Insights

If you’re unfamiliar with how venture capital funding works, it can seem akin to playing the lottery. Anyone can try, but only a few lucky entrepreneurs actually win. Fortunately, fundraising isn’t as random as a Powerball drawing and founders can improve their odds of success by engaging with right-size partners, recognizing what investors find intriguing, and understanding the technical aspects of term sheets.

The greatest expert on your customer is: your customer. I consider that rule number one on any customer development journey.

There’s a sign on the wall but she wants to be sure Cause you know sometimes words have two meanings

I had breakfast with two of my ex-students from Singapore who were building a really interesting startup. They were deep into Customer Discovery and presented a ton of customer data on the validity of their initial hypothesis – target customers, pricing, stickiness, etc. I was unprepared for what they said next. “We’re going to do a big launch of our product in three weeks.” I almost dropped my coffee. “Wait a minute, what about the rest of Customer Development? Aren’t you going to validate your hypotheses by first getting some customers?”

Entrepreneurs take note. More startups fail from a lack of customers than from a failure of product development. That’s why I believe strongly that every new product company should have a methodology for developing customers.

The culture of nearly every business-to-business software startup centers on products. Everyone talks about product innovation and disruptive technology, but I think today’s founders need more than great product ideas to launch successful companies.

A product business can double its revenue and quadruple its margins by moving to a service business. What is service? It's information, personal and relevant to you.

As a student of business, you may have come to realize that with a recurring-service-revenue business, you can not only double the revenues of the company, but also quadruple the margins. I recently spoke with an executive of a large European company who has a 50/50 business; 50% of their revenue is selling machines and 50% is service on those machines. He said, “In 2008 our revenues went down, but our margins went up.”