Truth Talking for Business Ideas

Getting true feedback from potential

customers about your business idea

HOW TO BUILD SOMETHING

THAT PEOPLE WILL BUY

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A successful Business Idea contains at least:

On top of that, you also need■ to reach the customers

via a marketing channel (direct sales, online marketing, physical store, …)

■ get paid enough to run the business

Always check customer-problem-solution first. These slides teach you how.

3) Accepted

Solution

• From the customers point of view

2) Relevant Problem

• Relevant = Happens often, costs a lot of money, causes lot of frustration.

• The problem can also be a desire.

1) Customer Segment

•A group of people or companies with the same problem, and often other similarities, too.

Talk to people!

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Your Business Idea is:

Sell solution S to customer segment C, so that they can solve their problem P.

■ Assumptions C is a large enough customer segment C has problem P Problem P is relevant (costly, frustrating, time consuming) C has enough money to pay for P S solves problem P

Your business idea is a list of assumptions, of how to make money

You need to find out as soon as possible, a cheap as possible, which assumptions are true and where you need to tweak and adapt your business idea.

Luckily, that’s possible by talking to people in the right way.

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How To Talk to People

■Decide on customer segment■Make cold contact■Talk to 5 people

Ask about problem Show your “demo”, ask for

feedback Take notes

• Good: One person talks, one takes notes

■Talk to more (10+) people, until answers become predictable

Use your notes (=cold, hard data) to decide where to tweak/adapt your business idea

“If it sounds weird to unexpectedly interview people, then that's only the case because you're thinking of it as an interview instead of a conversation.

The only thing people love talking about more than themselves is their problems.

Source: The Mom Test Book

CUSTOMER SEGMENT

A group of people or companies with the same problem, and often other similarities, too.

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Customer Segment

■Choose a customer segment for your idea Start with a very small segment and get to know it

well• It’s much better to have

a few enthusiastic, must-have paying customers than many nice-to-have non-paying non-customers.

If people give you different answers, make your segment smaller• Within this group, which type of this person would want it most?

■Make contact If you cannot find and talk to potential customers,

you will never sell them anything. Choose a different segment.

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How To Cold Contact Your Customer Segment■ Where can we find our demographic groups? ■ Explore your existing social contacts well

Good candidates are likely present, you just don't know that yet

■ Go to where your customers are already Physically: fairs, conferences, the café next to the office, … Digitally: Social media, blogs, … What are these people already doing to achieve their goal or survive

their problem? Where can we find people doing these workaround behaviors?

■ Create a new contact place and invite potential customers Physically: meet-ups, lecturing, speeches Digitally: build a landing page, advertise it, harvest email addresses,

make contact by phone

■ Cold Contact Fact: ca. 2 out of 100 people react to cold calls on the phone. Just keep

going.

■ Anything that works

Getting too many different results? Go back and choose a smaller customer segment.

Warm Intros

Cold Contact

Find your customers

Choose your customers

To Whom To Talk?

RELEVANT PROBLEM

• Relevant = Happens often, costs a lot of money, causes lot of frustration.

• The problem can also be a desire.

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The Mom Test – What people say

■You: Mom, I have a business idea. Do you have 5 minutes?

■Mom: Of course, dear …

■You: You like your iPad and use it a lot?■Mom: Sure, it’s great.

…

■You: Would you buy a cookbook app?■Mom: I love cookbooks, sounds nice. Does it come with

vegan recipes? Or something special for Xmas? …

Sounds good? But does your mum really think?11Source: The Mom Test Book

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The Mom Test – What people think

■You: Mom, I have a business idea. Do you have 5 minutes?

■Mom: Of course, dear I’m proud of you and I don’t want to hurt your feelings

■You: You like your iPad and use it a lot?■Mom: Sure, it’s great.

I use it to check email on the sofa.

■You: Would you buy a cookbook app?■Mom: I love cookbooks, sounds nice. Does it come

with vegan recipes? Or something special for Xmas?Well, I have plenty of cookbooks. I don’t need a computer in my kitchen – it might get dirty! But hey, if my kid made it, I’ll try. App? I never bought an app. Don’t you need to enter your credit card for that? Let me try to change the subject.

12Source: The Mom Test Book

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The Mom Test – How to do it right

You: ■Mom, when have you last time used the iPad?■For what?■Have you ever used it in the kitchen?■Have you ever bought an app? Which? Why? For how

much?■Do you use your cookbooks?■ Is there anything you dislike about them?■What was the last cookbook you bought? When?

Why?

Next slides: The patterns/techniques for doing it right

13Source: The Mom Test Book

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How Structure Your Conversation■Problem & Solution

First, learn all about the problem – Then mention your solution idea for the first time• You own the solution, the customer owns the problem. Or as Rob Fitzpatrick said: you aren’t allowed to tell them

what their problem is – they aren’t allowed to tell you what to build

■Ask questions, make the customer talk■ If possible: Keep it casual/informal to get more honest

answers■Ask questions, for which you are afraid of the answer■Ask: “What else should I have asked?”

Sometimes this unlocks a lot of domain expertise

■Ask: “To whom else should I talk to?” Less cold contacts to make If people refer you, that is a sign of interest/trust.

■Typical conversation takes maybe 5-15 minutes

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How To Talk About Problems

Good Data■ Ask about specifics in the past

When did the problem happened last time?

Can you walk me through each step?

How did you solve it? How much

time/money/frustration did it cost?

What have you tried to avoid/solve the problem?

Who pays for solutions to such a problem?

■ Ask what happened (= true data), not what the customer believes will happen (= fiction).

Bad DataWhen the customer says:■ I always/never …

Simply not true

■ I would/will … Customer has a rosy picture of

him/herself

■ I might/could … You also might not. This is

simply not data, but fiction.

■ When the customer has product ideas … ask, what problem that would

solve

Source: The Mom Test Book

ACCEPTED SOLUTION

From the customers point of view

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How To Demo Your Solution

You show your “demo”■ Anything that let’s

the customer imagine how the solution would change his life

■ But not more detailed than necessary!

Example for an app:■ Good demo: Scribble on

paper card People say: “I don’t need the

third view, ever”.

■ Bad demo: Looks like a real app People only say: “Make this

button a little smaller”. You obviously spent a lot of work on the demo, so they criticize less.

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Get Commitments

Ask for commitment■ Especially in B2B settings, ask for some commitment to find

out, how much the customer loves your idea

Commitments■ Can you introduce me to your boss?

customer pays with time, reputation

■ Can you pay a first rate for the solution? customer pays with money

■ Result: Data You make a step forward – or – You stop with this customer

■ Both is better than “it looks good, but nothing moves”

USE YOUR DATA

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How To Takes Notes

What to write down?■ emotions (!)

No selling without emotions. Where does the customer get excited or angry?

■ problems Maybe you discover many other related problems.

■ goals Surprisingly weird goals can be found in reality

■ workarounds Study the workarounds. How well do they work? What do they cost? Are you

better?

■ obstacles (“We are not allowed to use smartphones here”) You need to know the constraints.

■ ideas/feature requests Just write them down and move back to the problem side of things.

■ budgets/buying process Very important! Who has the money? What are their goals?

■ follow-up tasks To not forget anything you promides

■ referenced persons/companies Surely not loose this data.

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Use your Data

■Check your assumptions Which turned out to be true/validated

and which are rather false/invalidated? Adapt your idea to your changed

perception of reality.

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“EXAM”

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Good meeting or bad meeting?

■ “That’s so cool. I love it!”■ “Looks great. Let me know

when it launches.”■ “There are a couple people I

can intro you to when you’re ready.”

■ “What are the next steps?”■ “I would definitely buy that.”■ “When can we start the trial?”

■ “Can I buy the prototype?”■ “When can you come back to

talk to the rest of the team?”

fail, no commitmentfail, no commitment

mostly fail, customer decides you’re not readysuccessfail, no commitmentsuccess in DE, failure in US success!success

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Literature

■The Mom Test by Rob Fitzpatrick momtestbook.com and

foundercentric.com Version 1.0 from August 1, 2013 Most content comes from this

book

■Running Lean by Ash Maurya This is a good book for app/web-

entrepreneurs

■More references: http://bit.ly/entrep-links