Entrepreneurs are a lot of things. Innovators, business professionals, inventors. But scientists? Steve Blank certainly thinks so.
He refers to them as such in a video from his Founders School series The Lean Approach called Customer Development Data. Here, Steve talks about entrepreneurs needing to constantly hypothesize, test and analyze aspects of their businesses, especially when it comes to customer feedback data.
I know a lot of entrepreneurs who do capture this kind of data. They talk to users, run focus groups, and track website conversions. But for many business owners, that information just sits. . . in a pile on their desk or a spreadsheet on their desktop. From either place, it’s doing absolutely no good.
And that’s exactly Steve’s point. In order to make the data really work for their businesses, entrepreneurs need to turn it into insight. He gives an example to illustrate his point:
A few of his students had talked to 50 potential customers, asking if they would buy a certain product for $9.99. The resulting data was 47 out of the 50 people interviewed said yes, validating its worth at that price point. The students thought that was a wrap and wanted to move along to the next experiment.
But Steve saw an opportunity to gain some insight that wasn’t necessarily sitting in a column on their results spreadsheet. He asked what the other three potential customers had said. His students, passing off the individuals as “idiots,” said they had mentioned something about “if they added two additional features, it being worth $10,000”. Apparently these “idiots” thought the product—with these two other components—should be enterprise software, worth 1,000 times more than the $9.99 they were charging at the time. Now that’s some potentially business-altering insight.
This lesson translates well from classroom to real life. Just ask Joel Holland of Footage Firm (now known as VideoBlocks). He uses data to drive his company and with hundreds of millions of data points, has successfully predicted which potential customers will become actual customers. Hear what he says about his love for analyzing data in this Founder Genius clip.
So entrepreneurs, make a hypothesis, experiment, capture the data, and translate it into insight—insight that can help you grow your customer base and your business.