A good book to learn how to develop, market, and sell products as a startup. Makes a very convincing case for why the product development, marketing, and sales practices used in a big, established company will not work in a new venture trying to grab a foothold. Reasonably clear guide on the proper way to do it in such an uncertain environment, including lots of great questions to ask yourself (as a startup employee) and your customers.
Downsides to the book are that parts of it feel a little dragged out and repetitive and some of the advice is only useful for enterprise and B2B products and not consumer products. Also, parts of the book can be a bit egotistical. The Creation of Adam from the Sistine Chapel ceiling on the cover? "Epiphany" in the title? The first chapter talking about the "hero journey" of a founder? Bleh.
Some fun quotes from the book:
The surprising fact is that companies large and small, established corporate giants as well as brand new startups, fail in 9 out of 10 attempts to launch their new products.
The difference between the winners and losers is simple. Products developed with senior management out in front of customers early and often - win. Products handed off to a sales and marketing organization that has only been tangentially involved in the new Product Development process lose. It's that simple.
To begin with, the Product Development diagram completely ignores the fundamental truth about startups and all new products. The greatest risk—and hence the greatest cause of failure—in startups is not in the development of the new product but in the development of customers and markets. Startups don't fail because they lack a product; they fail because they lack customers and a proven financial model.
Broadly speaking, Customer Development focuses on understanding customer problems and needs, Customer Validation on developing a sales model that can be replicated, Customer Creation on creating and driving end user demand, and Company Building on transitioning the organization from one designed for learning and discovery to a well-oiled machine engineered for execution.
A startup begins with a vision: a vision of a new product or service, a vision of how the product will reach its customers, and a vision of why lots of people will buy that product. But most of what a startup's founders initially believe about their market and potential customers are just educated guesses. To turn the vision into reality (and a profitable company), a startup must test those guesses, or hypotheses, and find out which are correct. So the general goal of Customer Discovery amounts to this: turning the founders' initial hypotheses about their market and customers into facts. And since the facts live outside the building, the primary activity is to get in front of customers. Only after the founders have performed this step will they know whether they have a valid vision or just a hallucination.
I ask them [my customers], "If the product were free, how many would you actually deploy or use?" The goal is to take pricing away as an issue and see whether the product itself gets customers excited. If it does, I follow up with my next question: "Ok, it's not free. In fact, imagine I charged you $1 million. Would you buy it?" While this may sound like a facetious dialog, I use it all the time. Why? Because more than half the time customers will say something like, "Steve, you're out of your mind. This product isn't worth more than $250,000." I've just gotten customers to tell me how much they are willing to pay. Wow.
What if a customer tells you the issues you thought were important really aren't? Realize you've just obtained great data. While it may not be what you wanted to hear, it's wonderful to have that knowledge early on. Do not, I repeat, do not, try to "convince" customers they really have the problems you describe. They are the ones with the checkbooks, and you want them to convince you.
Can you reduce your business to a single clear, compelling message that says why your company is different and your product worth buying? That's the goal of a value proposition (sometimes called a unique selling proposition).
A company creating a new market is a radically different type of company than one entering or reframing an existing market. While there are no market-share battles with competitors, there are also no existing customers. If there are no existing customers, then even an infinite demand creation budget at the point of product launch will not garner market share. Creating a new market is about long-term customer education and adoption.
Startups creating new markets will not create a market of substantial size to generate a profit until three to seven years from product launch. This sobering piece of data is derived from looking at the results of hundreds of high-tech startups in the last twenty years.
One way to nurture maturity is to transition the "superstars" found in every corner of a startup into coaches and role models. When the company was a small startup, it looked for those world-class individuals who were ten times more productive than average. Now, when you need to scale and grow, you'll find there are not enough superstars in the job market to match the caliber of your existing staff. In a traditional startup, as processes, procedures, and rules begin to get added, jobs are redefined so "average" hires can do them. The superstars, who tend to be individualist and iconoclastic, look at all this with dismay, lamenting "the company is going downhill." Like the elves in the Lord of the Rings stories, they realize that their time has passed and quietly disappear by leaving the company. One way to keep and motivate superstars is to integrate them into larger teams as role models and coaches. If they can teach, make them coaches. If they prefer isolation, let them be revered role models. And if they are outspoken, they can become the voices in the wilderness that will sometimes be prophetic—as long as your culture protects the mavericks.