November 11, 2014 in ATDC News, Blog, Startup Circles

Customer Discovery is Key to Startup Success

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By Péralte C. Paul

Pete Santora, Entrepreneur In Residence at ATDC.

“If you build it, he will come.”

That classic movie line hails from the iconic baseball fantasy film, Field of Dreams.

But it doesn’t work that way in the real world of business startups. Sure, you might have a great idea, but the key question entrepreneurs need to ask themselves is: Before I build it, is it something my target customer actually wants?

That’s the crux of “customer discovery,” where startup leaders try to learn if their idea has merit and addresses a real need in the marketplace.

It’s a critical part of any company’s success blueprint, says Pete Santora, one of the Entrepreneurs In Residence at the Advanced Technology Development Center (ATDC), the startup incubator at Georgia Tech’s Enterprise Innovation Institute.

Still, adds the serial entrepreneur, it’s something few embrace willingly early on. Santora, a former professional soccer player and two-time all-American in the sport, co-founded Blue Sombrero, which was later acquired by Dick’s Sporting Goods, and then founded ThundrLizard, a sales coaching firm.

“There’s always been this myth of this entrepreneur being this visionary and having this great concept and no one believing in him and him creating this wonderful business,” Santora says, “and that’s all not true.”

Entrepreneurs should approach customer discovery much like a detective would in attempting to solve a mystery, by working backwards and testing all assumptions to disprove them, he says. “Any business that’s successful basically finds its way in this process. It’s just a matter of when you do it.”

In this week’s Tech Square Talk, Santora explains why customer discovery is so important and why startups can’t succeed without it.

Q: It seems like it should be intuitive, but why don’t startups naturally do customer discovery?

A: Entrepreneurs don’t like to be told that they’re wrong. They have this sense for what it is they think the world needs and so they want to execute on that sense. Customer discovery — the concept of going out and talking to people and opening yourself up and having them tell you where your idea is wrong is hard for anyone. It’s difficult to hear that kind of feedback and take it, consume it, and then use it to fuel you to the next stage. It’s really not an easy thing. It’s counterintuitive for entrepreneurs in general, because we tell them to charge ahead, and the customer discovery process is really an accelerator over the length of your business, but it’s not an accelerator at the beginning. We tell entrepreneurs to ‘go, go, go’ with their business, but with customer discovery, we’re telling them to slow down.

Q: What does customer discovery entail? How much do you need to do?

A: The basic premise is, identify the riskiest pieces of your business, create a theory for that, a hypothesis and then experiment. That process is, “I think that something is true. I will test to see if it actually is true.” The hardest thing about this is “confirmation bias,” where you believe anything they say reflects on what you’re doing positively. We constantly have entrepreneurs filtering in just what they want to hear.

Q: Is customer discovery a one-time thing at the launch of a startup, or is it something entrepreneurs need to do continually, even if they’ve already identified a market need?

A: It’s an all-the-time-thing. The key to it is that, as an entrepreneur, there has to be a balance between theory and reality. We’re not doing long, endless projects, we are trying to sprint through a bunch of things as fast as we can until we get to a point that we think something is doable or something is worth experimenting with. We have to build a business, we can’t just do customer discovery for the sake of doing customer discovery.

Q: Besides asking if a need exists for their product, what other questions should entrepreneurs ask in the customer discovery process?

A: Who is the customer? What is the value proposition that we provide to their problem? Where do they experience pain in what they do and what do they not want to do anymore? What can we do for them? It’s important to understand the situation they’re in.

Q: How much is too much or can one never do enough?

A: You can’t stop, but at the same time, you need to be able to execute. And when customer discovery gets in your way of executing — you have to strike a balance between customer discovery and execution. At the beginning, it’s very customer discovery heavy, and once you’ve found something, you need to go heavier on executing with the concept that we need to stay in front of our customers.

Q: What’s the difference between customer discovery and feedback?

A: Getting feedback from customers isn’t customer discovery. It’s feedback. Customers will tell you lots of stuff. They’re going to throw it out there as an option because they dream it up in their head. Customer discovery is almost a process of figuring out how to move a product forward without doing stuff. People who do it right figure out there are nine things out of 10 they can’t do. But there’s one thing — for their product to continue being that product that the customer uses — they have to do. That’s really the 1-out-of-10 feature you want to be looking for.

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