Below is the “Tip of the Week” transcript from the Podcast Episode 28: The Investment Readiness Level (Steve Blank):
There is a belief that great startups and founders need the ability to predict the future. As Steve mentioned, every startup that goes through his process learns, adapts and improves their strategy. It is the interaction with customers and potential customers that yield insights and improvements. When I was a product manager developing a new device for the water analytics industry, 90% of my time was spent talking w/ and learning from customers. While some artistic ability, of which I have none, is useful it is not necessary to create products or services that customers will love. And not only can one learn about the pain points customers experience when using products, one will also learn a great deal about how they buy, where they buy, how decisions are made, what regulatory factors influence them… and many factors that can’t be predicted.
Steve talked about how he created a culture of customer-focus by requiring each member of his team to talk w/ multiple customers a week. Is the startup you are evaluating obsessed with their customer? Do they have laser-focus of the demographic and physcographic profiles of customers in their target market? A couple of customer calls during due diligence and you’ll probably have your answer.