"Experience is what you get right after you need it." - James C. Wofford
Below are some of those startup lessons explained as a series of Matryoshka Russian stacking dolls, with the customer sitting at the center, encompassed by product, company and tribe.
Build The Product Around The Customer. This sounds obvious, and I thought I knew how to listen to customers, but I've never done it like this before, and now I see companies of all sizes missing opportunities to build value around their customers' needs.
At Armory, we've talked to over 150 prospective customers since starting the company just five months ago. We have learned from them and found consistent pain points across multiple customers that we are addressing as we build the product. Importantly, we didn't write a single line of code until we'd completed 100 customer conversations. And I don't just mean quick conversations -- I mean thirty to sixty minute deep dives with the target customers, where all the founders took copious notes, dissected the responses after the call, and looked for patterns across calls. We'd often ask if we could record the call and then re-listen to it to ensure we didn't miss anything the first time. It's an intense process, something I've never done before in any previous startups, and it's an approach championed by co-founder Ben Mappen, our Chief Product Officer.
For example, here's something we learned in our first month that surprised me:
The Armory team increased deployment frequency by over 300x at a previous company where we worked together and we experienced how incredibly valuable it was to deploy faster. Faster deployments led to happier engineers because they could actually see their code running in production, it led to us working on parts of the codebase that hadn't been touched in a long time because there was less friction to actually ship an update, and it enabled the executive team to focus on getting an entirely new line of business started. In short, when we started Armory, we were sure that velocity would matter to every company because we knew how transformational it had been for us, and we were excited about starting a company to bring deployment velocity to other enterprises.
But after talking to our first 100 prospective customers, we realized that what they are really looking for isn't velocity, it's safety. For much of the Global 2,000, software deployments are really scary. In some cases, prospective customers told us about how they still deploy software by taking their website down for planned maintenance, getting everyone in a room, pressing the "deploy" button, and literally crossing their fingers in the hopes that the new deployment didn't break anything. They do this on a Friday night so it affects as few customers as possible. But that means when something goes wrong, their team has to work over the weekend to resolve the issues. These companies are so scared of deploying software that they are literally turning their service off, ensuring the end user can't even access their service during an update, and then affecting employee morale by making them clean the mess up on the weekend!
So while as Armory founders, we were passionate about the velocity enabled by continuous software deployments, our prospective customers just wanted to be able to deploy with safety and reliability. If we hadn't teased that out at the beginning, we would have been solving the wrong problem -- one that did not yet resonate with our target customer. In fact, deploying faster is just about the last thing you want when you can't even deploy safely and with confidence today. And even though we know that once we can help our customers deploy more safely, they will then become interested in deploying with more velocity, our job is to listen to, and solve for, their urgent needs today.
It's hard to overstate the impact of this learning we teased out of our first 100 conversations. We are literally building a different company because of it. We thought we knew the problem we wanted to solve, but building the product around the customer taught us that we didn't.
If there's one opportunity I see large companies waste the most, it's usually this one. Established companies have a customer base they can learn from, but many of them have unhappy customers that feel unheard. It's the biggest irony because as a startup founder you desperately wish you could have actual customers to talk to, and yet large companies squander opportunities to innovate, often because they have existing revenue streams to protect, and innovating can mean disrupting their existing lines of business.
I've also seen large companies squander opportunities to learn from customers because they want to make their product (whether digital or physical) perfect before putting it in front of customers. Companies with established brands have a natural inclination to want to protect that brand and the consistency of that customer experience, and they have the luxury of time -- their existing revenue streams that remove the urgency of innovation.
The reality is more nuanced: A company's ability to segment customers into innovators, early adopters, early majority, late majority and laggards will enable that company to put the right level of innovation and ideation in front of customers that will appreciate it the most, and keep it away from the customers that won't.
Building a product around the customer begins at startup stage with listening to the urgent needs of target customers, finding patterns of needs that span across multiple customers, ensuring the need is something the target customer will pay for, and choosing a large or growing market to do all of this in. When the startup matures, it's about segmenting the customer base so as not to loose that ability to listen and innovate. Regardless of stage, not doing this spells doom for a company of any size -- it just takes larger companies much longer to die than startups.
We're applying the same approach to our product roadmap. Every single item there has been validated through multiple customer conversations. It's easy to think you understand the customer after a few conversations, but my advice to founders after doing this is to talk to 100 prospective customers before you write a single line of code, because patterns emerge when you talk to that many customers that you won't see otherwise. If anyone wants to learn more about specifics surrounding this process, like figuring out who your target customer is, how to run these calls, what questions to ask, how to get them on the phone, etc., I'll be happy to ask Ben if he'll write a blog post about it. Just drop a comment in below.
Again, all this sounds obvious, but if you're a startup founder, here's the litmus test: How many prospective customers have you really talked to? How many customers have you understood urgent pain points from? Where's the document with your recorded conversations and copious notes of each conversation for you to refer back to and tease commonalities out of? How much code have you written (or prototyping have you done) before truly understanding your target customer's needs?
Build The Company Around The Product: Companies with great products that work well and solve real problems create lasting, durable and scalable value. Facebook's advertising revenue is skyrocketing because its core product, the news feed, is very good. The iPhone was a hit a decade ago because it was a better kind of phone; same thing with the iPod before that. Having a strong product at the core of our company makes all the other aspects of the business better. It's easier to recruit new hires. It's easier to market strong products because passionate customers enable very authentic marketing initiatives (like mixing current and prospective customers at events). As Marc Benioff says in his book, Behind the Cloud, his tactic when building Salesforce was to turn "Adopters into Addicts." I really like that phrase, and we're focused on doing the same thing at Armory. But this approach only works when the product works.
Building the company around the product also means we provide very high levels of support to our customers so we can make sure they are happy with the product. We even retrospect with our customers twice a month to dissect where we're doing well, and what we can be doing better.
It's also easier to sell a good product vs. a bad one -- such an obvious statement that it pains me to even have to write it, but I've seen up-close how companies that prioritize sales over product hit a wall and can't scale past a certain level. Chasing deals will drive some revenue, but long sales cycles and a churning customer base will keep you from achieving escape velocity.
One really good piece of advice I got on this topic was from a fellow tech CEO who told me his business started to scale when he realized that the word "interesting" in sales pitches is a very bad signal. "Interesting" really means "not urgent enough for me to dedicate a budget to it right now, but interesting, so come back later and see if you've solved my urgent problem then." He started to treat "interesting" as a bad word for closing deals and used it to dig deeper and find out how he could make the product better in a way that would solve a more urgent need for the prospective customer.
Build A Tribe Around The Company: Tod Sacerdoti, the founder of Brightoll, has a great post on the importance of creating a Tribe in a startup (in addition to other invaluable startup advice). His perspective greatly influenced our goal of building a Tribe around Armory. A startup is, by definition, doing something impossible (otherwise it wouldn't be a startup), and doing impossible work requires a lot of understanding and support, not just from the people working in the startup, but also from the support network -- the spouses, families, and friends. We specifically prioritize events that will foster the creation of a Tribe, and we offer family-friendly perks and benefits, including free companion airfare anytime we send someone on a business trip.
We've applied these Matryoshka Russian stacking doll principles at Armory via three maxims we live by. These are dedicated to optimizing the product around the customer, the company around the product, and the tribe around the company:
I can blog more about these Maxims and how we use them to guide our decision making if anyone wants to hear details on that or some of the other things I've learned over my past startups (like doing 10 year founder vesting); just drop a comment in below. You can also read my CEO Manifesto on Armory's blog to learn more about how I'm building Armory.
 This second maxim deserves a blog post of its own at some point. It's a saying from Andrew Backes, our first employee, who uses it to make sure he's building the right thing at the right time, but it also applies beyond code to all activities we spend time on. We've happily adopted it as an Armory Maxim -- thanks, Andrew!
"It's also easier to sell a good product vs. a bad one -- such an obvious statement that it pains me to even have to write it, but I've seen up-close how companies that prioritize sales over product hit a wall and can't scale past a certain level. Chasing deals will drive some revenue, but long sales cycles and a churning customer base will keep you from achieving escape velocity."
WOW! What a great lead, so in depth and well-informed. I greatly appreciate the time you put in writing this!
Daniel, great post. How did you arrive at your 150 ideal customers. Did you know in advance you want to target Fortune 500? CTOs of SaaS startups? - Thanks
150 is a moving target -- that's just the current count. We're still in the early stages, and we still have a lot of feature prioritization to do.
But my new rule is to tell founders not to write any code until they've interviewed at least 100 customers. That's a solid litmus test, and few entrepreneurs I know have achieved that.
Re: knowing our target customer -- No, we've discovered our target customer along the way, and this too is an evolving process. Through all of these conversations + our first few paying customers we've gotten a good handle on identifying who the champions, stakeholders and buyers are. Still more work to do in this area, though, and it really deserves its own post.
Achieving strong product/market fit as a startup is arguably the most important thing a startup needs to get right, as early on as possible. One big barrier to doing that successfully is often finding customers that care enough about what the startup is doing to spend time helping the startup optimize its products for the customer's needs.
This gets especially hard with the Fortune 1000. Startups and behemoth companies couldn't be more different -- like oil and water. A startup lives in dog years, a large corporation in glacial years. Not only that, but corporations have to protect their existing revenue streams, which usually happens with a "if it ain't broke, don't fix it" mentality. But therein lies a dilemma: A profitable business today may become irrelevant tomorrow. History is littered with mega companies that failed to adapt: Kodak, Blackberry and Nokia, to name a few. Even the obscenely profitable Microsoft just axed its CEO for missing innovation in mobile.
So how does a big company spur innovation while not jeopardizing its existing business? Time Warner came up with an innovative program called Media Camp. Big props to Balaji Gopinath, the VP of Emerging Technology for Turner, for originally championing this concept at Turner Broadcasting.
My startup, Socialize, went through Media Camp at Turner last year, and we also participated in a Warner Bros TV program called the Brand Innovation (a big thank-you to our investor Chris Redlitz for turning us on to that one). These experiences allowed us to get an investment from Time Warner as well as sign a commercial agreement with them. That was invaluable to us as a startup, but it's also given Time Warner the ability to become very forward-thinking around social & mobile. It's truly been a symbiotic relationship.
This piece tells you Zac Cohn's story and awakening from being shy, to becoming a cutting edge athlete in parkour, to learning how to actually make sure you're building things that people actually want with your business time.
Zac is doing a GiveGetWin deal that has a mix of a group class and personal attention: Personal Training In How To Build Products That People Actually Want. It'll be an outstanding and insightful experience.
"7 Must-Do Guidelines To Build Products That People Actually Want"by Zac Cohn, as told to Sebastian Marshall
I was a pretty shy person when I was younger, but it started to change when I went with my dad on a business trip he was taking to San Francisco.
We went to a technology talk show called "The Screen Savers." We were talking to the handler -- the person who makes sure the live audience behaves.