Customer Discovery - The Good, The Bad and the Ugly

By Doug Zeisel, TCV Growth Partner -

What’s keeping you up at night? Isn’t that the first question many people use when conducting Customer Discovery?

Over the past 7 years the marketing research methodology known as Customer Discovery has become a “must do” for any company seeking seed stage funding. 

Agencies such as TEDCO have made the I-Corp Customer Discovery program a must do if a tech entrepreneur wants pre-seed and seed funding.  And although acceptance into the National Science Foundation SBIR program does not require performing Customer Discovery, doing at least limited sessions will greatly help getting an invitation to submit an application and eventually win a Phase I grant.

The benefits of Customer Discovery (The Good)

The popularity of Customer Discovery is largely due to minimizing risk by validating the need for a new technology.  So entrepreneurs are urged to spend endless hours (up to 100 interviews for TEDCO) interviewing those who they believe would be their target market customers to find pain points that their tech might overcome.  And that is the ultimate goal – determining if there truly is a need for the technology you propose to develop.  And done properly, Customer Discovery can be a huge asset to your endeavors because you can validate that there are customers that would love to buy the product or service you are creating. Furthermore, done properly, customer discovery may result in a pivot to a new market, business model or a new iteration of the technology under development.  But HOLD on, the key words above are IF DONE PROPERLY. 

Customer Discovery Drawbacks (The Bad)

None of us want to hear that our “baby is ugly”.  So it is very hard not to let confirmation bias enter our minds when conducting Customer Discovery.  The first step in conducting customer discovery is to create a list of questions that you can use as a guide thru a discussion with a person that is an industry specialist or potential customer in the area you are investigating.  While used as a guide for conducting the interview, the conversation often takes on a life of its own where confirmation bias can affect results.

The questions created to guide an interview are often very general such as:

• What’s keeping you up at night? (don’t laugh, I have seen people use this quite effectively when used in the context of an interviewee’s work)

• What are the major challenges you face when doing your job?

• What are you doing now to overcome these challenges?

• Would you invest in a solution?

• And more... But sometimes these questions can be biased in the way they are presented and discussed.

Next, the Discovery interview often ends with the great reveal – a description of the technology being developing. This is done to get feedback and hopefully a potential client. Two problems:

First, the person being interviewed often does not want to be a “Debbie Downer” and say “no way!” So the interviewer gets a positive when a negative should have been forthcoming. 

Second, the interviewer may misinterpret the response in a way that is not negative.  Again the confirmation bias gets in the way.

Customer Discovery Failures (The Ugly)

I have experienced ugly first hand. Long ago, before Customer Discovery become popular, we started a company (Sentence Wheel) that won a NSF SBIR Phase I grant – Rob Meissner conducted a well attended Focus Group of ESOL instructors and after winning the SBIR grant we conducted numerous customer discovery interviews. All the feedback we got from ESOL instructors was that there is a problem in getting ESOL students to practice proper sentence construction. And instructors overwhelmingly said it was a great idea that could overcome obstacles in helping non- English speakers learn how to construct proper sentences.

But when we brought it to market, no one would purchase it. Why? Because we had assumed that because it was a brilliant solution, ESOL instructors would flock to it and promote it to their students. However, ESOL instructors would have to change how they taught ESOL in their classrooms and no one wanted to change the way they were teaching ESOL. 

Hmm, lesson learned – be careful to construct the proper questions and don’t forget to probe whether the new tech requires a change in behavior of the customer. Is there a value proposition?

Another ugly situation comes to mind. Not long after TEDCO started promoting the I-Corp Customer Discovery program I attended a group in Harford County that was promoting up and coming entrepreneurs.  One of the participants was developing a technology to enhance and streamline the building of software code. He as absolutely over the top about his technology and the fact that he had validated his idea in the I-Corp program. 

So I asked him – who would be a typical first customer? His reply – Microsoft! Had he talked to anyone at Microsoft? No.  And of course his company is no longer in existence.  Fortunately the young entrepreneur kept his day time job whilst launching his failed dream.

One key takeaway from all my blathering – It often makes sense for a non-biased outside party to conduct market research, especially when it comes to Customer Discovery.  At TCV, our team has conducted over 15 market studies involving Customer Discovery for TEDCO, universities and SBIR funded grants. If you are looking for unbiased information on market need for a new technology, don’t hesitate to reach out.

TCV Partners Doug Zeisel and Rob Meissner conduct market research projects and will be happy to help. Rob is an I-Corp Mentor!