Over the last 10 weeks i had the pleasure of mentoring a team at Steve Blank’s Launchpad at Berkley. In 10 weeks i had the chance to observe the team take the journey from a nonviable idea to a first customer and purchase order. I decided to share here three advices i gave the team that i believe applies to every entrepreneur and startup:
- Dream big. Execute small – Halfway through the journey three target segments and two distribution channels stood out. As a startup resources are limited: the team is small, funding is limited and time is of essence. i asked the team to focus on the one segment and one distribution channel. Amazon started with books, Facebook with colleague students and Uber with black cars.
- Understand your customers (#1) – Customer development is key but customer development is useless unless you are asking the right questions. Early on the team asked prospect customers futuristic questions such as “how much would you be willing to pay for X?”. Futuristic questions requires a person to imagine a situation. It doesn’t bridge the different between aspiration and action. Instead ask about past experience vs. future ones. Ask about the average spent over the last 30 days vs. willingness to pay. Ask about the decision factors that led to the last purchase vs. “what’s important for you?”. While the team exercised customer development and conducted dozens of interviews every week, only when they started asking the right questions, did they receive meaningful feedback.
- Understand your customers (#2) – The team ran multiple surveys during the course but gained marginal insights until they started using scales and grades. If you get 10 qualitative answers you use your judgement to analyze the results. Your judgement is subjective. A quantitative result is more difficult to argue with. Ask your responders to grade the answers in a scale of 1-10. Ask them to share their average spending or number of times a week they do X. Numeric answers are easier to analyze and therefore are more insightful.