out there as soon as possible and test it out. Learning and iterating is the process that leads to a better product (vs. endless meetings in the office).

And again: “Very few startups fail for lack of technology. They almost always fail for lack of customers.” (Steve Blank)

More on customer develop
or about Steve Blank

Advertisements

About shanishoham

After 14 years of General Management and incubating/scaling new businesses & organizations for enterprises (established a $55M mobile business and a $100M/400 employees global division), I became an investor Today I’m a board member/mentor with 5 incubators & micro-VCs and involved with many other private & public incubators around the world. I also founded a VC firm named 2020 and I'm a member with a number of angel groups so i get to see & work with many startups, innovation centers and other parties across the ecosystem. I’m an alumnus of the Stanford Graduate School of business - Sloan Master in Management program, a 10 months intensive program for 57 carefully selected experienced Executives and leaders from all around the world.

10 comments

  1. Pingback: World Wide News Flash

  2. Richard Ebner

    Fine article, reminds me of two things I heard that we try to keep in mind at isiQiri:
    1. No business plan ever survives first customer contact.
    2. Fail quick, try often.

  3. Jonathan Tudor

    the article makes important observations – a reminder that product marketing is essential, i.e. really understanding what the customer needs and developing only that. Even if you develop a solution that a customer needs, unless it offers a profound and valuable alternative to what they’re currently doing to solve the problem, you’ll still not sell it. Best also not to forget that most businesses fail because the team wasn’t strong enough to execute….

  4. Pingback: Lean Startups – Part II – Business plans – Where do they fit in? « Shani shoham's world

  5. Completely agree- important thing to remember is not to spend 9 -12 months trying to sell to a ‘customer’ who is never going to buy. Bad news early is always good news in sales cycles.

  6. Josep Zuccoli

    I think these is the key factor who make a startup continue his living condition 2 or 3 years or dead in the first one. It incredible how many companies just think her product is great. But, the very first thing anybody have to do is check if the user thinks is great!!. Thanks , shani

  7. Tõnis Saag

    Being open about your idea is the first step to collect valueable clients’ feedback even before you start product development. That helps you to build a community before you go public.
    But some entrepreneurs tend to stay very closed about their plans and therefore have to start their launch from zero.
    Which one is better is a question of chicken and egg 🙂

  8. Pingback: The fundamental change – cheap and quick « Shani's Business Review (SBR)

  9. Pingback: The past, the Challenge and the Future of the Venture Capital Industry | Startup News

  10. Pingback: Get to user delight « The book of inspiration

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: