Focus + Your early stage startup
Having recently joined an education technology startup my focus has been on finding a “repeatable and scalable business model” that makes us profitable so we can spend our energy building the world’s best learning experiences. I’d like to share that journey with you.
The approach I’ve been following is called Customer Development or CustDev for short. The term was coined (to the best of my knowledge) by Steve Blank and if you’re interested I recommend his new book, The Startup Owner’s Manual, as it boils down a lot of entrepreneurial business theory into a practical and structured process.
So what is CustDev? I explain it to my business friends as: “validating one’s business model through customer research” and more colloquially as: “increasing the likelihood of your business succeeding, by asking potential customers if you’re building a company they would do business with”. Here is a graphical overview I made of the Customer Development process:
Customer Development has four steps which are divided into two categories: searching for the business model and executing the business model. As an early stage startup you’re probably still searching, and as such will likely be joining me at the Customer Discovery step. To get you oriented here is a quick overview of the different steps:
- Customer Discovery translates company vision into a series of hypotheses which are then tested.
- Customer Validation proves the business model you’ve come up with in step 1 can scale into a profitable business.
- Customer Creation ramps the business model into production with a focus on sales.
- Company-Building codifies business process into procedures and marks the graduation from a startup to a big company.
The Customer Discovery process walks you through defining assumptions about your business model, testing these hypotheses by speaking with potential customers, and then measuring your success by having you face the realities of your business model’s viability. You’ll then either move on to Customer Validation or realize you still have more to learn and go back to start the Customer Discovery process again, but this time armed with new found insights.
