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Strategy Canon

Strategy Map›Layer 6 · Operating Model›Capabilities+ from outside the named canon

Customer Discovery

By Dave WhittemoreUpdated 30 company case studies

What is Customer Discovery?

Customer discovery is the practice of testing a startup's assumptions about its customers before building much, through interviews, observation and small experiments with people who might buy. Steve Blank made it the first step of his Customer Development method. It counts when what the team learns changes a product or market decision.

Also calledcustomer development (Blank)problem interviews

How Customer Discovery works

Learning before committing cuts the risk of building something nobody chooses. AppFolio's founders interviewed about 20 property managers and found interest dropped sharply whenever the product lacked accounting, so they built trust accounting in between 2006 and 2008. Talkspace tried group and individual video sessions that failed to convert, noticed users writing their problems to customer support, and launched unlimited text therapy in 2014.

Discovery takes founder time and the discipline to change plans when customers disagree with them.

Pick a marketFounders drop auto repair for property management
Interview managersAbout 20 property managers
Hear the objectionInterest fell off without accounting
Change the productTrust accounting built in, 2006 to 2008
AppFolio's early discovery: interviews with property managers showed what the first product was missing, and the founders changed it.

How companies won with Customer Discovery

From the win chains in Strategy Canon case studies: what the winner did, and what its rival did at the same step.

vs. Buildium

AppFolio

Trust-accounting ledger for mid-sized managers, in the browser

What it did
Founders dropped auto repair, interviewed about 20 managers
Buildium
Browser books from 2005, double-entry by 2007, but built by two landlords for their own rentals and priced from five units
Read the AppFolio case study →
vs. SurveyMonkey

Qualtrics

Sophisticated research, self-serve, for academics

What it did
Founded 2002 by a BYU marketing-research professor and son
SurveyMonkey
A free tool for anyone who needed a survey (1999)
Read the Qualtrics case study →
vs. OneLogin · 2009–11

Okta

Hosted sign-on, funded far ahead of the category

What it did
CIO interviews turned a monitoring idea into hosted sign-on for Salesforce, Box and Google Apps (2009)
OneLogin
Same product from the same moment: Zendesk customers' credential problem led to hosted SSO, launched 2010 with 1,700+ apps by June 2011, more than Okta's 1,200 that December
Read the Okta case study →
vs. Motive · 2015–17

Samsara

Real-time gateway for operators, not a logbook for drivers

What it did
Sensor pilots showed the cold chain failed on the road
Motive
Free driver logbook app (Dec 2013); 'give [the ELD] away and generate value on top' (2014)
Read the Samsara case study →

Also tagged: Airbnb · Canva · Cornerstone OnDemand · Datadog · Epic Systems · Figma · Flatiron Health · HubSpot · Nubank · PDF Solutions · Plaid · Redfin · Revel Systems · Robinhood · Rubrik · Salesforce · Slack · Sprinklr · Sqreen · Talkspace · Toast · UiPath · Weave Communications · Wesabe · Wiz · Workday

Customer Discovery vs. Founder Domain Expertise and Customer Intimacy

What it isHow to tell it apartExample
Customer DiscoveryTesting assumptions about customers' problems through direct contact before committing to a productA dated decision changed because of what customers showed the teamAppFolio adding trust accounting after manager interviews
Founder Domain ExpertiseInsider knowledge of the customer's work that founders bring from before the ventureAsk when the knowledge arrived: before founding, or from customers afterwardathenahealth's founders running birthing practices
Customer IntimacyA continuing choice to deliver the best total solution for specific customersDiscovery tests early assumptions; intimacy is an ongoing way of serving accountsPalantir's forward-deployed model

How to tell if a company has it

  1. A stated assumption about customersThe customer, problem or solution the team believed in before it talked to potential buyers.
  2. Direct contact with potential customersInterviews, observation or experiments with real prospects, dated before the decision they informed.
  3. A specific lesson learnedWhat the contact confirmed or overturned, such as a missing feature or a different bottleneck than expected.
  4. A product or market decision followedA dated change in scope, target customer or product. Meetings or a feature request list alone don't count.

Who names it

AuthorWhat they call it / where it appears
Steve Blank +Customer Discovery (Customer Development, step 1)
← Quality & feedback systemsProduct/market fit →