Brant's Rant | Customer Development | Lean Startup | Sales and Marketing Roadmap

Lean Start-up Part IV

It has been awhile since I’ve updated the progress on a very lean startup I’m helping out.  Last time out I briefly discuss our first engagement with customers through personal interviews and surveys.

I am pleased to report our first failure.  : )

According to our surveys and interviews, our assumptions regarding who will be willing to pay for what appear to be wrong.  (I might add, too, that the feedback seems to be running exactly opposite of the expert advice the company heard while going through a local mentoring process.)

So now that we’ve got our answers, we’re ready to go to market, right?

Just kidding.  Customer Development principles dictate that upon failure we iterate.  So I am now rewriting our assumptions and we will start a new round of interviews.  With respect to the “who,” it’s clear to me we have not found our early adopters. Unfortunately for the “in-the-building,” “I think I’ll build an online survey,” aficionados among us, we have to put on our business development hats and hit the pavement.

I like the fact that the necessity of reaching beyond his impressive array of friends and families makes the CEO a bit uncomfortable.   In a great talk, Seth Godin says (h/t Dan Martell):

If you’re not upsetting anyone, then you’re not changing the status quo

Albeit in a different, #leanstartup context, I’d argue:

If you’re not upsetting yourself, then you’re not challenging your assumptions

With respect to the “what,” we have struggles there as well.  As a self-taught product manager working with a traditional Engineering executive, we are constantly fighting the propensity to become enveloped by the feature miasma.  We spent a couple of weeks investigating platforms, while in parallel, defining and creating mock-ups for developing from scratch, in-house.

I won’t go into the debate here, but suffice to say, it’s quite difficult to evaluate platforms without delving into feature minutiae.  The fear is, of course, that the wrong decision is going to screw us in the future.  The reality is likely to be, however, that success of the product will force a future decision and we will be happy to be in that position, even if we have to rebuild.  In other words, the platform decision we make now will not determine failure or success of the product, because either path will work to create the product.  The current objective is minimum viable product (MVP), not scalability, best-of-breed, most features, ease of development, best product support, etc.    The decision today needs to be made based on today’s objectives.  (These are not impromptu, however, but rather are defined (MVP) and tied to larger business objectives.)

In the end, we believe that time and money dictate that the  opensource platforms will best provide the best path to minimum viable product.  We will need to stitch them together, make them look good, and build the ability to monetize.

As we begin to make features public to “friends of the company,” our primary challenge is to figure out which functionality to monetize.   Based on our last round of interviews, we have some pretty good ideas.  The primary challenge we face here is the understandable, but misguided (IMO) feeling among some to offer for free, what can potentially be monetized.   The idea is driven by the fear that we need to create participation to provide value and forcing users to pay will dampen participation and therefore lessen value.

There is certainly truth in that.  But I’ve always found it more difficult to charge for something after it was first offered for free.   Someone somewhere wrote about the huge gap between Free ->1$ and 1$ -> 2$.

In a freemium business model, however, success depends on free, as well as paid.  You have to offer compelling value for free.  Making paid content free doesn’t change that equation.  So in the final analysis, making paid content free tests neither free nor paid!

Proposed solution is free version vs free trial (x months, w/o taking credit card).

Unfortunately, decision-making is often driven by fear.  Fear of making the wrong decision can lead to making no decision at all.  Typically only the latter is a death knell.  There’s an old sales adage that says the worst answer a customer can give is maybe.  When facing decisions, the worst action is not making a decision.  More on decision-making here.


Updated: In comments, Sean Murphy kindly provides the post I referred to above regarding the gap between Free ->1$ and 1$ -> 2$.  Please go read Josh Kopelman’s excellent post.