1 - Customer Discovery

Answer: Solve a Real Problem

The first step to starting a successful business is being absolutely certain you are solving a real problem. Maybe you already have an idea for a startup (which means you already know which problem you are solving) or you want to build a startup, but don’t have an idea. Either way, you must start with identifying the problem, and understanding the nuances of the problem.

Most young entrepreneurs overlook this step and it’s the cause of 90% of failures we see. This article will outline a technique called Needfinding which we teach to all our teen entrepreneurs. Needfinding is the process of speaking with potential customers to understand the intricacies of their problems, which in turn helps you build a successful solution (startup/business). Once you have completed the Needfinding portion of building your startup, you will be ready to move on to step 2, coming up with an idea using Ideation for your startup.

How a teen entrepreneur solved a real problem and found success

On a visit to India, successful teen entrepreneur and Catapult Alumni Mukund Venkatakrishnan realized his grandfather had hearing loss. The process to get a hearing aid was far to expense for most people in India (read Mukund’s full story →). A major problem that clearly needs to be solved. Mukund used Needfinding to fully understand the problem his Grandpa faced. It had to do with expensive doctor’s visits, in far away places, and long waits once you got there.

When hearing loss had been diagnosed, there were expensive tests to figure out exactly what type and how bad the hearing loss was. All of that information was then used to build a custom hearing aid. All in all, to solve the problem of hearing loss in India cost over $1200. In India, the average yearly salary is $660. See the problem? Mukund set out, not to create a new hearing aid then, but a small device that could serve as doctor to diagnose the problem, hearing test to figure out the specifics of the loss, and then custom hearing aid. That’s Needfinding at work.

On the other hand, we have students that have come to us with all sorts of crazy ideas. They are interesting and “cool, but they don’t do a very good job of solving a specific problem. One team spent all this time to build a website that would be the 1-stop place for online shopping. When we started digging into why the site worked the way it did, how it solved the problems people were having, it was clear that the team didn’t really know what problem they were solving for. Luckily, we were able to get them out talking to real customers, and observing as customers shopped online. Through Needfinding, they were able to see specific problems real customers had when using major e-commerce sites. In turn, they were able to design their site in a way that solved those problems and thus was able to compete established shopping sites.

NeedFinding is the best way to tell if your startup idea is good

So, what exactly is Needfinding and how does it work? Needfinding is the act of discovering people’s explicit and implicit needs so that you can create appropriate solutions (solutions is another word for Businesses, Products, Services). Needfinding was originally developed at Stanford University by Robert McKim as an approach to studying people to identify their unmet needs. Over time Needfinding has evolved into a methodology that’s a hybrid of both design research and design planning.

Needfinding is important, because when you discover Needs people have, you find opportunities. Often in our Incubator, when we send entrepreneurs out to do Needfinding in the public, they discover unmet, or hidden needs, and those are the real gems. If you can identify a need that isn’t being met, it’s just waiting for someone to come along and provide a solution.

Needs also last longer than any specific solution. Solutions come in and out of favor faster than the needs they serve. Punch cards, magnetic tape, floppy discs, and CDs have successively moved from introduction to obsolescence. However, the underlying need to store computer data has existed throughout the lives of each of those products and continues to exist today.

NeedFinding in Action

Say you regularly shovel the yard of an elderly neighbor down the street during the winter. You babysit for a family around the corner once a month or so. And last summer, you helped paint a few rooms in a neighbor’s house who was remodeling.

Suddenly it dawns on you. I should start a business that connects willing high school laborers (ie you and your friends) to families in your neighborhood who need odd jobs done.

Before you start your new business, ask yourself, am I solving a real problem? In this case, yes High Schoolers need money and Neighbors need odd jobs completed. Well duh. Lots of inexperienced entrepreneurs stop here, and go full board into creating their business (gotta love the enthusiasm). At QØ, we like to better understand this problem, to get to the real good stuff. So how would we use Needfinding the better understand this scenario?

Start by interviewing your (potential) customers

In this case you have 2 customers 1) high schoolers who do odd jobs, and 2) neighbors who have odd jobs that need doing. When we say interview, we don’t mean show up and ask a bunch of yes or no questions. We mean really dive in and try to understand what’s going on. The best way to do that is to ask your interviewees to tell stories about the subject you are asking them about, in this case, odd jobs. When people tell stories, listeners get lots of little details and we understand the context around the event. There are also lots of emotions in stories, powerful emotions are often a sign that there is a problem here that really needs fixing!

So for example, say you are speaking with a family who lives around the corner. You should ask at some point, ‘tell me about the worst experience you had with a babysitter’. Maybe they would answer:

• This one time, we forgot to stop at an ATM and pick up cash and we were so embarrassed when we got home, that my husband had to drive back out and I had to stay at home for another 45 minutes with the babysitter until he returned with the cash. (Need: To pay high school student in easier way)
• We were counting on our babysitter because we were going out for dinner, but I guess she forgot, we called her and eventually she came late, we missed our reservation, and ended up having dinner at a pizza place, not a great anniversary. (Need: To automatically remind the babysitter ahead of time)
• Our last baby sitter didn’t clean up at all, the kids weren’t in bed yet when we returned, we won’t be calling him again, I really wish we’d gone with someone else. (Need: To discern between good and bad babysitters)

Interesting stuff (of course, all fake for the purpose of this example). But by looking at these horrible experiences you can start to see what key things you would need to get right if you wanted to start a business like this. Maybe you can find a way to automate payment via credit card on a website. Maybe you can send a reminder text message to the high schooler the day of so that they don’t forget they agreed to babysit. Maybe you can allow neighbors to post reviews about the babysitter so that babysitters are inclined to do a better job.

Understanding all these intricacies allows you to build a service that meets your customer’s Needs and will be many more times successful compared to the competition.

You would definitely do the same thing with a few high school students who had done odd jobs as well. You could ask “Tell me about a really great experience doing an odd job for a neighbor”.  A ‘Great’ experience should have lots of positive emotions and you could try to replicate some of what you heard in your idea. For example, maybe you would hear:

• I helped to paint my neighbors house, and it was big. I remember showing up and thinking, wow i’m going to be painting all day. I hadn’t brought water, or a lunch, or anything, i was really unprepared. Luckily the woman who owned the house told me to take a break after 2 hours, I was able to go home and get something to eat and come back after taking a break and feeling recharged. (Need: To have breaks to do a good job)
• I Babysat all the time for a family. It was my first job and i really wanted to impress so I tried to make sure i did everything right, each time. After a few months, they told me I had been really great, and asked if they could recommend me to another family, of course I said yes. (Need: To be rewarded for good work)

On the surface these might not seem special, but think about how what you heard could show up in the way you build your business. Maybe you need to tell neighbors that jobs must not last longer than 2 hours, or if they do, that there must be 30 minute breaks. This would ensure the high school student stays productive and happy. You could also include a referral bonus, where neighbors left reviews and if you received positive reviews you gave out some sort of incentive. Just a few ideas, you probably have more.

If you remember anything from this article, remember these 5 things:

1. Needfinding is a technique where you talk with real customers and try to uncover hidden Needs they have.

2. Mukund did a lot of Needfinding to figure out the best solution for his grandpa. Going to an expensive doctor and getting an expensive hearing aid was the current solution, but because Mukund did Needfinding he was able to blow the competition out of the water.
3. To do Needfinding, you need to talk to real or potential customers.
4. Asking yes or no questions doesn’t get you good answers. Instead ask your interviewees to tell you stories that include emotions.
5. You can do Needfinding even once you have a business. Often time Needfinding can help you make your startup even better.

Remember, good Needs are not always obvious, but once you figure one out, you will know something no one else does!

If building a startup or joining a startup seems like an awesome way to spend 3 months, consider applying to a QØ program,  where you will get expert instruction and real world practice with Needfinding including in depth training on how to interview effectively, how to analyze your interview notes to uncover hidden Needs, and how to ideate for features based on the Needs you found.

If you are building your startup on your own, with the help of these articles, awesome! Once you’ve completed Needfinding, it’s time to move on to step 2, Ideation.