What the customer wants and what the customer actually buys are not always the same thing. On July 23rd 50 entrepreneurs met at Hive at 55 to network, pitch ideas and compete for cash and mentoring at The Lean Startup Machine, a 54-hour weekend where entrepreneurs use customer feedback to determine the right market for their products. Eric Ries, the Lean Startup founder who made Business Week‘s list of “Best Young Entrepreneurs of Tech” in 2007 and who writes the blog, Startup Lessons Learned, explained via webcam how asking a customer “what do you want?” isn’t the best way to find out.
A much better question, he said, is “why won’t you do this thing that my model says you’re supposed to?”
Ries once had an online product that wasn’t getting as many downloads as he had hoped. He and his team thought they had covered all their bases by building a giant button indicating where to click for the download, but when the customers sat down to use it, they just stared at the screen. When he finally asked why they weren’t pressing the button, Ries found out the simple truth behind the website’s failure: the over-sized button looked more like a banner and the customers didn’t know where to click.
Ries said he could have avoided this problem if he had done one thing prior to launching the product:
“Write down the behaviors you think you would see if you asked your customers to do the thing that your product was designed to do,” Ries said, making sure that the behaviors on the list “allow them to take some action that you could measure,” like signing up for a free trial.
This is how entrepreneurs can “establish a baseline to discover how far from reality you are now,” Ries explained. “Probably the first time you do this exercise, you will be very depressed,” he warned. “But that’s okay. Knowing what those differences are can structure your conversations with customers so that they become more productive.”
The participants in the Lean Startup competition had a chance to test this method over the course of the weekend. On Friday night they gave 60-second pitches and then voted on their favorites. The finalists then formed teams with the remaining participants, who outlined their assumptions about their market and hit the New York City streets to get real feedback from potential customers. By Sunday the groups had compiled the results into final presentations showing how their customers either validated or refuted their assumptions.
Among the winners were the creators of The Money Mob, a group discount website that lets consumers choose which products it sells. In their research the team discovered that small businesses, rather than middle-market retailers, were more interested in giving discounts in smaller increments, which also meant that the Money Mob could help the retailers by working directly with manufacturers to fill the orders. With this information they were able to outline a minimum viable product, which is Ries’ term for a test model used to get money and feedback from early adopters. The team organized their results in the slide presentation below: