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Why understanding customers is a key part of a lean startup approach

 

Andy Robinson, site development lead at Deliveroo Tech, Edinburgh, discusses his experience working with the pioneers of Lean Startup and lessons learned before finding success.

Please tell us about your time at Neo Innovation where Eric Ries was a partner.

We were one of the first companies that were adopting Lean Startup methodologies, and were trying to sell that process as part of how we built software products for large enterprises.

I was very excited about Lean Startup and how it focused on understanding business and human problems, and then having a way of creating products using that insight.
 

What sort of businesses did you target?

We thought that everybody that could possibly be interested in software would be a potential customer of ours. We looked at founders with an idea but no software team, we looked at tech businesses that needed to continue development of their new products.

We looked at the government who wanted to develop new ways of building products for citizens and using new technologies – and we looked at larger enterprises too.
 

How did things go?

We had about 120 people around the world who were fantastic software engineers, designers and developers – and we had this process that we really believed in that had been proven to show results. We just went out and started speaking to everybody.

We were all super excited. We knew that people needed to build software and we believed we had a solution that was significantly better than how things were done before. We talked to literally thousands of people about our proposition and everybody that we spoke to said “This is a fantastic, fantastic approach.”

So was there immediate success?

AR: We just assumed that people would want to buy from us because we were selling something that we felt was very valuable. And we were waiting for all these customers to kind of roll in. But the reality was that a lot of these companies weren't set up to buy from us.
 

What was the problem?

One belief that we had was that businesses liked to de-risk their investments, especially when they're building something expensive like software. So we offered very flexible contracts, where you could stop, pause or change direction.

But that sort of agility didn’t sit well with these big companies. We'd get all the way to the point of having a discussion with procurement and then it would just die. The contract had to say: “We'll do this, this and this, by this date, for this price”, and that didn't allow us to use our approach to change direction or to change the product.
 

Why didn’t you just give the customers what they wanted?

I think that's a really important point to consider. You have to balance believing in your product with the realities of the customer that you're trying to sell to. You can go too far in one direction where you have no sales because you can't close anything because you've refused to change – or you can go the other way, where you agree to everything that your customer wants.

If you agree to everything then at some point you're going to find yourself in a situation where you've agreed to do far too much, and the team might be burnt out or you're going over budget and causing yourself a huge amount of pain.

Is this a common problem?

I think a lot of startups get sucked into a situation where they think: “We need to bring in money, we need to bring in sales, we need to bring in customers. So let's just agree to whatever they want”.

I think it’s hard to find the balance between believing that your process is the only way while also engaging with the customer who has a wish list that takes you away from the product that you've created and believe in.
 

Did you change your sales approach?

Absolutely. We decided to be quite ruthless and only sell to organisations that had grown up as software businesses. We hoped this would mean they understood our proposition at all levels of the organisation, so we wouldn’t hit a barrier when we reached procurement or board level.
 

How did this help?

It made our entire process for selling much simpler because we would ask ourselves: “Does this client meet these criteria in terms of their size, their turnover, the amount of investment they've raised, the technology they use?”

How did you market the business?

We built the brand that we created within these communities of potential customers that we had identified. We fostered those relationships, built networks and sponsored the right events. All of it was to help us become known for building high quality software while being flexible.
 

And was it successful?

Yes – from there the work started to come in because we had a strong reputation and we refused to just take contracts where we could make a quick buck or do something for a company just to say that we've done it. Focusing on quality and flexibility made communication much more focused and effective.
 

What would your advice be for other startups?

Concentrate on the customer and be realistic about your product. Think about how can you really understand who that customer is and how to make their lives easier - how to make them feel comfortable that they made the right decision.

It means really listening to those customers, taking notes and looking for themes and problems.

Do that and not only can you better understand the customer in a way that allows you to evolve your product and improve your likelihood of being able to sell to them – it also means you can create content and have conversations that demonstrate that you're the right choice.

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