In this video, Steve Blank explains the Customer Development Process and how, when appropriately used with Product Development, reduces product, market, and customer risks.
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Steve Blank What is Customer Development Transcript
Unless some of you have been working in a specific domain for the last 20 years or so, the odds are that anything you are thinking about customers and markets are nothing more than a guess. You go, “Oh no, the buddies in the dorm, they looked like they liked it,” and “Look I put it up and I got 300 hits.”
It’s not a business, in fact, heuristics is if you can’t get 10,000 hits like in Silicon Valley, your server is not connected. But it’s not a business. The real notion is how do you take your idea, size the opportunity and figure out whether your hypothesis, your guesses about customers, about the problems you are solving, about your product are correct.
The first thing I teach students and coach young entrepreneurs is while your hypothesis are great, have all of them you want, you got me excited, the next step is get the hell out of the building and test them.
On a web company, you can do that virtually. You could get users to click on your page. If it’s a physical product, you physically leave the comfort of your dorm or office and you go out and you talk to people.
The first step you want to do is leave any notion of your slides or websites or whatever at home and go out and test some of the fundamental hypothesis that you have about your business. And you have two that are just absolutely essential.
One is in any company that you’re making a product or service, you believe you’re solving a problem or need that a customer has. Great, I’ll believe you. Now show me that there are customers out there who have agreed with you, who have said, “Yes, this really is a problem, and it’s the most important problem we have. And in fact, it’s so important, we’d actually pay you money or use your service.”
Or if it’s not a problem, you could convince me it’s a need that I didn’t even know I had. I’ll rush and go use your site or buy your product. And while you are out there, by the way, you could find out millions of other things about customers.
This is hard because if you’re a passionate entrepreneur, you’ll look at somebody like me and go, “Steve you don’t get it. I’m right, I’m passionate, I got it. I’ve nailed it, I’ve talked to 20 people, they’re all over me. I’me done, we’re launching.”
I will usually go, “Great, so this ought to be a very quick exercise. In about 20 minutes, you could go out of the building or get some people to click on your website and confirm.” Just what I’d say.
For those of you thinking about companies, and particularly those of you building web companies, you could run this exercise in a week. Trust me, it will be very sobering.
The goal is not to convince you not to do a business, the goal of a customer development process is simply to take the hypothesis about your business and product, as is, and see if there is customers in a market outside the building.