The famous "faster horses" quote is often used to dismiss the importance of customer feedback. However, the speaker argues that understanding customer needs is crucial, but it requires a strategic approach. He shares a better way to uncover what customers actually want and why common approaches fail.
Why Common Approaches to Understanding Customers Fail
The Default Founder's Way: Release Early and Often
The traditional method of building a Minimum Viable Product (MVP) and waiting for customer feedback used to be viable when there were higher barriers to entry and fewer choices for consumers.
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Problem: Today, customers are bombarded with options. A half-baked product will likely be abandoned in favor of a competitor.
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Consequence: Without direct feedback, founders are left guessing, trying random features hoping something will stick. This feels like "throwing spaghetti on the wall."
Directly Asking Customers What They Want
While seemingly logical, directly asking customers what they want can be ineffective, especially for innovative products.
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Problem: Customers struggle to articulate needs for things they've never experienced. They can't envision future solutions.
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Example: Customers didn't ask for smartphones, cheaper automobiles, or ride-sharing apps.
Validating Preconceived Problems
Asking customers to rank a pre-determined list of problems also has drawbacks.
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Problem 1: If the listed problems don't resonate, the conversation stalls.
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Problem 2: The "spotlight effect" exaggerates customer responses by focusing on specific issues.
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Problem 3: Confirmation bias leads founders to selectively hear what confirms their existing beliefs, often leading to building something nobody needs.
The Innovator's Gift: A Better Approach
The key to understanding customer needs lies in recognizing what the speaker calls the "innovator's gift."
New Problems Come From Old Solutions
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Premise: Worthwhile problems don't appear out of nowhere; they arise from the limitations and frustrations of existing solutions.
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Focus: Instead of looking for new problems, identify the pain points associated with current solutions.
Examples of Innovation Through Solving Existing Problems
The speaker uses the evolution of music playback devices as an example.
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Cassette Tapes to CDs: The transition wasn't driven by sound quality, but by the inconvenience of rewinding and forwarding tapes.
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CDs to MP3 Players: The driving force was the ability to download and buy individual songs, rather than entire albums.
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MP3 Players to Cloud Streaming: Access to a vast library of music on demand surpassed the need to own music.
The common thread in these transitions is that new technology addressed specific, familiar, and compelling problems associated with the old technology.
Uncovering Customer Needs: A Step-by-Step Guide
To uncover new problems worth solving, focus on studying how people currently use the existing solutions you intend to displace.
Step 1: Target Customers of the Old Way
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Focus: Don't seek out general interest; target those actively using existing alternatives.
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Competition: Recognize that your true competition is often the status quo, not necessarily other startups. (Email and spreadsheets have killed more startups than other startups.)
Step 2: Study When, Why, and How They Use the Old Way
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Key: Avoid directly asking what they want or even about their problems.
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Focus: Ask them to walk you through when, why, and how they use their current solution. Get them to tell stories about specific instances.
Identifying the Right Pain Points
Real problems are often disguised as:
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Pet Peeves: Small annoyances that customers have grown accustomed to.
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Struggles: Significant pain points that make the existing solution difficult or time-consuming.
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Workarounds: Creative solutions customers have developed to overcome the limitations.
The Power of Pattern Recognition
The speaker notes that after only about 10 interviews, patterns begin to emerge. When you repeatedly hear customers describe the same pet peeves, struggles, and workarounds, it's time to innovate.
Sell Before You Build: Demo Cell
Instead of immediately building your solution, try to sell your solution to the same customers before you build it, using a "demo cell" (sell demo build) approach. This allows you to know, rather than hope, that people will buy your product.