Tim’s Weblog Tim's Weblog
Tim Strehle’s links and thoughts on Web apps, managing software development and Digital Asset Management, since 2002.
2009-04-15

Validated learning about customers

Eric Ries – Validated learning about customers:

"The problem stems from selling each customer a custom one-time product. This is the magic of sales: by learning about each customer in-depth, they can convince each of them that this product would solve serious problems. That leads to cashing many checks. […] They are closing orders. They are gaining valuable customer data. They are close to breakeven. What’s the problem?

[…] Stories like these are what has led me to this definition of progress for a startup: validated learning about customers.

[…] This unit of progress is remarkable in several ways. First of all, it means that most aggregate measures of success, like total revenue, are not very useful. They don’t tell us the key things we need to know about the business: how profitable is it on a per-customer basis? What’s the total available market? What’s the ROI on acquiring new customers? And how do existing customers respond to our product over time?

Secondly, this definition locates progress firmly in the heads of the people inside the company, and not in any artifacts the company produces. That’s why none of dollars, milestones, products or code can count as progress."

Wed, 15 Apr 2009 06:19:47 +0000