For a long time, Ben was one of the pillars of the Montreal startup ecosystem. He co-founded B2B startup Standout Jobs, was a founding partner of early-stage accelerator Year One Labs and co-authored the book Lean Analytics. Now in Halifax, Nova Scotia, he is VP Product at GoInstant and author of the popular Instigator Blog.
Here’s the interview Ben gave for the book:
EG: What kind of customer development experience did you have prior to starting Standout Jobs? Where did your initial validation framework come from?
Ben Yoskovitz (BY): Prior to Standout Jobs, I was running a B2B software company in the project management space. Initially we built the application to solve our own problems with managing projects, and then found other customers that had similar problems (often it was our customers, b/c we were largely a consulting / service company at the time.) That was not a very rigorous validation process. As that company matured, we did get a bit more rigorous in terms of validating specific market segments where our product was finding more successful traction, but it wasn’t a validation framework per se.
EG: Why should startups decide to go in B2B? What are some of the benefits?
BY: People decide what to do, not startups. People should decide what they want to do based on what they like doing, and what they want to work on. Of course this tends to –not– lean people towards B2B startups, because they don’t have particular experience in a specific industry, or they might even want to escape an industry and do something different. I’m a fan of B2B startups because the paths through success are clearer. They’re not easier, but they’re clearer: solve a very painful problem and charge people money to do so.
EG: What are the main challenges of B2B?
BY: People underestimate the difficulties in the B2B space, and they don’t invest the time to really understand the root problems they’re looking at. They often just scratch the surface. People also go into B2B startups without any insight or knowledge of the industry they’re tackling; they just see a “big market” and assume they can punch a hole in it. That’s naive and dangerous.
EG: What are the main differences between B2B and B2C startups?
BY: The path to revenue in a B2B startup is usually clearer. The identification of a problem and customer is also clearer. If you’re not solving a significant problem in a B2B startup, you’ll know about it pretty quickly, whereas that can be hidden in a B2C startup. B2B startups don’t need the same virality or velocity of B2C startups either.
EG: How can a startup starting from scratch select a market?
BY: I’d recommend you have at least some experience in the market you’re choosing, but you don’t have to be an expert. Some insight though is helpful. Markets need to be really well defined. Saying, “We target SMBs” doesn’t count–that’s not a market in my mind, it’s just too broad. Go very specific — SMBs of a specific size, in a specific industry, that buy at a certain time of year, where you’re targeting the VP of Sales. That’s a market.
EG: How can you build credibility / visibility in your target market?
I’ve always had success leveraging my own personal brand, but I’ve also invested a lot in corporate blogging and social media to extend my reach (and my company’s reach.) You want to put yourself in a “thought leadership” position fairly quickly: blogging is a good way of doing that, white papers or e-books as well.
EG: Who should you meet first? How can you identify the people you should meet?
BY: I would recommend trying to meet the people that you think are the buyers, and validating the problem with them. If you’re going bottom-up (trying to infiltrate a company with an enterprise product that spreads virally) vs. top-down (going to a buyer and having them “impose” the product across the organization) then you want to go after users, and validate you’re solving a problem for them.
EG: How can you motivate people to help you early on?
BY: People are generally willing to help, I’ve never had a huge issue with this. You just need to ask. Make people feel smart and important, play to their egos.
EG: What validation process would your recommend to new startups in B2B?
BY: Steve Blank’s customer development process is pretty solid for B2B startups. Identify a problem, talk to 10-20 people that you think are customers to validate that the problem is painful enough, show them a solution and validate that it’s what they want, build it out and start selling it. That’s a simplified explanation of a fairly complex and challenging process, but it’s the right framework in my mind for staying focused and mitigating risk, while moving as quickly as possible towards building a real business.
EG: What are the objectives of the initial meetings?
BY: To validate or invalidate that you’ve found a problem worth solving.
EG: How do you make sense of the information collected during the interviews?
BY: You can try scoring problem interviews – I haven’t completely validated this as a way of helping with making sense of things, but I think it makes sense to try and quantify the qualitative results. You also have to get good at interpreting people’s feedback. We actually cover this fairly extensively in the book. Ash Maurya spends a fair bit of time on this as well.
EG: How should you re-engage prospects after the first interview?
BY: At the end of the first interview, if it’s gone well and you think you’ve validated the problem with them, ask them to come back and show them the solution (in some form: slide deck, paper prototype, working prototype, etc.) If they’re really excited, they’ll ask to see the solution before you ask them to show it to them.
EG: How should you structure your pitch? What should be your objective?
BY: The goal is to validate or invalidate that the solution you’re proposing makes sense and addresses their concerns. You’re trying to get to a Minimum Viable Product that’s doable within a reasonable time frame and meets their initial needs. If you’re going to charge right away, then ideally they’re committing dollars at the end of this meeting AND referring you to others.
EG: What type of offer should you make (pilot, discount, other)?
BY: I think this depends on the business and the model you’re thinking about. You don’t necessarily have to offer them anything; they shouldn’t be interested simply because they get the solution heavily discounted, but you can always throw them a carrot. Maybe it’s free support, or something else–but I wouldn’t focus on this at all.
EG: How can a startup tell when they have found product-market fit?
BY: I haven’t seen a definitive answer / formula for this. But I focus typically on engagement -> growth -> revenue -> LTV and then CAC (customer acquisition cost). Growth and revenue might be flipped depending on the model you’re going after. If you have good engagement (usage) numbers, and then build an engine for revenue + growth (a repeatable or near-repeatable business model that seems to be scaling well) you’re at product-market fit. You may still get tripped up on LTV and CAC, but I’d probably say “you’re at product-market fit” before you’ve completely addressed those.
EG: Do you have any advice / ideas to help startups validate B2B products faster?
BY: Don’t be shy. Get out there and talk to people that you think are your customers. Remain as intellectually honest with yourself as you can, and don’t fake yourself into believing you’ve found something. Be disciplined in everything you do. I like the Lean Canvas as a tool for this, at least initially. Really understand your buyer–who is she, how does she buy, why does she buy, what can she buy, etc. Again, don’t focus on these macro-markets that have no relevancy to you early on, get laser focused.
EG: Thank you Ben!
Download the First 6 Chapters for Free
This sampler covers the differences between B2B and Business-to-Customer (B2C) product-market validation, shows you how to define your vision for success, find early adopters, select market opportunities and assess a venture's risk. Download The First 6 Chapters Today »