Sunday Reads #186: Don't get your ideas from customers.
Sometimes, listening to your customers can kill your company.
Hey there! (and to recent subscribers, welcome!)
Hope you’re having a great weekend.
If you missed last week’s newsletter, here it is: What Roger Federer (the businessman) can teach us about pricing and value.
This week, let’s talk about the timeless Lean Startup advice - “Build what your customers want”. And let’s see why the real world is not so simple.
1. “If you ask people what they want, they'll say faster horses.”
I saw this on Twitter the other day.
I laughed out loud when I saw this. Steve Jobs would turn in his grave if the iPhone turned out like this!
But at the same time, it made me a little uneasy. After all, who hasn't done this?
As Aravind Srinivas added on Twitter, this actually happened to Evernote! Remember Evernote?
This actually happened to Evernote. They took the advice of “keep talking to your customers and ship whatever they want” as the only guiding principle for product development. And what ended up happening was paying users liked it, but the product become unintuitive and feature overload for the new user. To the extent that they had to rebuild a version for the new user.
Users don’t always know if they really want something. It’s your job to take the extra step to think on their behalf: whether they really need this. Or can what they ask be done through something much simpler. Or can you solve multiple problems of different users with one new redesign rather than a bunch of changes. The right principle is: “Keep talking and listening to your users, spend the additional time thinking on their behalf what they actually want, and ship that”.
Evernote listened to customers, and built a bloaty piece of software.
Why does this happen? Because:
If you ask people what they want, they'll say faster horses with more comfortable saddles that glow in the dark.
Don't get your ideas from customers.
Lenny Rachitsky has an interesting chart, on the origin stories of the biggest B2C startups.
Notice what's missing?
Talking to customers.
In fact, in his entire analysis, only one company came up with its idea by talking to customers - Doordash. (Aside: I wrote about the origin story of Doordash in 2020's Need for Speed).
This reminds me of one of my lessons from James Dyson's memoir. I wrote about this in What James Dyson learnt from making 5127 prototypes:
Priced at US$150, the compact silver and blue Walkman wasn’t cheap, while within Sony itself it was controversial and brave because it was unable to record, and no one had made a ‘tape recorder’ that wouldn’t do so before. Nevertheless, Sony’s Masura Ibuka − one of the Japanese company’s founders − hoped to sell 5,000 Walkmans a month. He sold 50,000 in the first two months. By the time production ended in Japan in 2010, more than 400 million had been sold worldwide.
With lightweight foam headphones and no function other than playback, the Walkman emerged. The press lampooned it. Even the name was ridiculous. The Japanese press was wrong, although the market hadn’t known it wanted a tiny personal stereo. When it saw the attractive little device and heard it in action, it fell in love with it. By the mid-1980s, the word had entered the Oxford English Dictionary.
I was also told that no one would want to see dust sucked up by a cleaner inside a transparent container. Simple market research confirmed this.
However, Pete, Simeon and I enjoyed seeing the dirt we had extracted in all its gory detail, so we ignored the market research. Curiously, and aside from the fact that the new cleaner was clearly powerful and with constant suction, this is exactly what customers did like to see. They were fascinated by the sight of just how much dirt they had successfully cleaned up.
So is talking to customers useless?
No it's not. But we often get it backwards.
The key lesson of talking to customers is not "Listen to what your customers want".
It's "Show your product to customers and listen to what they think".
As Steve Blank says in this video about his Lean Approach, yes - you need to get out of the building. But it's critical to have a hypothesis first.
As Dyson learned, sometimes even describing your product isn't enough. You need to show customers the actual product. Let them touch it, feel it, try it out.
And then observe how they use it. Where do they get stuck? Which features are magical? Lean in on them.
That's how you get to the "Aha!". Trial and error, and watching what clicks with your customers.
PayPal’s story is a great example of this.
Max Levchin was convinced about the company's hero product. it would be a Palm Pilot add-on, that let users "beam money" to each other. So that's what PayPal engineering focused on, investing millions of dollars.
But when they saw customers use their products, people weren't interested in that!
Instead, far more people were using the simpler "send money over email" feature.
So they decided to focus on that instead. The rest is history.
In a way, this is really how you get to Product-market fit:
Tinker with your product, to see what matches your target market.
See which customers are obsessed with your product, and which features they are obsessed with. Lean in.
It's like Customer Obsession™, but in the opposite direction.
Drive your clown car towards the most laughs, and you might fall into a gold mine.
Before we continue, a quick note:
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2. Golden Nugget of the week.
I liked this section from Morgan Housel's How People Think.
The best story wins.
Not the best idea. Not the right answer. Just whoever tells a story that catches people’s attention and gets them to nod their heads.
Sherlock Holmes put it: “What you do in this world is a matter of no consequence. The question is what can you make people believe you have done.”
Charles Darwin didn’t discover evolution, he just wrote the first and most compelling book about it. Andrew Carnegie said he was as proud of his charm and ability to befriend people as he was his business acumen. Elon Musk is as skilled at getting investors to believe a vision as he is at engineering. Rory Sutherland recently put it: “No one would have heard of Jesus if it wasn’t for Saint Paul.”
The most durable narratives are not the ones that stand up best to fact-checking. They’re the ones that address our deepest needs and desires.
This drives you crazy if you assume the world is swayed by facts and objectivity – if you assume the best idea wins. But it’s how people think. And it’s actually optimistic, because when you realize you can change the world by explaining an old thing in a new way vs. creating something new, you start to see so much potential.
3. Chart of the week.
AI-generated images have already reached 15 billion, in 1.5 years.
Human-generated photographs took 149 years to get there.
In Jan 2023's Lemon markets, dark forests, and a firehose of malicious garbage, I had written about the lemons problem of AI-generated content.
When it's easy to showcase a veneer of "work" without doing the work itself, then 99% of the work you see will not be real.
When it's easy to generate content without writing it yourself, then 99% of content will be AI-generated.
And if 99% of content is AI-generated, you're better off assuming that 100% is AI-generated.
When you see any content online, the default assumption will be: this has been written by an AI.
This won’t happen tomorrow. It might not happen for the next three years. But inevitably, it will happen.
The Internet will become "a market for lemons".
We're not there yet (thankfully). But you can sort of see it on the horizon.
4. An Associate Consultant would have been fired for this rubbish.
This is the greatest (and absolute worst) 2x2 matrix ever.
This is the chart that Steve Jobs used, when he announced the first iPhone on Jan 9, 2007.
In a way, this simple, atrocious chart created Jobs' reality distortion field. This irrationally brash and confident map reached out into the world, and made the iPhone the greatest consumer product ever.
But I still maintain:
If I made this chart when I was a consultant... I would not have been a consultant much longer.
That’s it for this week. Hope you enjoyed it.
As always, stay safe, healthy and sane, wherever you are.
I’ll see you next week.
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