Steve Blank: Acting on Customer Discovery | Summary and Q&A

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April 26, 2011
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Stanford eCorner
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Steve Blank: Acting on Customer Discovery

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Summary

In this video, the speaker shares two stories about the importance of customer discovery in entrepreneurship. The first story is about how Alan Michaels, the founder of Convergent Technologies, realized the potential of his single board computer by listening to customer feedback and making necessary improvements. The second story is about the speaker's experience at Ardent, where he discovered that founders themselves need to be actively involved in customer discovery rather than outsourcing it to others.

Questions & Answers

Q: What were the initial reactions of computer companies to Alan Michaels' single board computer?

The initial reactions of computer companies to Alan Michaels' single board computer were positive, but they were only interested in purchasing a few boards for their R&D labs. They were hesitant because the computer didn't have a case, operating system, or applications.

Q: How did Alan Michaels convince companies to buy his single board computer in larger quantities?

Alan Michaels convinced companies to buy his single board computer in larger quantities by addressing their concerns and making improvements. When one company expressed interest in purchasing 10 boards, Alan realized that he needed to provide additional features such as a case, operating system, and word processor.

Q: How did Convergent Technologies' success change after securing an order for 10,000 computers from Burrows?

Convergent Technologies' success changed dramatically after securing an order for 10,000 computers from Burrows. The company went from potentially selling only 25 boards in the first year to eventually being acquired by Burrows for $400 million. This success was a result of listening to customer feedback and making necessary changes to meet their requirements.

Q: What challenges did Alan Michaels face when starting his next company, Ardent?

When starting Ardent, Alan Michaels faced the challenge of building a graphics supercomputer that combined features from a Cray and a Silicon Graphics machine. However, instead of personally engaging with customers, Alan focused on talking to investors, leaving the VP of Marketing to interact with customers.

Q: What kind of feedback did the speaker receive from customers about Ardent's product features?

Customers provided feedback that Ardent's product features were not well received, but they saw potential in certain aspects if they were modified. They suggested removing certain elements and focusing on providing a server with improved price performance.

Q: How did the speaker feel after gathering feedback from customers and visiting various organizations?

The speaker felt confident and smart after gathering feedback from customers and visiting various organizations. He believed he had discovered what customers wanted and was excited to share his findings with Alan Michaels.

Q: How did Alan Michaels react when the speaker informed him about customers' negative feedback?

When the speaker informed Alan Michaels about customers' negative feedback, Alan fired the speaker three times. Alan did not value or listen to the feedback, which ultimately led to the company's downfall.

Q: Why does the speaker emphasize the importance of founders being involved in customer discovery?

The speaker emphasizes the importance of founders being involved in customer discovery because it is not an outsourceable problem. Founders need to hear both positive and negative feedback firsthand in order to make informed decisions and be able to change strategies effectively.

Q: What does the speaker say is the most valuable thing entrepreneurs can do?

The speaker states that getting feedback from customers is the most valuable thing entrepreneurs can do. It is not something that should be outsourced, and even technical founders should not rely solely on professional salespeople to sell their product without ever interacting with customers.

Q: What is the main takeaway from the speaker's stories about customer discovery?

The main takeaway from the speaker's stories about customer discovery is that founders themselves need to be actively involved in listening to customer feedback and making necessary improvements. Outsourcing customer discovery or ignoring customer feedback can lead to failure in the business. Take the time to personally understand and adapt to the needs and preferences of the target customers.

Takeaways

The main takeaways from the video are that customer discovery is crucial for the success of a business and should not be outsourced. Founders need to personally engage with customers, listen to their feedback, and be willing to make necessary changes to meet their needs. Investing time and effort into understanding and adapting to customer preferences can greatly improve the chances of success in entrepreneurship.

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