One incredibly useful principle I have discovered in the past year has been ‘customer development’. Customer development is a framework created by Steve Blank who teaches a course at Berkeley and Stanford of the same name. Steve has founded many startups, most recently e.piphany.
What exactly is customer development? It’s basically the acknowledgement that startups know shit when they begin. They have a lot of ideas and those ideas need to be measured and validated before moving on/scaling up. It’s an allergic reaction to the traditional path of raising a ton of venture money at the idea stage, hiring lots of marketing and biz dev folks right away and then have a humungous big-bang launch.
The most likely outcome in that strategy is that you have a high turnover of marketing/biz dev folk because of the disillusionment/expectations of everyone being out of whack. Also, you get a ton of traffic and attention when you aren’t ready to profit from it and you typecast yourself as something in people’s minds when you aren’t sure of your identity yourself.
Customer development says exactly the opposite: learn your way to success.
Steve has written a dry but incredibly insightful book, The Four Steps to the Epiphany
. I bought the book, read it and then gave it to a friend. It wasn’t until the Venturehacks guys started posting more frequently about customer development that I really started to think long and hard about it.
The most famous example of using customer development in a startup is at IMVU, a virtual worlds company. If there is one post you must read/listen to, it’s this one from founder/CTO Eric Reis. It is literally my favorite blog post of the past year.
Eric also maintains a fantastic blog here and is now an advisor to Kleiner Perkins. Go add it to your feed reader right away.
Customer Development is not new but it is certainly enjoying a renaissance around the framework Blank is establishing. For instance, take a look at this excerpt from a 1997 New Yorker piece on how Bloomberg was started:
It’s incredibly cool that one of the first three employees of Bloomberg was dedicated to learning about the customer. I imagine that this will become increasingly more commonplace in the next three years around valley venture-backed startups as well.
