Customer Discovery is a process for validating new product opportunities by getting early feedback from potential customers. It involves conducting interviews to test assumptions about the market problem, value of the product, viability of the business model, and ability to sell. This helps reduce the risk of failure and wasted resources later on. The document provides lessons and best practices for using Customer Discovery, such as focusing on customer problems rather than the product, seeking to understand buyer behavior, and getting out of the building to conduct many short interviews with the target market.

1. Customer Discovery:
Validating New Product Opportunities
Jim Semick
UCSB ESM 256B New Venture Opportunity Analysis, Winter 2013

3. Typical way to
identify and
launch new
products

4. Success is the exception, not the rule
The average company succeeds only 25% of
the time in launching new initiatives.
Harvard Business Review – Chris Zook and James Allen

5. Customer Discovery:
EVIDENCE from potential customers
• Is the market problem worth solving?
• What’s the real value of your product?
• Is your business model viable?
• Can you actually sell it?

6. How Customer Discovery could have
saved $10M and months of effort

7. Great idea.
Free Beta.
Few buyers.

8. Major Pivot

9. GoToMyPC
This time we’ll use
Customer Discovery

10. Lessons Learned
Test critical business model assumptions
Focus on customer problem not product
Understand actual buyer behavior
Nail business before scaling

11. Case Study

12. What do we Build?
Which Vertical Market
Opportunity is Best?

13. Use Customer Development to know:
• What are our false
assumptions?
• Can we solve problems in an
innovative way?
• What is the real value of our
product?
• Do we have buyers?
• How much will they pay?
• How do we reach them?

14. Fast growing
SaaS business
Industry leader
Lots of
customer love

15. Customer Discovery Best
Practices

16. Zen of Customer Discovery
My assumptions may be wrong.
“There are no facts inside the building.”
My opinion, though interesting, is irrelevant.

17. Write Your Product or Business Model
Hypothesis

18. Get Out

19. Test assumptions that matter.
Fail early.

20. • Go to where your target is
(online or in person)
Getting • Think how to reach LOTS of your
Interviews market at the same time
• Always ask for referrals
• Find the key industry influencers

21. Focus on finding problems
in your first interviews.
Don’t start with the product.

22. Seek deep customer understanding
Find real pain and motivation.
Ask open-ended questions.
Shut up.
Ask why. Use the Five Whys.

23. Do you Have the REAL
Minimum Viable Product?

24. Market Segment & Acquisition
• Find a narrow market segment
• Discover how you will reach them.
• Will it cost less than their lifetime value?
• How much will they pay?

25. Ideal Later-stage Interview Format
1. Tell them their problems.
2. Explain the solution.
3. Explain what it will NOT do for them.
4. Ask if they will buy.

26. • Aim for 20+ interviews
Interview • Plan 30+ minutes if you can
• Talk less than 50% of the time
Tips
• Take notes
• Recap key learning with team

27. The first interview is hard.
The second is easier.

28. People Want to Help
(especially if they are in pain)

29. Thank You!
www.productdiscovery.com
jim@productdiscovery.com