Customer Discovery, Scuttlebutt, and Moon People

Lean Startup Moon PersonLife in technology sometimes involves dealing with, as a mentor of mine referred to them ever so lovingly, moon people. Every now and then, you’ll have an awkward conversation with a consultant reeking of quasi-religious zealotry, every sentence dripping with buzz words of agile, lean, MVP, product/market fit, scrum, iterate, and pivot. (Ok, I still use the word pivot. I’m allowed to like one.)

Here’s my take. There’s some good points to the Church of Lean Startuptology, but I do hate the jargon. Cults love jargon as it’s a great way to build a code language that acts as a secret handshake/shibboleth. I hate the fact that I agree with a lot of their ideas, but wish I could make the packaging a little less Amway.

One specific instance where I’m a fan of the concept but not the term is “Customer Discovery.” A friend of mine thinks that the proper term that worked just fine before a fleet of consultants with eyes calling you into the desert to tell you they had found the one, true way, was “market research.” I agree. The lean startup folks do have some wonderful points to make about modern day market research. Specifically, why on earth would you spend time building something if you don’t have reasonable data showing that people will buy it?

Good, modern day market research tools are fantastic. The arsenal at your disposal is enormous: scouring through what people are searching for on Google, running test websites with AdWords campaigns and measuring how many people would actually buy it if you built it, A/B testing product features, analytics pouring through all parts of your retention funnel, running free simian surveys to see what people actually want. However, the old rules of market research still apply. Steve Blank harkens back to an older time by saying, “Get the heck out of the building, and talk to your potential customers, you lazy bum.” (So, I might have misquoted and turned him into some sort of Lean Startup Burgess Meredith, but I like that image better.)

Focusing on your market versus focusing on your engineering finally clicked for me when I began to merge my two separate professional lives, one as an investor, one as an entrepreneur. I finally started connecting the two when I realized that I was falling for the traps as an entrepreneur that I would never fall for as an investor.

Good market research is doing your homework to reduce risk. Don’t build something because you think it’s cool; get actual data suggesting how many people would really buy it. Similarly, don’t invest in a stock because you love the product; do your homework and get data to help you predict how the business will run in the future. The vast majority of my career as an entrepreneur can be described along the lines of “Oh wow! That’s cool! Let’s build it then see if we can sell it!” This really is akin to buying stock in Crocs or because, you just know they’re going to be huge.

Another analogy: good market research is really scuttlebutt. Aye, more jargon. At least it’s old jargon, and there’s not a cult associated with it. Scuttlebutt is a term invented by the legendary investor Phil Fisher in his book, Common Stocks and Uncommon Profits. It’s a good book, albeit a little dated. However, the chapter on scuttlebutt was an excellent insight at the time and still bears repeating. You can actually talk to people about a company to get information, and it not be insider trading. Don’t just go off of numbers; talk to people in the industry, especially friends who are competitors and former employees. You’re bound to learn a lot more about a company and get the full story on risks they’re facing. Similarly, talk to your potential customers. A lot.

And that’s basically what Steve Blank and Eric Ries have been proclaiming for the last decade in the realm of entrepreneurship. As first and foremost a software developer, it’s hard for me to hear what they have to say, possibly another reason why I find lean startup jargon so irritating. My unfortunate first reaction in entrepreneurship is to build, Build, BUILD, just as a poor investor’s first reaction to a good press release is to buy, Buy, BUY! It’s not rational, it’s not good business, but there will always be people heading in the wrong direction in both areas no matter what time period we’re in. I’ve had to rejigger my brain from that of an engineer, to that of a scientist, constantly studying what people will really buy. It’s a simple shift to say, but one I’m still in the process of making.

If you’re interested in more jargon laden, yet still useful reading with more specifics, I’ve found The Thoughtbot Playbook to be a really good, free guide to the essentials of customer discov… err… market research and then some. It’s short and without a lot of fluff, but you will have to wade through some jargon. But, it’s also a great read for even old school investors to understand what the heck those moon people in Silly Valley are up to. Charlie Munger would enjoy.

Also, I’m in the process of being a reformed “Build it! I Know It Will Be AMAZING!” entrepreneur. I’d love to hear from you any other books worth reading or other insights. Leave a comment or find me on twitter if you liked the piece, have questions, or just want to share your favorite Lean Jargon™.

Photo Credit: AllzweckJack /