So you have a business idea.
You have a ton of energy and endless passion to make it happen. You are convinced your idea will be a hit.
Even your family and friends seem pumped about the idea. They tell you how great the idea is and that you’ll do great. Maybe you even told some fellow entrepreneurs, potential advisors, mentors or even investors – they all agreed that you’re onto something big.
But are you really?
There have been many founders who felt exactly the same:
Plancast – A social event sharing site that allows users to discover, plan, promote and celebrate events. The startup all but abandoned after an inability to attract users beyond 100,000 early adopter sign ups,
MyGuidie.com – A platform designed to connect travellers with local guides. Great idea and winner of many pitching competition was closed after 2 years of development,
Boozilla – A platform connecting artisan distilleries with booze lovers. My own business burnt our teams cash and turned into a big failure after only a few months and lots of positive feedback,
The examples are endless.
Everything from personalised e-commerce, tutor matching, music streaming, wine as a service companies, to games and mobile apps ended up in this TechCrunch DEADPOOL.
So how do you know that you’re not going to be the same? And most importantly, what will you do to make sure that you don’t end up like one of those examples.
The good news is that many successful entrepreneurs have had some big failures before success. The bad news is that regardless of experience. Almost all startups fail.
This issue is designed to help you find out if you really have a winning idea before you invest significant time or money.
Our Hero: Rob Fitzpatrick
Our interviewee Rob Fitzpatrick dropped his business after 4 years of development, even after selling to major companies and being backed by Y Combinator – one of the best startup incubators in the world.
In my interview with Rob, he shared his years of experience on how to talk to customers and get valuable feedback. He gives us actionable tips on how you can start eliciting feedback about your idea without costly mistakes. A fundamental skill every entrepreneur should develop. Follow Rob’s advice and I promise you‘ll avoid many years of struggle chasing the wrong idea.
How to validate your business idea when everyone is lying to you
What is Customer Development?
If you’ve been in the startup environment, I’m sure you’ve come across customer development – the catalyst of the Lean Startup approach.
If not, let me introduce you to this fundamental startup concept that totally changed the way I look at building a business.
Customer development wants to answer the simple question ‘What does the customer want?’.
The concept uses simple principles to systematize the startup build process and lets you create things that people want (and stop building what they don’t) through customer conversations.
By talking to customers before you have a working product, you have the opportunity to gain customer insights, test assumptions and optimize ideas.
Don’t get burnt by your business ideas
You have seen the failures of founders that lost their company, money and even years of their lives on a bad idea. Going through emotional torture even though they had no chance in the first place.
So what can you do to turn the odds in your favour?
While there’s no one single answer, there are some questions you can use to get some answers that put you on a good path:
What is the problem I am solving?
Are there others with this problem (or is it unique to me)?
What are their motivations to solve the problem?
How do they solve this problem now?
How much does it cost them?
What is the best solution according to them?
So how can you get the answers without making bad assumptions? The answer is obvious right…
Talk to your customers!
There are many benefits of talking to customers after the idea pops in your head.
You get to ask them questions and understand their lives – their motivations, goals, how their day looks, costly problems and what they think would be the best solution.
With patience and practice – It’s that easy to get the right information! You find your customers, you ask them questions, they tell you their solution, you build it and then they buy from you. You have a real money making business. Well, maybe not so fast.
Even though many startups DO talk to customers… most of us still get it wrong.
Don’t shoot yourself in the foot
When you ask your potential customers:
‘Do you like the idea?’,
‘Would you buy it?’, or
‘How much would you pay?’
You will probably get an answer pretty far from the truth that will send you in the wrong direction. And this is why you need to pay attention.
Our guest Rob learnt the hard way on how to get useful customer feedback that led to building products people wanted and were willing to pay for.
He found himself in a situation where he realized after months of customer conversations that they were useless!
All because he was doing them wrong. Gradually burning through all his investors and teams money, going broke and dropping the business after years of work.
The thing is, he understood that talking to customers was important. He was constantly in touch with his customers, getting out of the office, talking to clients and getting feedback on the idea that he and his team were building – It was a solution they said they wanted!
Even after getting giant company customers in MTV, Sony and even being backed by Y Combinator. Rob found himself and the team working on a product that just didn’t scale. There just weren’t enough customers and no recurring revenue.
Going through all that pain and learning how to do it properly with a few more businesses allowed Rob to write the book ‘The Mom Test – How to talk to customers & learn if your business is a good idea when everyone is lying to you’.
That’s why Rob’s here. To help us learn from his mistakes and jump right into our customer conversations to get the truth!
Why you need to understand your customer right NOW
Do you really need to be convinced that understanding customers is the number one skill every entrepreneur needs?
Imagine if you could suddenly take the guessing out of the equation when building a business, or if you could instantly answer the questions… ‘Would people want it?’, ‘Will somebody buy it?’ or ‘How much will they pay for it?’.
Here are a few more reasons why you should be dying to understand your customers:
Avoid spending time and money building something nobody wants,
Focus on vital product features people actually want,
Understand the motivation of your customers and sell them easily,
Gain insights that help you build the most valuable product,
Get startup ideas from people ready to buy before you even invest anything,
Build a community of early adopters and advisors who will help you build your product,
Launch to a group of customers who already know and trust you, and
Pre-sell your product before it even exists
It’s obvious right? Customer conversations done right are powerful.
It’s been years since Steve Blank delivered the methodology of customer development in his book ‘Four Steps to the Epiphany’. So why isn’t everyone doing this? But as Rob says its much harder than it looks. In the next section we’ll look at some of the pitfalls to avoid with customer conversations.
Ways you will screw up conversations
Even though Rob understood how important customer development was, he wasn’t a natural and made a lot of mistakes. Mistakes that he could have easily avoided.
Here are some of the mistakes Rob says we need to avoid in our conversations:
Mistake 1. Looking for compliments
We go out there, we say to people “Here is my idea, do you like it?”
In the best scenario, somebody will try to point out some of the problems with your idea, but most will just say “Yeah, It sounds awesome”.
Then you come back to your team and they ask “How was it? What do they think?” and your obvious answer is “They all love it!”.
The problem is that the feedback is mostly false positives, bad information that causes you to run ever so enthusiastically into a brick wall. Ask the wrong way or annoy someone enough and they’ll tell you what you want to hear.
Mistake 2. Pitching
Many entrepreneurs think it’s best to get feedback through pitching the idea. Wrong! By pitching somebody your idea, you are making them biased.
Let’s imagine it. You are so excited about it that you see somebody and instantly spew out your precious idea.
How can someone give you honest feedback when you just told them the problem, the solution and instantly counter their feedback with “but it’s waterproof, has a touchscreen and keeps your data in the cloud!”.
You might try to hold off on pitching mode but as soon as somebody asks “So what is your idea?”, you instantly find yourself back to pitching mode and suddenly losing a chance to learn about your customer.
Mistake 3. Collecting bad data
What are you actually looking for? What do you need to know if an idea is good or bad? What is the specific hypothesis you are trying to validate?
Finding out that your target customer takes a shower daily and thinks it’s a waste of time doesn’t validate your idea!
Mistake 4. Talking too much
When you talk, you don’t learn.
To have a useful conversation, you need to not only ask the right questions but actually listen and hear the answers. Be comfortable with silence and let the person actually think. Remember it’s not about you, it’s about them and what they want.
So how on earth do you get customer conversations right?
The Mom Test
After years of talking to customers and several failures Rob has come up with The Mom Test.
“People say that you are not meant to ask your mom about your business idea” Rob explained. “This is because she will always say – ‘It’s wonderful and that’s very smart – good job’.”
Not great feedback right? The problem as Rob found was ALL people he talked with were nice and gave positive feedback just like his mom!
For example, you go to an investor and say “Here is my business” and they say “Oh that’s really interesting… keep me in the loop, let me know how it goes and keep me up to date.”
So you always hear these seemingly ‘positive’ pieces of feedback but don’t actually get feedback that helps you build a better business Rob explained.
You’re just too likeable and nobody wants to tell you that your idea sucks.
Realizing this problem, Rob finally understood what to do. If you can’t ask your mom whether your business is a good idea, you shouldn’t ask anybody whether your business is a good idea!
So give them no choice using The Mom Test
You should ask questions that will give people no choice but to tell the truth.
To do it, you must not mention your idea. Instead, you ask them about their lives, what they care about, their goals, their budgets, their problems and their current solutions.
Note how I repeated THEIR lot of times? Yes, I did it for a reason. It’s not about you and your idea – it’s about THEM!
So even when you ask your mom, she won’t have the chance to lie to you – unknowingly she will let you know if you have a crappy idea.