How does a startup discover its customers?

Whether it's physical or digital, every product needs users or customers to survive. Steve Blank knows a good 4 phase strategy to optimize your product and generate revenue in the end.

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Obviously it's more difficult and time- and cost-consuming to adapt physical products to the market needs. Although the digital market works with mostly the same mechanisms, results can be achieved much faster. As I myself work in the digital field, I'll talk about the strategy in this area in particular. However - and I'm certainly repeating myself here! - most of it is also true for physical products in stores or wherever in the real world. In general, there are 4 phases that we need to go through to make investors and partners happy, and fill our pockets to develop our product constantly. I'll refer to my alugha project, as I was able to gain much experience with the aforementioned phases.

First there are hypotheses

First I formulated hypotheses about what problem alugha was supposed to solve. Combine several languages in one video and create a player and all necessary tools to provide a multilingual video platform. You choose your potential customers, business areas, partners... and in the end you have a strategy, how your products should look like when its introduced onto the market. This phase isn't a one-time procedure in the beginning. You'll repeat it every time you change or add features to your product. In phase 4, we'll always come to back to phase 1, so in the end we'll go into a cycle. If this does not happen, you've either invented something extraordinary that doesn't need improvement, like water for example , or you haven't understood that needs are changing constantly.

Second we need to test the problem we discovered

We assume that we recognized the problem correctly. But to be sure, we need to test our assumptions. We really want to understand if our hypotheses are just a pipe dream or really do solve this problem. Based on this we can define if solving this problem is truly worth the trouble or even the investment. In the case of alugha, I asked a lot of video producers, translators, dubbing studios, YouTubers and others in this business if they see a problem in uploading one video for each language they want to offer and how they evalute the resulting effort and costs related to this fact.

Based on the results, I was able to create a solution and proceed to phase three

Together with my team (which is constantly growing) I developed a solution. First, this solution was a multilingual video player that could be used on YouTube. We added some tools to make it easier to add audio tracks. We wanted to enter the market with it and were sure that it would be a big hit. But unfortunately that wasn't the case. People liked our idea, but the effort to create additional audio files was still too much and caused high costs for transcription, translation and dubbing... so I wasn't satisfied and still determined that the world needs our product. It was my task to make our potential customers understand why alugha makes sense for them.

So phase 4 began: optimize and continue

With every new feedback, every positive or negative criticism we went back to phase 1. We formulated new hypotheses and got to phase 3 at some point. Then we went back to the customers... we continued optimizing and step by step we created quite a complex product. When one feature was working as intended, we reorganized our ressources according to the needs for new features or others that were already in development. We kept looking for suitable partners that could help us discover more problem or needs. Over time, we created a great tool with outstanding features and implemented a very flexible pipeline/road map with important customer wishes that we are implementing step by step. From time to time, we optimize and redesign existing elements.

Conclusion

It doesn't matter how awesome I think my product is... if my customers don't understand it and, in the end, don't use it, I am going to run out of money eventually. I'm not saying that our products only have to be tailored to our customers needs, but it should be close. As a startup founder you're usually an entrepreneur, visionary and most of the time we found a startup because we faced a situation that could have been solved easily with a new product and we want to solve it for others. But at the same time, we want to create a product for the market that is flexible and does respond to customer needs. The first Mac introduced by Steve Jobs and the Macs today most certainly have things in common, however, only constant improvement lead to the huge development over the last 30 years.

Pay attention, don't be selfish, request feedback and ask your customers for opinions. Listen to their complaints and go out yourself doing support. Be open to new thoughts and ideas and think about the 4 phases.

 

This article is written by our CEO, Bernd Korz. With his experience as an entrepreneur, he shares his vision about the lessons provided by Steve Blank. Join us every week for a new article on Steve Blank’s lectures.

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