38 Responses

  1. Just following the steps does not a business model make (says Yoda.) Internalizing customer insight to mold the business model is an art, requires much legwork, and can’t be shortened. Congrats to the entrepreneur for executing as far as he could, and more congrats to seeking advice to get him to the next level!

  2. Steve, excellent post, as always! Business model thinking is something that none can forget, should wake up with it, take breakfast with it, lunch with it, sleep with it :-)

    A tech guy trend to focus on the tech details and solutions and all aspects related on how to optimize, before, as you say,forget to validate all nine building blocks. In the situation you described a fremium consist giving basic for free for casual users and charging for more features for heavier users and not giving everything they request, mainly for free :-(

    Changing a mindset of a person, from tech to business model, is a hard task, he must experience a fail in order to understand what was missing, the big picture.

    The cycle of hiphoteses apply mainly to the concept understanding: read bmgen,cust dev,lean, design thinking could help as well, start practicing, fail, read again, fail again, read again…

    My self and a partner started giving Bmgen+custdev+design thinking class here at a University, my personal goal is not the framework, but make them experience and change their mindset. That’s is a pleasure journey that we are also learning, failing and pivoting.

    Cheers from Brazil (I was with my father at Warthon SF in your lecture last October with Alex, on the weekend before the NSF program has started).

    Anxiously waiting for my copy of your book.

    Renato Nobre

  3. Steve, I find it extremely helpful to see how other business models are mapped to the business canvas. I would love to see more of that. Thanks.

  4. Your backyard sounds fantastic, about where are you located Steve? I had no idea any place existed like that in/near Silicon Valley.

  5. Steve, will the Startup Owners Manual be available in Kindle format (or any other e-book)? I want to pre-order but I only see the hard copy option.

  6. Thanks for the wonderful post, Steve! This post has impeccable timing. It provided some much needed clarity on the purpose of Customer Development as we had a lull period recently. I plan to pick your brain on this topic some more tonight. See you in class!

  7. Dear Yoda, I mean Steve… you’re insights are terrific. I love that you listen. My businesses tend to be small, so I’m not sure how my experience translate to growth businesses, but, I’ll share with you anyway.

    I learned the lesson of ‘firing my customers’ a few years back as I was shifting from B2B services (as a music producer whose customer was the artist and label) to selling directly to the consumer (high resolution downloads).

    In 2007 the music industry was all but dead as Walmart declared “all discs will be priced at $9.95″. We were just about to launch our label, Blue Coast Records. I told my distributor, let’s retail for $40, we’ll never be in Walmart anyway. He thought I was nuts.

    While Apple declared “all downloads will be $0.99″ we created a program for selling at $3-5 per single. Even I think it’s crazy, but it’s what we need to make our higher quality recordings and pay people. We don’t want to be the reason for people to walk into Walmart or see the Apple brand. We want customers who love quality.

    We now have more than 11,000 opted in members and are increasing that number at a 9-12% rate per month. In this order, these are the customers I fired…

    A) Friends and family who cheered me on, but never bought anything or tried a sample when sent something free. They weren’t even good as promoters.. :)
    B) Potential investors who were enamored by the latest iPhone app, loved we were making money, but never bought or tried to download our products.
    C) The artists and labels who just didn’t understand that they were making a bigger percentage from us and couldn’t figure out how to setup a link from their site.
    D) My distributors who couldn’t sell anything on their own and owe me a LOT of money. :) (Sorry, gang, I love you but this is not the way to do business… )

    I don’t know if what we’re doing will ever be a growth kind of business to interest investors, but our sales are double over last year. I’m happy with a smaller group of customers who are also promoting our products. They’re our best marketing tools and they don’t cost much except a couple of emails every month.

    Steve, our gang of eight is looking forward to your “lean launchpad” online class! Thanks for being an inspiration and telling it like it is.

    Cookie Marenco

  8. Terrific post, professor. Thank you for the didactic stroll through the ranch. It lead me right back to my customer development canvas to reevaluate the conversion to premium in our freemium model. It’s just nine easy steps back to the https://www.leanlaunchlab.com/. Lesson 6: Be the bobcat, not the gopher. Standing by for the Startup Owners Manual, have you considered context-sensitive help files?

  9. Really great post. We’re actively doing customer development and while we haven’t fired any of our customers yet, we haven’t given segmentation too much thought. For companies that have millions of potential customers, learning how to target the group that has the highest chance of conversion and focusing all of our sales and product development efforts on that single segment makes a lot of sense.

    Thanks Steve!

  10. Great read. Entrepreneurs are constantly pushed to get to that “huge” number of users and then hope those users convert to profits. This works for the big guys( FB, Google, Twitter) but for a more niche product, it is often best to focus on the exact market you want to attract, win them over, and make them your evangelists to get to bigger numbers later on.

  11. A lot has been said and blogged about on the topic of being markert driven.Your point about keping the business model or pricing center makes all the defference in the world.

    Product Management can be customer driven, but they must keep everything centered around the price strategy. Well done!

  12. Steve, I need to see this hanging pond that made Satish stop talking. (If it’s the same Satish in my mind) -Hany

  13. Great anecdote Steve! Also, although subtle, thanks for making the distinction between users & customers (users who pay – in single market systems). Too often are we fixated on treating our users as customers. Making a distinction will help startups/projects/etc to think about the cost structure of having to acquire both users AND customers. This will profoundly impact the approach in building an MVP and looking for repeatable/scalable models.

  14. I still need to figure out who should be my customers. This article shines some light. Guess I won’t be listening to everybody after all.

    http://Www.unclebobtech.com

    Unclebob Robotics and Technology

  15. In a double-sided platform like social media – users create content and later on when there is significant traffic/ content we can have advertising. So would be wrong to just focus on improving the platform and customer experience to make it sticky instead of trying to make sales pitches to advertisers right from the very beginning even without having enough traffic/ content?

    • I think it depends on your product. It’s hard to get a serious investment these days without a proven model. For the advertising model to work, you have to have really broad appeal and the ability to get millions of users without much funding. If the cost of user acquisition is high, you have a chicken and an egg problem and it’s probably wise to seek different sources of revenue.. If the product has the potential to go viral on its own with limited funding, freemium or ad driven can always work.

  16. I found this so helpful, and I’m glad you explained the difference between “listening to your customers” and “understanding them.” Very important distinction!

  17. […] Blank almost always has good nuggets to share on his blog, steveblank.com. “Killing Your Startup by Listening to Customers” is another one worth reading. An […]

  18. I was once product manager for a company that did everything by the book – focus groups, early prototypes, surveys, etc. We had built a product that many people said they would buy if we built it – but not a single one did. When we came back with the product, the universal response was, “this is great, but I am not the guy to buy it. Go talk to Bob down the hall.” Of course Bob had no idea why we were knocking on his door. I learned a lot from that experience and have since done it right several times. Huge difference between listening and extrapolating to what customer really want. Nice piece.

  19. Thanks Steve for a very good blog. Showing how to listen to customers is key but listening for the right information is critical.

    I pre-ordered your book and can’t wait to receive it. Thanks!

  20. […] is just getting the sense of who they are as people. My impression of Steve Blank is that he is very kind. He really cares about helping entrepreneurs learn and […]

  21. […] A great post from Steve Blank on why you shouldn’t try to please everyone. […]

  22. That “Get Keep Grow” channel is the best description of a funnel I have ever seen. Love it, thanks!

  23. Steve, very useful and full of wisdom. Bought the book (on impulse), looking forward to its arrival.

    If you’re ever in Cape Town, South Africa. Let me know, people here could really use someone like you.

    Many thanks,

    JRM

  24. HI Steve,
    This was EXACTLY what I wanted you to elucidate when you visited Finland and e had a dialog about “Finding/searching for those insights”!!
    Now you have verbally articulated it very well: In the definition of “Innovation” which I define ” Any idea that can be Seizes a Critical insight and create(or capture) Real value ” where Value is The “benefits over price” for all in the value network.
    Ideas are overrated and so Only when we apply the Critical insight that we gather from dialog with prospective customers OR research prospective (create markets) markets, can the idea start to become a “Business idea”. Only when that business idea starts to create or capture real Value will that become an innovation ( Or a New business).

  25. […] Killing Your Startup By Listening to Customers (steveblank.com) […]

  26. […] building out tests of those assumptions. On a really associated note, Steve Blank recently wrote a great post on disagreement a business indication methodology (and how to repair it). Heidi Allstop of Spill […]

  27. […] and building out tests of those assumptions. On a very related note, Steve Blank recently wrote a great post on misunderstanding a business model methodology (and how to fix it). Heidi Allstop of Spill shared […]

  28. […] highly reusable, such as Dave McClure's startup metrics for pirates or David Skok's SaaS Series, SG Blank's work or the Business Model Canvas.  But I never use them overtly.  I try to use common sense […]

  29. […] and building out tests of those assumptions. On a very related note, Steve Blank recently wrote a great post on misunderstanding a business model methodology (and how to fix it). Heidi Allstop of Spill shared […]

  30. Excellent discussion all the way around from the content of the discussion to the scenic reflection of digesting the lessons learned on the customer feedback and business model cycle. Thank you for sharing the insights with the rest of us.

  31. […] Blank almost always has good nuggets to share on his blog, steveblank.com. “Killing Your Startup by Listening to Customers” is another one worth reading. An […]

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