Talking to customers isn't enough
There’s a myth that most successful startups begin with an ingenious, hard-won insight. The founders leverage their industry expertise to identify a gap in the market, build a product to fill it, and customers flock. The reality, of course, is way more complicated. Real founding stories come in all shapes and sizes. There’s the hard pivot (e.g. Odeo to Twitter), the “why-don’t-we-just-commercialize-this-awesome-internal-tool-we-built” (e.g. Tiny Speck to Slack), the gutsy “build it and they will come” (e.g. Airtable, Notion, most consumer applications you use), and everything in between.
Point is, regardless of the approach, no founders have it all figured out on day one. Most founders start with a product idea, a vague sense for who might like it, and a hypothesis for what value they can provide. That’s it. If they’re really good, they may have a few customers willing to be design partners so they can figure out who really needs their product, why, and how much they’d pay for it.
But lots of founders we talk to are stuck somewhere in the middle. They have an amazing piece of technology, but no unique insight on their market. When investors hear this, they inevitably jump in and suggest that founders “talk to customers!” And that’s undoubtedly the right thing to do. But I find that advice is just too generic to be helpful. These founders have been talking to customers! That’s not the problem. And I don’t think the issue is that they weren’t listening either. In my experience, the problem is that the founders stopped asking questions. They heard what they wanted to hear and moved on.
My take? With this pithy line, Paul Graham traded brevity for utility, and created a generation of entrepreneurs who are racking up hours on Zoom, but learning very little in return. In other words, talking to customers isn’t enough. It’s how you do it that matters. And for that, my advice is to take a bit of inspiration from Taiichi Ohno, the architect of the Toyota Production System, and his elegantly simple technique for identifying the root cause of a problem called the Five Whys.
You’ve probably come across this before, but if not, the conceit is incredibly straightforward: to find the root cause of a problem, ask why five times in a row. Here’s a famous example (originally quoted here) of Jeff Bezos asking the Five Whys after a safety incident at one of Amazon’s fulfillment centers. An associate hurt his thumb. Why, Bezos asked? “Because his thumb got caught in the conveyor”. Why did his thumb get caught in the conveyor? “Because he was chasing his bag, which was running down the conveyor belt”. After a few more whys, Bezos had his solution. The associate needed a table on which to place his bag.
The conclusion is so simple as to seem silly. No new conveyor belt design. No expanded safety training. Just a table.
But this tracks with the unique market insights I’ve seen unearthed by companies in the Angular portfolio as well. As the founders traverse the whys, the answers get more and more complex until all of a sudden, a surprisingly simple root cause is revealed. But the issue, inevitably, is a Gordian Knot. Simple to understand, but pernicious to solve. The knot tied tighter and tighter due to technical limitations, institutional inertia and coordination challenges. But as a founder, this is the ground truth you need to derive your unique insights on the market and determine how you’ll operationalize those insights to cut through that knot once and for all.
As first-check investors, we don’t expect you to have it all figured out, so don’t worry if you’re still trying to unearth your unique market insights. Reach out. Let’s discuss. We can ask “why” together.