One Customer Doesn’t Make a Market



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These days, most entrepreneurs I talk to understand the importance of speaking with customers before building a full-blown product. They’re getting out of the building. And that’s great. A few years ago it wasn’t like that at all.

But unfortunately, I often speak with entrepreneurs that have only talked to one or two customers. That’s not nearly enough. The danger in speaking with too few customers is that you bet too much on too little data. If the first customer you speak to loves your idea and you put blinders on to go build the solution, you haven’t eliminated any real risk. You’ve just found one potential customer. Chances are you don’t even understand the problem well enough to solve it.

A customer that says, “That sounds cool,” or “That would be really useful,” is a lot different than one who says, “I’ve tried solving that problem in a few ways, and looked at five different solutions, none of which really addresses my problem.”

You need to find out if the customers you’re speaking to have ever tried to solve the problem on their own and/or if they’ve gone out and looked at other solutions. If they haven’t done that, there’s a very good chance the problem isn’t big or painful enough. Ask them straight up, “How have you tried to solve this problem before?” Don’t be shy about it.

Consulting companies that want to convert themselves into product companies run the risk of building a product off too few customers. They get hired to build something, and assume there are no alternative solutions that are good enough. They deliver the solution and then decide that there must be a whole bunch of other customers out there that need the same thing. Maybe. But maybe not.

In my experience you need to speak with at least 10-15 potential customers before you can see any significant patterns and get any real clarity. After 10 or so interviews you should have a good sense as to whether or not the problem you’re proposing to solve is important enough.

One customer doesn’t automatically represent a worthwhile market. It’s just one customer. And you need to know why they’re a customer (or a potential customer) before making the big assumption that they represent a full-blown market. If they became a customer because they didn’t know any better (never bothered looking for something else), or they’re your friends, or some other non-replicable and scalable reason, you could be in trouble.

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January 15, 2012 Posted in Customer Development by

  • http://www.startupdispatch.com/ Puranjay

    Ben,

    There are many obvious problems with some very obvious (and not so obvious) solutions. Example: cleaner, cheaper cars or faster, better cloud storage.

    But what about startups that sprung up purely out of intuition and are solving some not-so-obvious problems? Take Twitter for example. The world was fine before Twitter. If Jack Dorsey had asked me five years ago if I would obsessively tell the world what I’m up to, I would’ve dismissed the idea altogether. 

    And yet, look at what Twitter has turned into. Nobody missed it when it didn’t exist, but we definitely will if it were to disappear tomorrow. It has rewired the very manner in which we communicate.

    Same goes for social networking in general.

    Sometimes, you have to ignore the customers and go with your gut instinct too.

  • http://www.instigatorblog.com Benjamin Yoskovitz

    Puranjay – Every entrepreneur needs a “good gut” that they can trust. You can’t complete eliminate risk from startups, it just won’t happen. I also don’t believe you can build a perfectly scientific model for startup success.

    As for Twitter — it’s a commonly used example of someone just doing something and having it succeed in a huge way. For starters, I don’t really know what Jack Dorsey did to validate Twitter in the early stages … maybe nothing at all … but I’m not comfortable using outliers like that as an example against doing customer development.

    There are other examples like Foursquare that people have used, but Dennis Crowley had been working on Foursquare for years, just in different forms.

    If someone wants to go completely with their gut – go for it – but I’d rather mitigate some risk in advance of investing in any serious development, only to find out no one cares. That doesn’t mean you completely ignore your gut though…

  • Pingback: One Customer Doesn’t Make a Market | InnovationKeg

  • http://www.startupdispatch.com/ Puranjay

    But of course, an analysis of your prospective customer base isn’t a mere statistical exercise. And yes, Twitter is an outlier and can’t possibly be paraded as an example of instinctive inspiration trumping methodical, meticulous planning. Just as you can’t erase risk from a startup (if you could, you’d then call it ’9 to 5′ and not ‘entrepreneurship), you can’t eliminate instinct either. I guess the appropriate model would be to combine the two worlds – research and analyze your customer base, but at the same time, maintain a degree of independent thought and creativity. The best example of this perhaps would be Apple.

  • ColinRobinsonIM

    Great point, i often meet these too, but sometimes even worse i meet entrepreneurs with 6 billion customers.

    Defining your market clearly, even if its an initial market, that you can go after straight away is highly valued by investors

  • http://www.instigatorblog.com Benjamin Yoskovitz

    There’s no question that instinct and guts are a big part of being an entrepreneur. Any data you collect from any process (Lean Startup or otherwise) is always imperfect. That means you’ve got to be capable and willing to make judgement calls and big decisions on a constant basis. That’s part of the experience…

  • http://www.instigatorblog.com Benjamin Yoskovitz

    Very true … “Everyone” can’t be your customer. Even a few markets or customer segments may be too many at the beginning to really focus and deliver results.

  • Jasmineturrner

    Great information……..defining your market ,if its an initial market, that you can go after straight away is up valued by investors… Granite Countertopthanks for sheering……..

  • http://www.newsuperhuman.com CrystalDoll

    I agreed. This should be read by more businessmen. 

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Ben Yoskovitz
I'm VP Product at GoInstant.

I'm also a Founding Partner at Year One Labs, an early stage accelerator in Montreal. Previously I founded Standout Jobs (and sold it).

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