At Ardent we assembled an amazing group of talented engineers to build personal supercomputers to sell to scientists and engineers. (Context here.) The company failed.
Getting Out of the Building Wasn’t Entertainment – Discovery and Validation
Now that I was the master of the “facts” about customer needs in these specialized vertical markets, and with my team of vertical marketers, I thought I had achieved absolution and redemption. Opinions had been eliminated as part of marketing’s dialog inside the company; we had achieved “fact nirvana.” But there was one fatal flaw. As I enjoyed my post-graduate vertical marketing education, I had forgotten the real purpose of spending time in the field.
While understanding how customer’s do their work was one key part of Customer Discovery, I neglected the other key component – Customer Validation – to understand whether there were sufficient number of customers who had a problem that needed to be solved – and would pay to solve it. I had needed to ask customers four simple questions.
- Did the customers know they had a problem?
- If so, did they want to change the way they were doing things to solve that problem?
- If so, how much would they pay to solve the problem?
- Would they write us a Purchase Order now before our supercomputer was even complete, to be the first to solve their problems?
In hindsight, these questions seem blindingly apparent yet not asking them led to the ultimate demise of Ardent. I just assumed that since customers were talking to me and spending time with me, it must mean that they agreed with our new company’s vision and would spend piles of money with us. At this point in my career I didn’t understand that the goal of getting outside the building was not only finding markets with potential customers to sell to but also confirming the company’s vision, business model and product/market fit.
I had done a good job of Customer Discovery but failed at Customer Validation.
Ignoring the Red Flags
While I had lots of people willing to talk to me, we never really pushed hard to see if any customers were willing to buy and pay for the product before it shipped.
Early startup customers are visionaries just like the founders selling to them. If your startup’s vision is compelling enough, these early customers want to buy into the dream of what could be, and they want to get in early. They will put up with an unfinished system that barely works to get a competitive advantage outside their company (or sometimes a political one inside their company.) They will count on your startup to listen to their needs for subsequent releases or follow-on systems that actually deliver on the initial promise.
All industries, markets and segments have these visionary, early adopters. It is one of the wonderful intersections between human nature, capitalism, and startups. Not finding a sufficient set of these early visionaries is the biggest red flag a company can encounter. Ignoring these warning signs is fatal.
Product/Market Fit
Getting out of the building is not to collect feature lists from prospective customers nor run tons of focus groups (I had passed this test.) Instead it was to validate the product/market fit by discovering if their were enough customers who would buy our product as spec’d. This was where I had failed at Ardent. Once we had found our target customers we spent our meetings describing our new personal supercomputer and what it could do for these researchers instead of listening and truly understanding whether what we were offering was a “nice to have it” or “got to have it.”
If I had had actually been asking “Were we solving a problem these scientists and engineers felt they had?” I would have gotten a half-hearted “maybe.” If I had followed that up with a “If our personal supercomputer delivers as promised, would you write me a check now, before it ships?” I would have seen that no one was falling over themselves to be the first to buy our product. Another clue: lots of people said, “We’d try it if you give it to us.” That answer is always a dead give-away that you don’t yet have a product compelling enough to build a business.
As often happens in a startup, we confused our own vision and passion with the passion of our potential customers.
I had talked too much and listened too little.
What did the company do when we heard customer input that contradicted our business plan and assumptions? More in the next post.
Lessons learned:
- We had “discovered” Ardent’s initial markets and customers
- We spent too much time selling our vision and not enough time validating whether customers would actually buy
- A lack of early, eager purchasers is a red-flag – time to revisit your business model
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Filed under: Ardent, Customer Development |
[…] Ardent War Story 6: Listen more, talk less « Steve Blank steveblank.com/2009/10/22/ardent-war-stories-6-listen-more-talk-less – view page – cached + Ardent War Story 4: You Know You’re Getting Close to Your Customers When They Offer You a Job + Ardent 3: Supercomputer Porn + Fun For Hours + Ardent 2: Get Out of My Building + Ardent 1:… (Read more)+ Ardent War Story 4: You Know You’re Getting Close to Your Customers When They Offer You a Job + Ardent 3: Supercomputer Porn + Fun For Hours + Ardent 2: Get Out of My Building + Ardent 1: Supercomputers Get Personal + Durant Versus Sloan – Part 1 + Unintended Lessons + Let’s Fire Our Customers * Archives + October 2009 + September 2009 + August 2009 + July 2009 + June 2009 + May 2009 + April 2009 + March 2009 + February 2009 * Other Stuff + Steve Blank + Entrepreneurship o Books/Blogs for Startups + Secret History (Read less) — From the page […]
[…] Steve Blank’s blog is awesome but its latest post is very well timed for me: it talks about customer validation. Customer discovery is understanding who has problems that you can solve. But customer validation […]
I think the problem of “talking too much and listening too little” can usually be traced to company culture, starting with CEO. If everything thinks they are so awesome because of their prior and usually unrelated successes, disaster is just around the corner.
In the early 90’s I was at Landmark Graphics – a company building software for the Oil & Gas industry; one of Ardent’s markets. One day I was wandering around the building and there in a room all by itself was this large rack computer I’d never seen. After asking around a bit, I finally found someone that knew what it was.
It was a Stardent machine, which I’m sure Steve will eventually get to in his story. Ok, so here’s the tie in to this chapter of the story. When I asked what it does, the answer was, “not much, but it spins great teapots”. So they eventually did buy future generations of machines, but those still didn’t fit the need. Years later, we started rolling in multi-rack SGI Onyx machine.
…alan
[…] Ardent War Story 6: Listen more, talk less « Steve Blank (tags: customer-development product-management startup) Possibly related posts: (automatically generated)links for 2009-08-07links for 2009-10-20The Unraveling of String TheoryTimes Says It Will Cut 100 Newsroom Jobs […]
This is gold for any startups. It’s very hard to distinguish between “nice to have” and “must have”, but, as folk said, money talks… that’s the key thing we can all count on.
Tim
Hi Steve,
1. At what point in time during/after Ardent did it occur to you that you didn’t do Customer Validation?
2. What was the “Aha” moment that made you realize you didn’t do Customer Validation?
Thanks!
Asking for the order at this early stage must be a very hard thing to do. Nobody enjoys a rejection. Getting to the 4th “Yes” would be an exercise in punishment.
How did you overcome that in your later ventures?
[…] customers nor running tons of focus groups”–that is, traditional market research [via Steve Blank]. Rather, we’re determining if there are customers to buy the product, potentially one that […]
Steve,
This reminds me of my days in Supercomputing at Control Data [Cyber 205] and at ETA [ETA-10]. In fact, I was recruited to join this effort before it was called Stardent – my recollection was that it was being partially funded by Kubota (yes, the Japanese tractor company). I skipped this startup to move on to others….
Thanks !
Andrew
[…] Blank tells of his experience at super-computing company Ardent: I had needed to ask customers four simple questions. Did the customers know they had a problem? If […]
[…] the end work looks like from the get go. However, unlike an artist, they should be willing to validate every part of the product, and tear down any part which doesn’t serve their customer’s true needs. They should be […]