Starting a Company? Talk to Customers

When I talk to entrepreneurs in the early stages, I strongly advocate for talking with potential customers as early as possible.  I believe this to be true in almost any situation or industry, although there may be exceptions.  I’d love to hear about them if you have one.

In particular for online or software businesses, there’s no excuse for not getting customer feedback almost immediately.  If you can build a version of your product in a weekend and have people use it, go for it.  (That’s what we did with SeeClickFix.  We weren’t just seeing if the software was useful to our friends and neighbors, we were also seeing if we wanted to work together.  More on test driving your team another time, perhaps.)

If there isn’t a version of the software or product you can build in a weekend that would be useful, then go try to sell it before building too much.  (That’s what we did at Higher One.  One of the very first things we did was write a summary of our proposed service and go pitch two CFOs of local colleges.  We had nothing built, no employees, no company, no money, etc.)

In the software development world, some call this “customer driven development” or sometimes in a derogatory way “selling vaporware”.  The Lean Startup Circle has a great blow-by-blow in-the-trenches story of how this can work.  If your product is more consumer focused, you can test the market demand by setting up a quick website describing what you’re selling and buying $50 in Google Adwords.  Market it and see if people click on the buy button.  Tell them it is not currently available and see if you can get their email address for later.

When I offer this approach to people, I often hear one of four concerns:

  • They will steal my idea
  • It does happen occasionally that someone will copy you.  Yet, most start-ups I run across have much more to lose from obscurity and irrelevance then from the chance of creating more completion.  It’s tough to create something new and most people are too busy with their own projects to worry about doing yours.  They’d rather tell you why it will never work.  That’s much easier for them and valuable information for you.My suggestion is to find a way to describe the business and the product that leaves out any special sauce.  It’s fine even to say that you have a secret that powers the business without saying what it is.  You can tell people the benefits and the outcomes.

    For example, Google does not reveal all details of its search algorithm, hardware management or clustering technology.  Yet, as a customer, you know the outcomes of fast relevant queries and associated ads.

  • I’ll look silly
    Yes, you may.  So, what?  As an alternative to feeling silly for a few minutes, think about spending years of your life raising money, and building something that no one wants.  I’d rather fail fast, while there’s still time to figure out how to be successful than fail slowly.  (I joke that Higher One still does not have a Connecticut client because I talked to customers early on… We do have clients in 40+ states and I’m sure one day we’ll work with a client in Connecticut.)
  • It doesn’t feel honest
    I understand where you’re coming from with this one.  Conducting business with integrity is important to me, as well.  (BTW, a great book on values in business is Conscious Business)  You’ll have to make your own choice about how much information you feel required to volunteer.  When does it become dishonest to not blurt out every problem, issue or lack of feature?You’ll be surprised how open people will be to the concept of your product not being completed.  If you say it’s under development, most people won’t push you to know how far along things are.  And if they do, it is probably a sign they want to start using it.  Maybe they will give you money upfront to make things move faster!The main thing, is to pick a level of detail you want to share about the product development process and get out there and talk to people.  You can say these are screenshots (perhaps implying to some that the software is working somewhere rather than just an idea) or you could say these are mock-ups or design ideas.  Just say something so you can start the conversation and get real feedback.
  • I’ll waste my one chance with Mr. X

    I know people who hold back on their “connections” and do not reach out to those that could help them because they want to be further along and more polished. They wait for the perfect moment which never comes.  It’s good to be prepared for a meeting.  Yet, if you never call about a connection, it withers.  I think you strengthen connections by talking.  Not by hording them.  (Read Never Eat Alone for more tips on creating and building relationships in business and life.)
  • OK, maybe there is an exception if your potential market is 3 customers.  Question – why are you in this market?  If the answer is that you are an expert in it and know all the players, then you can probably have already talked potential customers in other settings and have an idea what they want.  You probably can follow a process like this anyway.  If the answer is that you’re not sure why you’re in a market with only 3 potential customers, may you should pick a bigger one.

One caveat – by listening to customers I’m not suggesting that you have to solve every problem in exactly the way they describe to you.  In early conversations with universities about Higher One, no one told us the solution.  Rather they told us about problems, we suggested various solutions and we learned from their reactions.

It isn’t the customer’s job to invent the solution.  That’s where you come in.

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