October is the month that we at Startup Commons Global focus on Estonia to find out the main challenges they are facing to build a vibrant startup ecosystem and main actions that they are planning.
Which are the main triggers that are pushing to design a new innovation system?
Estonia is a small country with 1.3 Million inhabitants, with small domestic market so companies with high ambition to grow need to look beyond estonian borders. While Estonia is known to generate a huge number of innovative startups per capita, the majority of entrepreneurial businesses in Estonia are quite traditional and are stuck in subcontracting activities, what it means that there’s no enough number of them to produce a big impact on the economy.
According to GEDI report for Estonia, there are four key bottlenecks that hold back Estonian entrepreneurial performance:
Clearly, the cultural factors (attitudes and skills) are closely related, and both are key drivers of the innovation and finance bottlenecks.
Call to Action for Estonia
The GEDI approach is designed to identify and analyse bottlenecks that hold back entrepreneurial performance in countries, and to design policies that help alleviate those bottlenecks. Therefore, the call for actions in that report listed below are aimed to remove those bottlenecks:
Skills and Attitudes
Challenge: Ecosystem-wide approach is required
There’s no magic potion for such scenario but long term commitment to stimulate entrepreneurial skills and mindset and effective allocation of resources to support organizations, services and activities that are helping entrepreneurs and startups to move forward to next level.
Startups ecosystems are complex systems that need to be understood, maintained and improved. Perhaps one of the most difficult things to assume is that, above all, nobody and no organization has its control as the startup journey is unpredictable, interacting with different organizations, services, activities or processes, whether at local level or beyond your borders.
You just contribute to the system in the most sustainable way, creating as much interactions as possible with other stakeholders and comparing this concept to a telecommunication network, according to Metcalfe's law, the value of the ecosystem is proportional to the square of the number of connected organizations of the system.
That’s why it is so important, amongst other things, to map any startup ecosystem as once you know who is who in your ecosystem, the likelihood to create interactions increases and therefore, the value does as well.
Arengufond, the public institution subject to the Parliament whose aim is to contribute to the economic development of Estonia, got in contact with Grow Advisors, a consulting unit of Grow VC Group that also Startup Commons is part of, as they are looking for a partner who would have the expertise in developing an startup ecosystem as a whole and help to guide through the process to implement the Startup Estonia program in order to develop the startup ecosystem in Estonia.
For that purpose, a join team by Grow Advisors and Startup Commons visited Arengufond headquarters in Tallinn last week to run a two full days workshop. The results of that workshop will be announced next month on our blog site. Meanwhile, stay tuned and don’t stop building startups ecosystems!
In this article, Chris Bank of UXPin – The UX Design App details what a Minimum Viable Product (MVP) is in basic terms and how experts think about it. Lean startups and tech titans alike, are increasingly using the minimum viable product (MVP) as a starting point for building successful software products. By focusing on an integral set of key features and core functionality for product development, firms can efficiently establish a definitive core to form the basis out of which the rest of the product can evolve.
How the Top Product Minds in the World Think About MVPs?
As discussed in the Guide to Minimum Viable Products, a common misconception is that an MVP consists of the minimum set of features deemed necessary for a working software product, with the goal of bringing it to market quickly. This misses the mark on several levels, most notably in the overemphasis on speedy delivery and time to market, as opposed to focusing on customer and market acceptance. Indeed, rapid development is of essence, but only to the extent that learning and research objectives can be obtained quickly.
As defined by Wikipedia, “The minimum viable product (MVP) is a strategy used for fast and quantitative market testing of a product or product feature. The term was coined by Frank Robinson and popularized by Eric Ries for web applications.” This definition is narrow — particularly, it’s too quantitative and product-focused — according to many experts. However, some of the noted purposes of an MVP below begin to open up a more significant discussion:
Let’s look at what the experts have to have to say.
Expert Takes on MVPs
Eric Ries, cofounder/CTO of IMVU and MVP proponent, defines an MVP as a version of a new product that allows for the most learning possible for the least amount of effort. That is to say, an MVP allows for testing actual usage scenarios with customers. To this end, expensive market research and subsequent product development is eschewed; instead, a rapidly-built product with a minimum set of features is deployed to test assumptions about customer requirements.
Image credit: Build-Measure-Learn
Ash Maurya, CEO of P2P sharing site Cloudfire and author of Running Lean - Helping Entrepreneurs Succeed, recounts his experiences in building an MVP for his startup. After identifying a target group of users, he then proceeded to identify the three main issues they experienced with current solutions on the market. He was then able to build a solution to minimally address those issues, and drive early adopters to sign up via the product’s landing page. Fortunately for Maurya, the process was simplified through leveraging key functionality from a previous product. This allowed him to dramatically cut the time and effort it took him to validate his assumptions about the potential user base for his product.
Reflecting on his experience, Ash now emphasizes the importance of capturing customer value with any MVP. It’s critical to get the product right, making sure you have a problem worth solving. Using the Lean Canvas framework below, he highlights the 4 critical steps to nailing the product in your MVP:
To understand market and customer risks of an MVP, see his post The 10x Product Launch.
Image credit: The 10x Product LaunchMarcin Treder, CEO and Co-Founder of UXPin, went through a very similar experience although his company’s existing product was a paper prototyping notepad while the current solution is a web-based wireframing and prototyping application. “Clearly, the paper products were cheaper to make initially,” he states, “but we honestly had no idea that our next version of the product would be technical — we were a few designers just trying to help our peers become better designers.” But he quickly realized how fragmented the existing solutions were and how much people complained about them. According to Treder, “An MVP isn’t the quickest or the most perfect product. Rather, it is a product with minimum development effort that creates maximum value.” He admits that his first product didn’t provide the maximum value given current alternatives today. But, today, UXPin is one of the leading wireframing and prototyping applications on the marketing. So he clearly made the transition.
Image credit: Practical Product Management for New Product Managers
Of course, not all lean startups will have the luxury of having a pre-existing product to massage into MVP form. In many cases, this is barely necessary.
Nick Swinmurn, Zappos co-founder, experienced this first-hand. In an extreme case of MVP leanness and agility, the e-commerce stalwart’s humble beginnings started with Swinmurn photographing shoes at a local retailer. He then posted the photos online and, for each online order, he would return to the retailer and buy the necessary items. In this sense, the primary objective of an MVP is to eliminate business uncertainty to the greatest extent possible. He didn’t have a product and acted as his own customer in the initial stages.
Image credit: The 10x Product LaunchAnd it’s far more common for companies to sell and market vaporware (products that don’t yet exist or barely exist) — especially in the startup world.
Cindy Alvarez, UX for Yammer and previously Product at Kissmetrics, echoes that a common mistake people make is assuming an MVP needs to be a product. According to her, the goal of an MVP is to maximize learning while minimizing risk and investment and, therefore, a product should not be the only means to that end. By thinking so narrowly about MVPs, she has seen many people start by thinking about the “final” product and trying to cut features instead of doing anything scientific. To avoid this pitfall, one of her rules of thumb is following the Cupcake Model whereby you think of one complete experience.
Image credit: 7 Ways to Test MVP
She also provides some practical advice in executing on MVPs within teams. She claims there are two important problems that must be addressed head-on internally:
Steve Blank, a serial-entrepreneur and author / lecturer on MVPs, asserts that the Customer Development and Lean Startup methodology under-emphasizes the importance of selling a vision to visionaries — not everyone — while delivering a minimum feature set. From his observations, many people easily comprehend how to build a minimal product with few features (the Minimum Feature Set), but they fail to acknowledge that most people won’t like their MVP — how many people do you know who brag about a minimal product? Instead, they should be building early adoption and evangelism while selling a vision about how the world will work, and be so much better, with the product being built a few years out, starting with a minimal product that you can play around with and internalize today.
Image credit: Silicon Africa, 5 Characteristics of Earlyvangelists
Rand Fishkin, co-founder of Moz, seems to be more of a showman than the rest. From his perspective, first impressions matter — a lot. It is for this reason that he encourages others to take their MVP one step further toward being an EVP (an Exceptional, Viable Product). He claims to have seen a lot of MVPs launch that hardly produce significant value, and strongly believes it’s highly problematic. After all, there’s only so many times you can re-launch a product. In practice, Rand suggests making your MVPs in-house and dogfooding them internally and with a few customers. Gather feedback and iterate until the first internal and external users find that “A Ha” moment, then release it to the wild as an EVP. This may take an extra 30-90+ days to reach this point but, in his opinion, it’s well worth the wait.
Image credit: Moz, “7 unlikely recommendations for startups & entrepreneurs”
MVPs are just a means to an endThere are many ways to skin a cat, but even more ways to deliver an MVP. Although each expert has their own twist on what an MVP means to them and golden rules they follow to make sure they don’t get caught in the weeds, the underlying message is the same: MVPs are a means to an end product or product improvement, not the end product itself. Make sure you don’t lose sight of that.
This is an edited version of a post originally posted at http://www.onextrapixel.com/, by Chris Bank, who a product and startup enthusiast.You are free to re-edit and repost this in your own blog or other use under Creative Commons Attribution 3.0 License terms, by giving credit with a link to www.startupcommons.org and the original post.
In the past decade, there has been a revolution in how people think about bringing new products and services to market. Driving that revolution have been two major movements: the Lean StartUp methodology first set out by Eric Ries, and design thinking, popularised by leading design consultancies such as IDEO. Both Lean StartUp and design thinking have a great deal in common, but they evolved separately and are only now starting to converge, with fascinating results.
Lean StartUp’s principles are as simple as they are profound: don’t wait for perfection when creating something new, just get a ‘minimum viable product’ (the most basic workable version) in front of a customer as quickly as you can. Get customer feedback based on actual observed market behaviour (‘customer validation’) then continually iterate your product and market strategy (‘persist, pivot or kill’) based on that feedback until you hone in on exactly what customers want.
Design thinking is no less revolutionary. Similar to Lean StartUp, there is a relentless focus on the customer. In the case of design thinking, the emphasis is on truly understanding the customer’s real needs, of ‘taking a walk in the user’s shoes’. In other words, a really deep application of empathy, as the critical quality needed for success. If you understand the real needs of your customer, you have the true north for which to aim. The design process is then about how to creatively generate as many ideas as possible, refine them through customer feedback, and evolve towards a best-fit solution.
What can social entrepreneurs, or those running non-profits, learn from Lean StartUp and design thinking? The answer is: a great deal.
For non-profits, substitute ‘beneficiary’ for ‘customer’ if you need to, but the principles are the same. Walking in the shoes of the person that you are trying to serve, prototyping a solution and iterating it continuously based on observed real world behaviour, not assuming a solution but testing it in the field – these are as true for the social start-up in Sudan as they are for the latest tech launch in Silicon Valley. Meet your customers before building a product.
Let's take a look at one venture that developed a rainwater capture device for use in Bangladesh. By capturing rainwater on their roofs, the local women could save hundreds of hours a month queueing up for water at the local pump, which was often unreliable and dirty. Who wouldn’t want to save all that time? Yet it turned out that gathering around the local village pump was actually a key social event where women of the village met and talked. Displacing that with one solution (reduced time carrying water) would actually have failed to meet another key need of the village (social gathering). It transpired that the women didn’t really place high value on the time saved, or on getting cleaner water than what they could obtain from the pump. Hence no demand for the product, no matter how useful it would have been.
Lean Startup and design thinking have revolutionised how start-ups work today. The world’s best social entrepreneurs and non-profits are taking note. It’s time for lean and design to meet social.
This is a week’s Virgin Unite Google Hangout with three industry titans:Eric Ries in conversation with Tim Brown, the CEO of IDEO, andJake Knapp, a Design Partner at Google Ventures.
This is an edited version of a post originally posted at http://www.virgin.com/, by Mark Cheng, who is the UK Director of Ashoka, the global network of the world’s leading social entrepreneurs.You are free to re-edit and repost this in your own blog or other use under Creative Commons Attribution 3.0 License terms, by giving credit with a link to www.startupcommons.org and the original post.
1. Be very clear why you want to attend an event. What do you want to achieve or get out of it? It can be as specific as meeting with so-and-so or non-specific like just to get inspired and be in the energetic company of doers. Having a clear objective is a sure shot way to getting what you want. You know what you are going after.
An example that can sum up the importance of focus is the following lines from ‘Alice in Wonderland’:
“Would you tell me, please, which way I ought to go from here?’ said Alice.
That depends on where you want to get to,’ said the Cat.
‘I don’t much care where,’ said Alice.
‘Then it doesn’t matter which way you go,’ said the Cat.”
2. How prepared are you to attend an event? Do you have your business card ready? Another big question is, is your business card telling a great /different story? Once the noisy event is over, you will only have your calling card as your reminder. You want the prospect to call you back and give you a meeting. Is your card giving you the extra push for the same? Please think about it. A business card is a small but an effective strategy since the early days. As entrepreneurs, we have to sell all the time, and what better occasion than an event with diverse people and opportunities? And let’s not forget it’s always a great conversation starter. Try it.
3. How are you converting leads for yourself in an event? Let’s not forget that people are more committed to their own ideas than your ideas. They are trying to achieve their objectives as you are, from the event. The smartest people I have seen turn their own ideas into the idea of the person they are pitching to, selling to or meeting. How do you do that? By listening to people; actually, by genuinely listening to what they are saying. You will be surprised how easily you can pitch in an event where everyone is so open to anything and anyone. You can simply stand out by being a good listener. Listening will arm you with the right ammunition of aligning your objective with that of your target prospect.
4. Make yourself stand out. How? Practice. As the legendary Dale Carnegie once said, “There are always three speeches for every one you actually gave: the one you practiced, the one you gave and the one you wish you gave.” Practice. Practice your pitch, talk, conversation openers, one-liners… you never know how handy it will be. Soon, this will come naturally. Standing out in a crowd has to be practiced. Nobody is born with it. Talk to people and give them your full, undivided attention. Don't fake.
5. Ignore the extra-confident, over opinionated and the always-in-a-group people, who seem to know it all. Their extra confidence can be discouraging, especially if you are a lone ranger in a big party. Walk confidently with a smile. Trust me a big smile will get you through most people. Yes. Even a Ted talk, talks about it!
6. Don’t praise a speaker like everyone does. Be different. Say something like, ‘I totally loved what you said but don’t you think the problem is actually much deeper and it requires individual answers?’ Don’t try this until and unless you are very sure you have something genuinely different to add. It can get you the right attention but can surely backfire too.
7. Sure-shot NOs
- Don’t look around while you are talking to someone.
- Don’t speak too much. Many times we are nervous or we take someone’s interest as a welcome sign to go on. Please, please keep your conversation simple, crisp and to the point. Ask it out. You will be surprised how you might just get it.
-Ask shamelessly. At the most, you will get a no, but please ask. And that brings to the first point, be clear in what you want, you might just get exactly that.
This is an edited version of a post originally posted at http://yourstory.com/, by Shradha Sharma. You are free to re-edit and repost this in your own blog or other use under Creative Commons Attribution 3.0 License terms, by giving credit with a link to www.startupcommons.org and the original post.
How do you know whether your idea you have is worth your time and effort? Wouldn't you like to find out it as soon as possible?
Many people put their ideas on the back burner, uncertain if they have potential or daunted by the amount of money they'll need to get started. It doesn't have to be this hard.
There are four questions that will help you predict whether your startup idea will be succesfull or not.
1. HOW BIG IS THE PROBLEM?
Before doing anything else, figure out if you're solving a real problem and for who you are solving it for (the customer). If you have a sense of who your customers are based on previous interactions, go interview them. Set up a coffee meeting or a phone call to ask them a few questions and further understand how you can solve for their needs.
Conducting effective customer interviews takes practice and interpreting the qualitative data that they provide can be subjective. You can use the problem interview scoring technique to quantify results and make a faster decision based on the score. An interview score of 25 or higher indicates that you're onto something with the problem you want to solve.
2. HOW MUCH WILL CUSTOMERS PAY FOR YOUR SOLUTION?
If you're not sure who your customers could be or have a few ideas you want to test quickly, start with a landing page experiment instead, then interview people once they sign up. Include a price point on your landing page and use Google Adwords to drive targeted visitors to your page.
Measure the number of visitors who convert and leave their emails based on the price you set. Aim to get a 10 percent to 15 percent conversion rate to proceed with your idea. Test different price points and determine the value of a customer even before building your business. You can use QuickMVP to set up this experiment in five minutes.
3. HOW MUCH DOES IT COST TO ACQUIRE EACH CUSTOMER?
After you've validated that people will pay you to solve their problem, figure out how much it costs to get more people to your product.
Paid Ads are a good technique to calculate Customer Acquisition Cost (CAC) early on since it gives you a representative customer sample and their conversion rate.
-> Customer acquisition cost = Total spent on ads/# of paid conversions on landing page
To build a sustainable business, the acquisition cost should be significantly less than what customers pay to use your service.
4. HOW BIG IS THE MARKET & HOW ACCESSIBLE IS IT?
Now that you've acquired a handful of customers, can you get 1,000? 10,000? Is the opportunity big enough?
Find out early. Many startups have shut down because they could not acquire enough customers.
To get an idea of your market size, look at the search volumes of relevant Google keywords. Find uncompetitive keywords with a high search volume to reach a large market at a low acquisition cost. If your keywords are popular but competitive, you're entering a saturated market and will have a harder time scaling.
Next time you have a great idea, jot it down and test it with these four questions. The sooner you test your ideas and get answers, the sooner you'll know which idea is worth pursuing. All it takes is a landing page and Google Adwords to get started.
This is an edited version of a post originally posted at http://www.iafrikan.com/ by Grace Ng who is a Co-Founder of Javelin, an enterprise software and services company for implementing Lean Startup. You are free to re-edit and repost this in your own blog or other use under Creative Commons Attribution 3.0 License terms, by giving credit with a link to www.startupcommons.org and the original post.
Businesses with digital projects have accepted that lean thinking and agile methodologies provide the best approach for their projects and ventures. Start-ups use them as a matter of necessity. Commonwealth Bank, Suncorp, Telstra, Fairfax and even the Australian government have realised the value in this new method.
Lean thinking and an agile approach work by taking an iterative, evolving approach to developing an idea rather than the more traditional, stages of plan, develop and deliver as a whole. Lean and agile can shorten product development cycles, reduce the risk of misunderstanding user needs, increase the likelihood you create something that sticks and, if it doesn’t work, decrease the cost of the failed project.
Lean isn’t for everyone and here are six watch outs to think about before embarking on your own lean project:
1. Lean is not the ‘no plan’ plan
Far too often people say ‘we’re running agile, so we don’t write plans or requirements any more’ and the speed and low-cost benefits are used as an excuse not to invest time and money into thinking things through, opening up a project for failure.
Going lean doesn’t mean doing away with planning.
Each project should have a list of completed or outstanding tasks. Use documents, diagrams or mock-ups describing what needed to be done to keep everything on track. You don’t need to spend months planning but you still need to plan, do requirements and think ahead to keep stakeholders on the same page. You may even choose to evolve your planning and requirements iteratively.
2. You and your stakeholders must accept things will go wrong
Lean means that you would prefer to try, fail, learn, improve and repeat in small incremental and manageable investments. Failing is part of the process of understanding where things are going wrong.
Demanding that things go smoothly is therefore false economy. Sure, there are mistakes that are avoidable but more often than not, if you have good team and you’re following the process correctly, the errors will be important. Errors mark a need to change approach, re-evaluate or, in extreme cases, kill the project – a much more favourable, low-risk outcome compared to an investment in something that isn’t going to work.
But you need board, senior management, customers and suppliers to buy in. Google does this really well. They brand their products or features as “beta” or “labs” signalling that they’re trialling something and it may go wrong. People accept that these features may have errors because they know it’s part of the process of producing a better outcome for them.
This might sound obvious, but when you’re innovating and outside your comfort zone the temptation to return to the comfortable can be strong, especially when the board or senior management is breathing down your neck demanding to know why things aren’t going smoothly. But if you succumb, you face a much greater risk: a project with the expectations of “lean” but none of the flexibility to experiment and learn.
3. Lean isn’t an excuse not to commit to things
With the emphasis on trying, failing, learning and improving it is easy for teams to start avoiding any commitment but you can’t let lean or agile be a scapegoat. At the end of the day, your team is still operating in a commercial environment and results need to be delivered.
4. Accumulating technical debt
Projects that use lean as an excuse to go as quickly as possible without much forethought tend to pile up what engineers call ‘technical debt’ that is an amount of future effort required to fix technical tasks that were done the quick way instead of the right way.
5. Lean doesn’t mean you can always change your mind and expect immediate results
Lean can help move things along faster and can be better at dealing with change when compared to more traditional approaches. This is often how it is sold to management and stakeholders. However, lean and agile don’t mean you can repeatedly change your mind and expect immediate results.
Software engineers make decisions and create logical structures based on the current requirements and future vision of the project. Some changes can easily slide inline with prior decisions and the existing logical structures but other changes may require a significant restructure which in turn results in a significant effort to make changes.
6. Knowing when to move away from lean
The landscape may have changed; you may have thousands of users, new regulation to deal with or greater certainty that the project will succeed. Ignoring more “traditional” planning or risk mitigation strategies may result in missed opportunities or worse, in a damaged brand or fines.
The lean methodology has already brought great rewards and better business practice to many firms, but like any other process, misunderstand it and it can go wrong.
This is an edited version of a post originally posted at http://m.startupsmart.com.au/ by Scott Middleton who is the CEO and founder of Terem Technologies, an Australian company that specialises in developing custom software and technology solutions for corporate innovations and high-tech ventures. You are free to re-edit and repost this in your own blog or other use under Creative Commons Attribution 3.0 License terms, by giving credit with a link to www.startupcommons.org and the original post.
Knowing what your customers think about you and your brand is clearly invaluable information, but you’d be surprised by how many companies build for themselves rather than for their customers’ needs. Yes, we all like to work on projects we’re passionate about, but a business needs to be profitable (eventually), or at least break even for now.
Here’s how listening to what current and potential customers are saying will help you build and grow revenue for your business.
1. Lead generation
Pay attention to conversations around keywords related to your brand to identify potential customers and the problems and needs they’re trying to solve for. Use this as an opportunity to join in the conversation and build a valuable relationship.
Front, a tool for sharing company email accounts, was able to recruit 15 high quality beta users every week with this approach.
How to generate leads with media monitoring:
2. Competitive monitoring
Much like keyword monitoring, you can monitor what people are saying about your competitors. It’s possible that your potential customers:
Use a media monitoring tool to track these conversations, then reach out when you’re able to solve a problem.
Workable has seen great success generating leads by monitoring competitors’ names. They recently won over a new brand advocate by starting a casual conversation with someone who was unhappy with a competitor’s interface, which led to a demo and a favorable tweet — all by being friendly and transparent.
How to win over the competition’s business without being a jerk:
It’s easy to get caught up in the desire to grow quickly. We all want to find the hacks that will lead to 100,000 users in one month, etc. However, you shouldn’t lose sight of the customers you’ve already won over. It’s actually very important to keep these customers happy. Consider these stats:
Retention is crucial for sustainable growth, and a lack of focus on retention results in a large spike in growth, followed by a spike in attrition. Customers want to be heard. By listening to what your customers are saying, you can take the necessary measures to make them happy, and keep them around.
How to retain customers by listening:
Front did this when selecting which keyboard shortcuts they should offer:
Equally important is to work on bugs and glitches. If you say you’ll look into something, make sure to do it, and get back to them!
Tighter feedback loops (getting closer to the customer and reducing reaction time) make the customer happier and benefit the company in the long run by creating an opportunity to develop a product with a pre-established customer base.
4. Virality via loyalty programs
By analyzing data from 100 clients over 30 days, Portent found that social is the third most influential factor when you define conversions broadly. If your customers aren’t happy, they won’t stick around. If they don’t stick around, they are not able to invite others to try your product over an extended period of time. And virality — the likelihood of your brand or product going viral — is crucial to large spikes in growth. by listening to customers (via support) and potential customers (via listening), you can collect important data at the beginning of your relationship to create customer personas. These can then be used to develop custom loyalty programs that will lead to increased shares to relevant audience.
How to maintain consistent virality:
Wrapping it up
When deciding on what marketing and community activities to invest time and resources in, it’s only fair to want to know what the return will be. As outlined above, the financial return of listening to current and potential customers is evident, but its value goes beyond just revenue. Joining the right conversations at the right time also contributes to brand awareness, credibility, and long term relationships, all of which are invaluable.
This is an edited version of a post originally posted at http://blog.mention.com/ by Shannon Byrne who is Mention’s Content & PR Manager, she crafts words, creates strategies, and recruits loyal advocates. She’s based in New York. Get in touch with her at @ShannnonB. You are free to re-edit and repost this in your own blog or other use under Creative Commons Attribution 3.0 License terms, by giving credit with a link to www.startupcommons.org and the original post.
Most entrepreneurs just use customer interviews for data, but there are easy ways to turn these potential customers into paying clients.
The lean startup methodology took what they taught in MBA classes and turned it upside down, completely changing the way most of us thought about entrepreneurship. No longer was starting a business about projections and management titles. Instead, it changed into experiments and data.
While customer interviews are a big part of finding your value proposition, they also can be a perfect time to build leads. Just because you're still looking to find insights doesn't mean you should stop selling. With a little preparation, you can discover insights about your business model and score a sale. Here are some ways to do both.
Step 1: Once you identify their problem, dig deeper
It's essential that when you start interviewing customers, you don't have any loaded questions. You want the people you're interviewing to be completely open with you. Swaying or selling them too early will ruin the advice you need for your business. Often you can tell you're getting good data if your customers start getting emotional about the problem.
When you hear this, they've given you a path to future business. Once you identify the problem that's causing them stress, dig into the problem deeper. Start by asking what's been the cause of the problem, and ask them how much they are spending to fix the issue right now. Go into how much time they are spending trying to solve the problem. After a few minutes, they'll start spouting off valuable information.
This not only gives you information but also opens up your customers' minds about how important the problem is. No one typically takes the time to ask the questions you're asking, so many customers don't think of finding a solution. When you open up customers' minds about how big the obstacle is, they'll become more interested in what you're doing.
Step 2: Pitch a solution, even if you don't have one
After customers've found the problem, this is where most entrepreneurs stop their interview. Happy with the data they gathered, they thank the person for his or her time and walk away.
When you do this, you miss a perfect opportunity to generate business. Here your customer is with a huge problem, and you're going to walk away? No. Instead, pitch a solution, even if it's off the top of your head. When I tell people this, they usually ask, "Why would I pitch a solution that I haven't built?" The answer is because you want to find out exactly what needs to be built to make revenue.
Next time you're in this situation, pitch them a hypothesis you have that you think will work and see how they respond. If they don't like it, awesome--you shouldn't build that. If they do like it, now you can ask them if they'd be interested in your showing them a demo in the future. If they answered yes to liking your solution, they'll almost always be open to seeing a demo. Now you know your customer's problem, and know at least one solution a customer would be interested in buying.
Step 3: Track results and close sales
Don't stop interviewing customers once you have one who you've sold your solution to. Instead, keep conducting interviews until you get to about 100 quality ones. Then look back at the interviews and see which was the most successful solution you pitched. What were customers willing to pay for?
Once you've looked at the data and you have enough customers to make it worthwhile, contact those customers. Schedule a demo in the future and build your minimum viable product in the meantime. While the product is being built, schedule more interviews. Next, build some quick mockups and start showing them around. This could also be a great time to raise early capital if you need to. Most entrepreneurs think you need a finished product to raise capital. False.
Investors will tell you that it's much better to have 10 customers lined up and no product than it is to have a finished product with no buyers. Most companies don't fail because they never get a product off the ground. They fail because they can't get sales.
This is an edited version of a post originally posted at http://www.inc.com/ by AJ Agrawal who is an entrepreneur, writer, and speaker. He is the CEO and co-founder of Alumnify Inc. You are free to re-edit and repost this in your own blog or other use under Creative Commons Attribution 3.0 License terms, by giving credit with a link to www.startupcommons.org and the original post.
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