The Four Steps to the Epiphany

CHAPTER 3Customer Discovery

A journey of a thousand miles begins with a single step.

— Lao-tzu

IN 1994, STEVE POWELL HAD AN IDEA for a new type of home office device. Capitalizing on the new high-speed phone connection called ISDN, Steve envisioned creating the Swiss Army knife of home office devices. His box would offer fax, voicemail, intelligent call forwarding, email, video and phone all rolled into one. Initially Steve envisioned the market for his device would be the 11 million people with small offices or home offices (the SOHO market).

Steve's technical vision was compelling, and he raised $3 million in the first round of funding for his company, FastOffice. Like most technology startups, FastOffice was first headed by its creator, even though Steve was an engineer by training. A year after he got his first round of funding, he raised another $5 million at a higher valuation. In good Silicon Valley tradition, his team followed the canonical Product Development diagram, and in 18 months he had first customer ship of his product called Front Desk. There was just one small problem: Front Desk cost $1395, and at that price, customers were not exactly lining up at FastOffice's door. Steve's board had assumed that, as with all technology startups, first customer ship meant FastOffice was going to ramp up sales revenues the day the product was available. Six months after ...