The Startup Owner's Manual

CHAPTER 7Customer Discovery, Phase Four: Verify the Business Model and Pivot or Proceed

HAS YOUR CUSTOMER DISCOVERY EFFORT turned your hypotheses (or guesses) into hard facts? Do you believe it’s time to proceed to customer validation, when you test whether your business model can scale?

There are three critical questions to answer:

1. Have we found a product/market fit? Is there sizable demand for solving the problem, and does the product fill that demand well in the customers’ eyes?
2. Who are our customers and how do we reach them? Do we understand the demography and archetypes of our key target customers and enough about their behavior to know how to find them cost-effectively?
3. Can we make money and grow the company? Can we grow predictably and large enough to make a great company?

If your answer to this analysis is “proceed,” remember that it’s still not time to launch. This go/no-go decision answers only one question: do we have enough confidence in customers’ enthusiasm and the product/market fit to proceed to customer validation and see if our business model scales by five times, 10 times or more? It’s often frustrating to entrepreneurs who make the “go” decision, since they’re rarin’ to get out and start doing and selling. After all, that’s what entrepreneurs do. It’s also a dangerous trap: customer validation accelerates spending, which—if unsuccessful—can cost you your ...