This is from a talk I gave today at Lean Startup Machine (LSM) in Silicon Valley. LSM is a three day workshop for learning customer development and Lean Startup techniques. I founded the workshop series five years ago and it’s been hosted in over one hundred cities around the world.
Make sure you check out #19, which is a key point. Since this post is somewhat of a rant, I’d like to confess I’ve been guilty of not doing almost everything below. I’m sharing this knowledge to help others who are about to walk the same path of entrepreneurship.
1. Running lots of experiments gives you more chances to be successful. No matter how smart you are, this process takes practice and your hypotheses (aka ideas) will likely be wrong. Sounds too good to be true, but it is–hard work by running experiments will eventually lead you to a big idea. Being clever and thoughtful is immensely overrated. Learning and being flexible is immensely underrated.
2. Running lots of experiments gets you good at running experiments. This is a skill that you will take with you for the rest of your life in business and technology. It completely changes the way you think and makes you indispensable in environments of uncertainty.
3. At LSM we require teams to run at least 5 Experiments in 48 hours. The best teams run 10 or more. The Experiment Board is a free tool you can use to test ideas and it has 5 columns for this reason.
4. Customer interviews are 80% of customer development. They are hard. They are an art. I’ve never been to an LSM event where I found teams who didn’t ask Leading Questions in the beginning. This is because even if I tell you exactly how to do them correctly, you will mess it up while learning.
5. Leading Questions are most commonly “yes or no” questions or questions that start with “Would you…” Customer interviews are not about feedback when you are exploring the problem space. It is about getting data behind people’s real world problems. You want to know specific examples of their biggest problems and when they most recently happened. Do not talk about your solution, do not talk about your company. These things bias the people you are talking to.
6. Ask open-ended questions. Don’t steer the customer except for in broad ways or when they are completely off topic. Most likely, they will never bring up your problem because it is not a big one for them. This is not true in all cases but is a broad rule you should accept if you are just starting. If you ever notice a customer start talking about the thing you are thinking, you have biased them and you might need a reality check. This is the tell tale sign of someone who is in love with his idea to the point of ignoring reality.
7. Talk to people who are bored. They may be waiting in line for coffee, sitting in a park, or doing anything except for being super focused and trying to accomplish a task.
8. Watch out for “Porsche Problems.” There are certain areas of our life we would always like to be better. ie. We would all like to drive a Porsche, live in a nicer apartment, have a better job, etc. Many entrepreneurs get confused when people say something is frustrating, but won’t actually pay for a solution. This is a “Porsche Problem.” If people have a problem with something, they will pay for a solution, or it’s not a real problem.
9. By far the biggest mistake every new entrepreneur makes is falling in love with their idea. It’s natural, we all do it. But it will really mess you up. First of all, most of the ideas we think are good are not actually good in reality. I’m saying this because 90% of the ideas people test in LSM are proven not to be good. It has nothing to do with how smart you are it’s just the level of uncertainty involved in these things.
10. Second, starting today you will have hundreds and thousands of ideas. In fact, the best ideas come after you invalidate something and learn another thing about customers you never expected. Yet almost all entrepreneurs get depressed when their first idea doesn’t work out and they blame things that are completely unrelated. I guess this is the same thing as what happens with your first love :).
11. Get the money. New entrepreneurs are afraid to ask people for money before their product exists. Some are even afraid to ask for $1. You have to get over this fear because this is a required part of the process. It makes a lot of sense why you should pre-sell a product before it exists. It saves you from making a bad decision and your product isn’t truly validated until you sell it.
12. You’re a drug dealer, not a candy store. As entrepreneurs, you don’t have millions of dollars to market your product. So you need to be a drug dealer, not a candy store. People should want your product so bad, they can’t live without it. As I mentioned before, you will have so many ideas that the biggest mistake you can make is wasting time on the wrong one. It’s much easier to grow a business that is a drug for a small group–by expanding it’s use cases to more people, than it is to turn a candy into a drug.
13. Ring the cash register. Once you’ve found something people want, sell as much of it as you can to really find the limit. Sometimes entrepreneurs are so happy to have any customers pay anything for their idea, they stop after a few customers and don’t see how far they can go. If you stop early, there’s no way to tell HOW good your idea is and how much money it will make in the long run. Don’t stop until you have at least $1k in sales, the time this takes will give you a sense of your market potential.
14. QuickMVP is a software that makes it easy to launch a landing page and create a Google Ad campaign to test if customers want a product. The User Interface is so simple it’s at least ten times faster than doing it on your own and there’s some special sauce that will help you in a bigger way: determining the price of your product and how many customers you can acquire immediately.
15. Make sure you can speak in your customers words before using a landing page. If you don’t have a specific customer definition, the way you build your page will not be focused enough to convert. If you don’t understand that customer’s problem with enough depth, you won’t be able to use the right words to motivate people to buy.
16. Write concise copy that a 10-year old could understand. If you have kids, this will be easy, just think about how you would explain the product to them. I will write a post with more copywriting advice in a future post.
17. Think of your first page as just a baseline. Envision where you need to be to reach success. Now run your first test. How many views did you get? How many clicks? How many sign-ups? Was there a price on the button? All of these things add MORE validation to your test. The most important thing is to figure out how far you are away from your success, and to see that each new test gets you a lot closer.
18. Ask the people you have interviewed who have the problem how they have already searched for a solution. This is the best way to determine your keywords. There is NO OTHER good way. If you are doing something new and original, there may be no competition. The keywords may be really cheap to buy. Or there could be lot’s of people advertising with the keywords and making a ton of money doing it (making the keywords expensive). It’s context specific and you have to test it to get a good idea of what works.
19. Equally weight how badly people need your product and if you can get easy distribution for it. Having a great product is a MUST, but HOW GREAT is not as important as HOW EASILY you can get customers. The magic of using Adwords with QuickMVP is that you can measure the market size by monthly search volume and determine not only how much profit you can make on each customer but also how many customers you can get in the next 30 days! In fact, we do this for you. Just think about it: if on DAY ONE you find a product people desperately need AND a way to get it distributed to a large pool of customers, you’ve won the lottery.
20. Warren Buffet made his money from disciplined decision making over a long period of time, as opposed to an entrepreneur who had one big idea and was “in the right place at the right time.” In this we can apply much of his philosophy to ourselves.
21. Warren Buffet once said, “I do not look for five-foot bars to jump over. I look for one-foot bars to step over.” Too many entrepreneurs ask me something to the effect of, “This has been invalidated here, but could it possibly work somewhere, somehow, sometime?” This is not pragmatic thinking. The question you should care about is not what’s the best idea, but what’s the best idea for YOU to execute on. Warren Buffet prefers ideas with a lower return and a guaranteed chance of success (from his analysis). The most successful serial entrepreneurs I’ve met instinctively think this way. They have a formula and they apply it quickly and ruthlessly to achieve a guaranteed outcome. Unless you are smarter than Warren Buffet, I urge you to focus on having a vision you can pursue with ruthless pragmatism.