You Can't Use Customer Discovery for B2C Products

This post is a simple reminder to everyone out there starting a B2C web startup: it's risky and no framework or theory is going to change that.

Steve Blank’s Customer Discovery framework has helped an entire generation of entrepreneurs focus on the most important aspect of their business from day one: finding paying customers. But Steve Blank focuses on B2B products, and even more specifically, B2B enterprise products. These are products for which the number of potential customers is relatively small and each account is relatively large.

But what if you are building a B2C product? This business model aims to build something that a large number of customers will use, and any one customers will have a tiny impact on your bottom line. I’m talking about consumer web products, Netflix, Prezzi, and Instagram all fall into this category.

If that is what you are trying to build, the Customer Development process really only has three steps:

1. Build a minimum viable product (MVP).
2. Show it to people and see if they use it.
3. Rinse, repeat, or pivot.

The only input the Customer Discovery process has for this type of product is to build as little as possible in step #1. But this is hardly new information. Building a minimum viable product has become de facto industry advice for entrepreneurs and was good advice before the 4 Steps to Epiphany was published.

The takeaway here isn’t that Steve Blank’s advice is flawed or that the Customer Discovery process is useless. The takeaway is that unlike B2B startups, there are no straight-forward steps you can take to validate your B2C startup idea quickly without writing code.

So if you are starting a B2C web product, remember there’s no magic bullet when getting started. The best thing you can do is just start building a stripped down minimum viable product and get people using it. Which is essentially what it’s always meant to build B2C consumer web products. The best thing you can do is get started!

How to Choose A Name For Your Startup

Naming a product is tough. It's thankless, there's no objective criteria for success, and when you're first starting out, it can seem unproductive. But none of these are legitimate excuses for not spending a tremendous amount of time and energy picking that name. Later on, when you have paying customers, the name that shows up on their credit card statements will be a soothing reminder of your consistent and trustworthy brand. Changing it requires far more effort than most founders imagine, so do it right the first time. Here's a concrete step-by-step guide to finding a great name for your startup's product.

Create a list of possible names.

There are dozens of excellent articles that can get you started with the process of brainstorming possible names. Most of these articles do an excellent job of summarizing the most common guidelines, so I will only briefly mention them here:

• The shorter the name, the better.
• Choose something that can be verbed. "I'm going to Twitter this" works much better than "I'm going to ShortMessagesWithFriends" this.
• Choose a relevant name, if you are starting an invoicing company, bikemanufacturers.com probably isn't appropriate.
• Choose names with greater phonetic clarity. The word "phonetic," for example is terrible because it isn't clear when spoken whether it should be spelled "fonetic," "phonetic," "fonetik," or "phonetik." The proliferation of mis-spelled domains and product names have exacerbated this problem.
• For products that create new markets (AirBnB for instance), it won't be important to have a name with high SEO value like "bestbnb.com." If search discoverability is important, however, consider shelling out cash for a name that will rank for your keywords. You can think of this as money well spent compared to the Adwords, conference attendance, and content marketing you would need to do later to drum up traffic for a less discoverable domain.
• If you are struggling to come up with ideas, I recommend using Impossibility, which has the added benefit of only showing you available, non-parked domains.

Check availability and price.

For my second startup, we generated about 150 possible names to start. My cofounders and I checked their availability using InstantDomainSearch, and weeded out names that both didn't excite us and were unavailable. Since we were creating a product that was unlikely to benefit a great deal from organic SEO, we disqualified quite a few domains that were selling for more than a few thousand dollars. [1]

Gather relevant data.

Next, my founders and I rated each name on a scale of 1-10. Using this data, we created an average score for each name that equally represented our preferences. We sorted the names using our aggregate scores and chose the top 15.

We then create a Google form, and sent the top 15 names to 30 people who were either potential customers, close friends, or both. The form asked recipients to rate the names using the same 1-10 scale.

Using the data from real potential customers and those who were heavily invested in our success, we created a final index of each each name's overall goodness.

Steve Blank says that products rarely survive first contact with customers, and the same is true of names. In our case, we had an internal favorite which was disliked by our friends and potential customers. If we hadn't sought feedback, we would have chosen a terrible name!

Contacting Domain Owners

Domain names can be shockingly expensive [2], but for most product-based companies, it doesn't make sense to spend very much on the domain. Quality products take thousands of hours to build, brand, and market. Invest your time in a new name rather than fighting the baggage left by the domain's previous owner.

After getting feedback about our choices, we disqualified the lowest five options and focused on getting one of the top ten names. Of those, only one was not registered, two were unwilling to sell, two did not return our inquiry email, and the remainder quoted prices ranging from $32,000 to $700. The audience favorite, however, was listed for $788, which we ended up purchasing.

Conclusion

Considering the costs associated with re-branding, it makes monetary sense to invest heavily in choosing the best available name. It took us 20-30 hours to make our decision, and among the tasks associated with getting a new business started, I count those hours as some of the most valuable.

[1] Interestingly, the most expensive domain we discovered had a "suggested retail price" of $80,000.

[2] For kicks, you might enjoy checking out the list of the most expensive domain names ever sold. The current king is $35.6M for insurance.com.

I Want To Unsubscribe, Not "Manage My Preferences"

Spam is a huge problem. But my experience with the Gmail spam filter has been heavenly; it's been years since I've seen spam in my inbox promising to enlarge my manhood with a Rolex.

The big problem today is opt-in email. I have been actively unsubscribing from email lists for months. But newsletters, special updates, coupon offers, and other email marketing still arrive every day in droves. During the last seven days I have received 14 notifications from meetup.com, 6 Google+ friend requests, 3 Facebook event reminders, 2 notifications from job boards, 2 newsletters from services I've long since stopped using, 2 survey requests for services I've recently used, 1 LinkedIn update, 1 travel advertisement, and 1 airline advertisement. That's 32 emails in 7 days. I never consciously opted into any of these emails and have tried to unsubscribe myself as best I can.

But increasingly, I see emails sent from large, respectable companies [1] that provide me with no unsubscribe link. Instead there is an insidious trend towards "Managing Preferences," which invariably requires a log in, a brief search to find the unsubscribe option, and a form submit. And after all that am I unsubscribed? Apparently not because I keep getting messages. The companies assure me that I'm off XY email list while seemingly putting me on ZQW list simultaneously. Perhaps most irritating of all, I am spending an increasing amount of time browsing and checking email from my phone, and elaborate unsubscribe workflows thwart my ability to quickly opt out.

As the founder of a web startup myself I do not believe there is anything wrong with emailing customers. I don't even mind that I'm being opted into email lists by default; it actually makes a lot of sense. We did an A/B test a while back to see whether visitors to our site wanted to subscribe to five introductory tip emails [2]. Interestingly, we found that just putting the option to get email--we phrased the offer several different ways-- decreased signups, even though 78% chose to receive them, and getting them vs. not getting them made no difference in conversion past the free trial. Users didn't mind getting email, but they did mind being asked. We derive monetary value from sending customers email, and subscribing users by default causes fewer than 1 complaint per 10,000 emails sent. In summary, a company has every incentive to email its customers, and I don't begrudge those attempts. The problem is that these companies aren't respecting my ability to unsubscribe.

Skritter and CodeCombat newsletters go out to a lot of people every month, and folks seem to enjoy it. We easily get 10x the number of positive responses to our newsletter for every request to unsubscribe. I suspect the reason is that we provide a one-click unsubscribe link that respects people's time and privacy. If my company were 20x larger, we would probably want to send more and different email to customers. But complexity doesn't magic away a company's responsibility to allow innocents like me to easily opt out of their email presence. When a company asks me to "Manage my Preferences," they disrespect my time and fracture my trust.

[1] LinkedIn and TripAdvisor spring to mind as companies that have foisted this on me just in the past 7 days. I still can't figure out how to make the Trip Advisor emails to stop, even after wandering around the "My Account" section on my laptop for several minutes.

[2] The tip emails were a series of 5 emails sent to users during their trial periods that introduced them to site features. They were 100% instructional and intended to increase engagement. We didn't put marketing or sales materials in them.

How Netflix Can Ruin Your App's Value Proposition

When you are running a subscription-based web app, cancellations are a part of everyday life. At Skritter, we realized early on that knowing why people cancelled would be of critical importance. We ask everyone who cancels to let us know why, and a surprising 50% of people actually do. We get these missives via emails and I track them to keep a pulse on what we need to improve. And so it was a fairly routine morning a few weeks back, while reading one such cancellation email, that I was struck by what the user had written:

"I have no money these days. Great program, but $10 is a bit too expensive. Would sign up and keep it for 1/2 the price. Netflix costs less than you guys."

Comparing prices between products is nothing new of course, and the big players in any space will always influence prices for the little guys, but this was personal for two reasons. First, I use Netflix all the time and personally love the company and their product. Second, I also happen to run a small startup which charges more per month than the big red giant I so adore. This user's comment was damning because while Skritter helps people a lot, it was hard to argue that Skritter is more fun or better value than renting 20,000 streaming movies.

This got me thinking about web app subscriptions as a whole. For founders, choosing a price for your product is difficult. It's also one of the most important decisions you will make as a business owner. So it's no surprise, faced with such an important decision, that many founders--ourselves included--look to the market for pricing clues.

The market for subscription services is homogenizing and falling. Back when monthly subscriptions were relatively unusual, there was less consensus regarding what an online web application should cost per month. Was it $50? Or was it $2? There was and is no one right answer for all teams. Unlike the market 2 years ago, however, customers seem more certain today how about much web apps should cost. This certainty is being driven by relative giants, the Netflixes and Xbox Lives of the world, who seem to be settling on a base price between $5-10/mo.

Just as people browsing the App Store expect paid apps to be a few dollars [1], so too do customers now expect to pay a certain amount for consumer web applications.

Big companies are providing customers with price anchors which will increasingly impact customer perceptions of value. While individual web apps will always have unique aspects that enable variable pricing, I don't think the day is far off when a young entrepreneur starting a B2C web app will unthinkingly set his price at $8.95/mo because that's what everyone expects.

The trend, however, is worse still. Because large consumer internet brands--like the industrial widget manufacturers of old--can leverage similar mass production economics, the perceived "correct" cost of a web app is likely to decline over time. Netflix already benefits from a virtuous cycle of user adoption, which allows it to reap more profit by lowering prices. There will be some basement price at which Netflix will no longer want to lower their price, but given that it used to cost $14.99/mo to get worse service than I currently get for $7.95/mo, I suspect that price is lower still. [2]

For those of us in the far remote niches of the internet, I believe that companies like Netflix have an increasing ability to ruin the perceived value add of B2C products through increasingly lower prices. And here I thought the selection was the worst part of Netflix streaming.

[1] $4.03 for iPhones, and $4.37 for iPads, according to marketing firm Distimo.

[2] And perhaps more importantly, the predictability of revenue streams.

Increase Your Productivity by Getting Busier

This post was originally published on 12/22/2011.

At the beginning of 2011, my work schedule was light. I could stop work on the startup early without stressing out, I took longer lunch breaks, and I spent the evenings recreating. I watched a bunch of movies that had been on my list for years, I caught up on correspondences, and I thought about and wrote more blog posts. I went to sleep when I wanted, woke up when the sun rose and generally lived it up. From the outside, I was living the lifestyle business dream, if only temporarily, while other projects wrapped up.

I was, however, deeply unhappy. After the first week or two, I found that watching a lot of movies at once was kind of boring, that I could correspond with others much faster than they could reply, and that it didn't take long to write all the blog posts I had been planning. But much worse, I discovered that for me, being productive had a large impact on my happiness and I simply wasn't efficient when I wasn't busy. Without hard deadlines and time limits, coworkers and customers, it was always acceptable to dally and watch an episode of Community. Or stay up late reading Reddit. Or hit the snooze button more than once.

Just to be clear, I didn't have motivation problems at first. I found that the less I had to do, the less I had to worry about using my time efficiently, and this led to a rapid decline in productivity. The whole slowdown process took 2 weeks.

Starting in the summer, work started picking up again. Even though I was working more than full time, I realized I was accomplishing more on my personal projects than I had when a two hour lunch break was no problem and my days ended at 4PM.

In short, I've found that the right kind of productivity (as in, working on projects/work that matters to you personally) tends to increase as you get busier. There is a linear relationship between how much you have to get done in a day and how much work will get done on personal projects.

There's an old saying that goes "if you want to get a job done, give it a busy person." This isn't a new or revolutionary thought, but the inverse is new and revolutionary: "if you want to get a job done yourself, get busier." I can't speak for everyone, but I've definitely found this to be true.

Have others found this to be true? If so, have you found any hacks that increase productivity even more?