Bill, now let's turn to actually going out and finding the 10
customers.
How do you do it?
The first thing you have to do is, you have to go back
and look at your target customer profile.
That we did early on in this process.
And that defines who the customer is at a general level.
That's what we used to do our total addressable market.
We ended up picking someone out of that who as a persona
we thought best represented it.
But within that target customer profile,
we did a demographic analysis of it
and we did a psychometric analysis of it.
What's the difference?
Well, demographic is-- here's how old they are,
here's how much money they make.
It's things that you can identify.
Psychometric analysis-- here's the types
of things they like to do.
They have an iPhone 6.
They like to watch cable TV.
It's not those things that are just
factual from a demographic standpoint.
But these behavioral type of things
could lead you to find customers as well.
They'll tell you where their watering holes are.
They'll tell you things that you can identify about them.
And in the process of doing primary customer research,
you must have met a lot of people
so you can go back to them and present them with more data
that you've generated over the course of the process right?
Absolutely.
I think it's very important when you go out and do
primary market research to understand, this is pure gold.
If you do a good job, this is pure gold
that you can mine over and over again.
And so you're going to interview people and you might say,
oh person x isn't in our target customer group.
But keeping that data is very important
because that may turn out later.
You might want to come back and say maybe
that person should be in our target customer group.
Or potentially you go back and say, oh person x is clearly not
in our target customer group.
And having an anti-persona is sometimes as valuable
or more valuable than having the persona.
Because it's not just about selecting what you do--
it's about deselecting those things that you will not do.
Steve Jobs once said, "I'm as proud of the things that I
haven't done as those things that I have
done.'' That's disciplined entrepreneurship.
Let's explore two scenarios.
On the one hand, you can go out, find 10 customers,
and receive very positive feedback.
On the other hand, you can find data
that is inconsistent with your earlier images of persona.
How do you deal with both of the scenarios?
What's going to happen is, you're
going to actually have both of those.
You're going to go out and sell your full life cycle use
case to a customer.
And they're going to validate certain parts.
They're going to invalidate other parts.
And they're going to refine a whole lot of it.
In business to business markets, it
is common to get letters of intent
from interested customers to ask customers
to pre-pay for the solution.
Is this something you'd recommend in this step?
Now, it's a little early in the process,
but I think this is a really good point to think about.
In B2C, you can go out and try many different customers
and not worry so much about it.
In B2B, when you're talking about businesses,
there's a smaller set of customers.
And if you go out and talk to them,
you want to have a very positive engagement with them,
because there's a very good chance you're
going to go back to them later.
A great example of this was, some of our students, Andy
and Melinda, they went out and they
were starting a new company.
And basically they went to landfill sites
and they came up with a kind of mesh network
to capture the methane that comes out
of that to use it for energy.
They went out to landfill sites and they tested the idea
on them.
They refined the idea and then they
started getting very positive feedback.
What they did at that point was, while understanding they
were still not committing to do the product,
the customers wanted to sign letters of intent.
They really wanted to get a commitment.
And so at that point, Melinda and Andy actually
got letters of intent from them.
But they had the caveat that the product could change over time.
But it was extremely compelling for them.
They knew that they were on to something good.
And this convinced other potential employees,
other advisors and investors that Loci Controls
was on to something good.
It took the risk out of the new venture.
Your list of customers is a very important asset for a company.
What recommendations do you have for entrepreneurs
in protecting that asset?
That's a really good point, there, Erdin,
is that a lot of times-- and this
is probably at MIT more so than other places-- people think
all the magic is in the technology.
It's in the intellectual property
that they filed with the patent office.
There's the other side of the equation
that's equally important.
And that's what we refer to as customer IP.
This is an asset that you've developed over time with which
required skill, investment and maybe some luck.
And once you've developed this customer IP,
it is extremely valuable asset as well
that you shouldn't just go put up on your website.
Because if you do that, then someone else
will come along with comparable technology.
And then they'll say, oh, these are your customers.
Let me go talk to them.
Maybe I can get it at a lower price.
So don't do that, any more than you would show people
your patent application.
Well, Bill we covered a lot today.
What should be the key takeaway?
The key is you're getting more confidence,
because up until this point we put a stake in the ground.
It's like in golf, we took our first shot towards the hole.
But we're not there by any stretch.
Identifying the next 10 customers
gets us much closer to the hole.
It gets us hopefully on the green.
And that confidence is not only important to us
as the founding team, but we're also
going to need to convince other customers.
And those customers, because of our confidence,
will be easier to convince, because we
know we have is closer to the pin, so to speak.
And it will also help us to get advisors, investors,
and other key employees.
So this is a very important step for us.