The key points of Customer Development are:
1. Get out of the building. Very few technology startups fail for lack of technology. They almost always fail for lack of customers. Yet surprisingly few companies take the basic step of attempting to learn about their customers (or potential customers) until it is too late – it’s just so easy to focus on product and technology instead. True, there are the rare products that have literally no market risk; they are all about technology risk (i.e. life sciences and a “cure for cancer”). For everyone else you need to get some facts to inform and qualify our hypotheses (“fancy word for guesses”) about what kind of product customers will ultimately buy.
2. Theory of market types. Market Types is a theory that helps explain why different startups face wildly different challenges and time horizons. There are three fundamental situations that change what your company needs to do: creating a new market, bringing a new product to an existing market, and resegmenting an existing market. If you’re entering an existing market, competition comes from the incumbent players. When creating a new market, it may take years before you get traction with early customers.
3. Finding a market for the product as specified. Customer Development tries is to find the minimum feature set required to get early customers.
4. Phases of product & company growth. Customer Development posits that startups go through four stages of growth; Customer Discovery (when you’re just trying to figure out if there are any customers who might want your product), Customer Validation (when you make your first revenue by selling your early product), Customer Creation (akin to a traditional startup launch,) and Company Building (where you gear up to Cross the Chasm and realign management.
5. Learning and iterating vs. linear execution. In the early stage of a startup companies s are focused on figuring out which way is up. They really don’t have a clue what they should be doing, and everything is guesses. In a traditional startup model, they would probably publicly launch their product and company during this phase, failing or succeeding spectacularly. Only after a major, public, and expensive failure would they try a new iteration.
6. Premature Execution. An insight of Customer Development is that startups need time spent in a mindset of learning and iterating, before they try to launch. During that time, they can collect facts and change direction in private, without dramatic and public embarrassment for their founders and investors.
