How listening to customers can kill your startup

Photo credit: Benedikt Geyer / Unsplash

The art of entrepreneurship and the science of customer development is not just getting out of the building and listening to prospective customers. It’s understanding who to listen to and why.

Five cups of coffee

I got a call from Satish, one of my ex-students, last week. He got my attention when he said, “Following your customer development stuff is making my company fail.” The rest of the conversation sounded too confusing to figure out over the phone, so I invited him out to the ranch to chat.

When he arrived, Satish sounded like he had five cups of coffee. I suggested we take a hike. We took the trail behind the house down the hill, through the forest, and emerged into the bright sun in the lower valley.

As we walked up the valley, Satish kept up a running dialog catching me up on six years of family, classmates, and how he started his consumer web company. Sitting on a bench staring across the pond, Satish described his experience.

We did everything customers asked for

“We did everything you said. We got out of the building and talked to potential customers. We surveyed a ton of them online, ran A/B tests, brought a segment of those who used the product in-house for face-to-face meetings. ”

Yep, sounds good.

“Next, we built a minimum viable product.”

OK, still sounds good.

And then we built everything our prospective customers asked for.

That took me aback. “Everything?” I asked.

“Yes, we added all their feature requests and we priced the product just like they requested. We had a ton of people come to our website and a healthy number actually activated.”

“That’s great,” I said, “but what’s your pricing model?”

“Freemium,” came the reply.

What’s your business model?

Customer development = The pursuit of customer understanding

Lessons learned