Eric Reis’ Startup Lessons Learned

In June the Infochimps attended an event in Austin where Eric Reis gave a talk about the Lean Startup. His ideas inspired further reading, and we have been applying his methodology to making Infochimps.org a sustainable and profitable web service. Here is a breakdown of two of the ideas Eric writes about, which also crossover with Steve Blank’s wonderful book, The 4 Steps to the Epiphany.

1) Product development vs. customer development: In product development the team builds a product that they spec’d out themselves in the early stages. Customer development instead is about developing the market. It is a more holistic approach to building a company and launching a product. And customer development deeply integrates with agile software development. Every code deploy happens for a reason – it is in the service of some story that solves an identified need of the customer or users. How do you know what those needs are? You need to have talked to real customers and users.

Our site is built by two Physics researchers – scientists intimately familiar with the problems of finding and sharing data on the web. They have thought well into the future about how our site can solve these issues. Our feature list is long and describes a killer application. Problems arise, however, when we try to organize and prioritize this list. User testing helps tremendously. Observing how people used the site teaches us which features our users have trouble with and which features we can neglect because they aren’t being used. For example, user testing showed that Search is our most important feature, and that browsing by categories was less important.

Once we started talking to customers, our organizational priorities became much clearer as well. Through talking to Data Suppliers, we learned what features are most important to them on the site, which clauses of our Data Supplier Agreement they had most trouble with, and what the best way is to talk to them about selling their data on our site.

2) What type of market are you in? Steve Blank drives this point home in nearly every chapter of his book. Is your product competing in a market that already exists? If so, does it resegment that market by price or niche? Or is your product creating a new market?

Steve’s clearest example of this is the PDA market. When the first PDA came out, it created a new market. People could now do something they had never been able to do before – that is, sync their computer with a handheld device and work on the go. Marketing and PR efforts had to go towards educating people on these new tools and what they could do, and not talk about product features. Once PDA’s became an existing market with multiple players, marketing and PR efforts had to switch goals, and the conversations became less about the new possibilities and more about individual features, like whether this PDA had 8MB of memory and a 10in screen.

Infochimps has to split our pitch between the existing markets we resegment, and the new markets we create. Data is already sold in the Market Research and Finance industries – our website resegments this existing industry by offering different features and benefits. When we spoke to Zogby we didn’t have to tell them they could sell their data, they already do this. We just had to show them why Infochimps is different and a better solution. Data is not already sold by businesses everywhere, but our website is enabling just this. It is much harder to talk a taxicab company into selling their data – we first have to make the case that this is a profitable possibility. Our job is to educate this mainstream market to the new opportunities they can take advantage of with their data.

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