After going through the exercise of designing, developing and deploying our first product in the marketplace, we decided that it was time to take a step back and re-evaluate what we have learned and where we will go from here.

This is where it gets interesting. We decided that it was time to implement a proper customer development approach to our product and started going through the motions. Steve’s book is a gold mine, and his worksheets made it so much easier for us to get ready for this process. Getting some members of the team across the cust dev line took a bit of time, but the timely arrival of “The Entrepreneur´s Guide to Customer Development for Tech Startups” made this a relatively painless process. This ebook provides an awesome way to introduce people the concepts around cust dev. Highly recommended!

We kicked off with preparing for first customer contact, came up with a list of people to talk to, called them and organized the meetings. This initial step turned out to be a piece of piss, but only because we had already spend a lot of time building relationships with shop owners and marketing managers. Offering to give something back (in terms of knowledge, information and insight) does bring a lot of people across the line, so use it.

The longest part of the process so far has been coming up with the problem presentation, as it requires quite a bit of research, thinking about our product and general pondering about life and the universe. But, we managed to pull it together, and it made sense to us. Would it make sense to our customers?

As it turns out, after our first three interviews, it did make sense to our customers! We are planning to do a few more interviews this week and then another 3-5 next week. Already, I’m seeing a huge amount of value coming out of this process. We can already see our consumers segments more clearly, which in turn forces us to re-evaluate our complete business model based on which way we eventually choose to go.

The funniest thing about the whole process is interacting with our customers, who are all in retail. I’ve lived in Australia for about 5 years now, but I still get amazed by the level of honesty, bluntness and general laid back attitude. My favorite so far is “Mate, this shit will definitely work here in the city, but I’m not sure about how it’ll go out in woop woop”. Woop woop, for all of you not familiar with Australian slang, means “in the middle of nowhere”, “in the boonies”.

Coming back from woop woop to reality, we have also started to do a bit of fishing in terms of pricing. Since these interviews are not sales pitches, our customers are quite open and transparent about their expectations in terms of pricing. We found these two of Steve’s pricing questions to be a great way to “break the ice” and start talking about dollars and cents:

1. If we gave you our solution for free today, would you implement it. (Getting a No is a huge red flag. Luckily, no red flags for us.)
2. If we charged you , would you use it?

We did get a few “mate, that’s way too expensive” comments, which is great feedback. Especially considering the fact that it was followed by “$xx seems like a much more reasonable amount for it”.

Next steps

As I said, we are going to do more interviews, then look at what we have learned from the process so far and formulate our proposed solution through a set of screenshots/wireframes/use cases. We will be going back to our customers to validate our proposed solution and use that feedback to tweak it to the point where we are ready to do our first soft sales pitches. I’ll keep you posted. Exciting times ahead!

Why Accountants Don’t Run Startups – Steve Blank

Idea

There are many ways of coming up with ideas for applications. I won’t get into too much detail here, but let’s just say that the least risky and time consuming way to start with an initial idea is to try and solve a problem that you personally experience.

Let’s assume that I was into free diving. This is the sport where you hold your breath and dive as deep as you possibly can. As a free diver, I really need to work on holding my breath. There are a number of techniques that I can use to improve my time and people have been using these with great success for quite some time now. So, instead of looking at charts, writing down times, comparing numbers to understand my progress and so on, we can create an iPhone application that will automate a lot of these tasks and help me improve faster.

Mock ups

Now that I have a general idea of what I need, I have to look into the details of this application. There is no better way to do that, than to actually create a mock up of the application. There is an awesome tool you can use to speed this process up and create amazingly realistic looking mock ups very quickly. You can download MockApps templates for PowerPoint and Keynote and start turning your idea into a concept straight away. The templates include a large number of standard iPhone UI components, but that doesn’t stop you from generating new ones if your idea requires more custom elements.

To make this tool even more useful, you can export your mock ups as a PDF and view them directly on your iPhone using a PDF reader (GoodReader for example).This means that you can see what you application will look like directly on your iPhone! You can also include links in your mock ups which means that you can even click around the application on your iPhone. Extremely useful!

Let’s assume that I have created mock ups for our free diving application and loaded them onto my iPhone.

User testing (optional)

Once we have the basic application mocked up, it’s time to test it out with potential users. This step requires you to find people who have the same problem as you and get them to give you feedback on your application. If you are solving your own problem, chances are you will know other people who face the same problem. This step will allow you to refine your application and make sure that it’s easy to use and easy to understand for all of your users.

This step is optional as you will be able to judge how many people are interested in your application, even if you don’t have the whole application properly designed and user tested. We’ll get into that in the next post.

Make sure you test your application on at least 5-8 potential users. This will help you iron out most of the inconsistencies and problems inside the application. At this stage, the application does not have to be perfect, just easy to understand so that you can judge people’s interest.

I will take my free diving mock ups, load them onto my iPhone and after my free diving training session ask a few of the students to give me feedback. You will find that people love to give you opinions if you ask them and especially so if it’s around an area they are interested in. Be careful not to jump to conclusions based on one or two opinions. Everyone will have their own take on the application and it’s your job to find the middle ground. Based on talking to 7 of my peers I’ve realised that some of the screens are a bit confusing and that there is a way to simplify and improve the application greatly. It’s important to include those improvements in the mock ups as soon as you can.

That’s it for this post. In the next posts, we will talk about getting a feel for the market size and evaluating the opportunity, tracking visits to your site, being constantly updated about the interest in your site/application, promoting your application, making the call on investing money and how to approach development.

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New smartphone devices allow users to incorporate physical location into their real time online experience. All of a sudden, user’s physical location starts having value. It has value to the fashion store down the street wanting to attract customers. It has value to restaurants, cafes, bars and pubs looking for patrons. It has value to lawyers, dentists and plumbers advertising to people in their immediate area. It even has value to brands which can further their innovation and value by appealing not only to someone who they understand but also someone who they know is at a certain location.

The ability to harness user’s location is going to allow for a whole new wave of companies and products focusing on a more intimate, engaging and entertaining user experience. The whole idea behind realizing that location has value is to create products and services that provide users with something valuable and entertaining in exchange for their location. Gaming mechanics of these products are a key element as they entertain and motivate users to keep coming back for more. The power of location based games is that they connect the online world with the physical world, which means that users can experience benefits both online and offline. You can win a game badge as well as a drink at the bar down the street.

One of the pioneers and leaders of this industry is foursquare. Their application gives users their friends’ locations, tips on nearby places, awards users with badges and points among other things in exchange for users telling them where they are. With the information about user location, foursquare can tailor the user experience and make it even more intimate, engaging and entertaining. To top it off, users are so content with the service that they regularly contribute local content which gives them a sense of belonging to a place.

foursquare is well on their way of becoming the Facebook of this space. The idea that user location has value translates into the possibility of users wanting to exchange this value for something they want. Think of it as location currency. I’ll tell you where I am if you help me find my friends and grab a drink. I’ll tell you where I am if you save me some money. I’ll tell you where I am if you give me some valuable information. I’ll tell you where I am if you entertain me.

Just like Facebook focuses on the social aspect of the online experience, foursquare focuses on the social aspect of location based mobile experience. foursquare are looking at ways to monetize the platform through local business advertising, which is a great model for a company like this. Just like online today, there will be a number of other products that will provide other types of niche experiences and rewards in the mobile space, not just social ones. Today’s online dating sites, city guides, loyalty programs, entertainment info sites and many others will soon have their location aware, entertaining and user value generating equivalents. Just like Facebook Connect provides an identity platform for other products and services out there, foursquare API will try to dominate the location identity space.

Let’s not forget that concepts around these products do not only have to be commercial. There are a huge number of possibilities for community and social development as well as the future promise of helping socially disadvantaged and creating new ways to aid people in under-developed nations.

Harnessing the power of location and gaming mechanics to provide users with value (information, savings, social interaction, etc.) promises to create products and services that are more intimate, engaging and entertaining. This is something that I am definitely looking forward to experiencing.

Note: I’m a co-founder of HopShopper (http://hopshopper.com), a company which is using the concepts presented above to develop a mobile application focused on creating rewarding shopping experiences.

Read the post here

I will start this list with my favourites, but what I would really like to see happen is other people adding their favourite resources. Next post will be about best people to follow on Twitter in this area.

1) Paul Graham – http://www.paulgraham.com/articles.html
2) Steve Blank – http://steveblank.com/
3) Eric Ries – http://www.startuplessonslearned.com/
4) Dave McClure – http://500hats.typepad.com
5) Andrew Chen – http://andrewchenblog.com
6) Stanford eCorner – http://cgi.stanford.edu/~group-edcorner/wordpress/
7) Startonomics – http://startonomics.com
8) Sean Murphy – http://www.skmurphy.com
9) Under the radar – http://www.undertheradarblog.com
10) Venture Hacks – http://venturehacks.com
11) Steve Sammartino – http://startupblog.wordpress.com
12) Dharmesh Shah – http://onstartups.com
13) John Gillespie-Brown – http://www.tobeanentrepreneur.com
14) Fred Wilson – http://www.avc.com
15) Jason Cohen – http://blog.asmartbear.com
16) Brad Feld, Jason Mendelson – http://www.askthevc.com
17) Marc Andreessen – http://blog.pmarca.com/
18) fbFund – http://fbfund.com
19) Lean Startup Circle – http://groups.google.com/group/lean-startup-circle
20) Silicon Beach Australia – http://siliconbeachaustralia.org/