How to Use Customer Discovery to Build a Startup: The Definitive Guide


How do you uncover unmet needs in the market?
How do you discover what your customers want?
How do you decide what to build?
How do you find out what businesses will pay for?

Does it start at the drawing board?
Is it about listing thoughts and ideas in Excel?
Throwing spaghetti at the wall, hoping something sticks?

If you’re reading this, you most likely have a hunch that the answers to those questions will be found outside of the building, not inside, starting with the voice of the customer, outside-in.

But voice of the customer comes in many shapes and forms…

Maybe it’s user tests, maybe it’s analytics, maybe it’s surveys, maybe it’s support feedback, maybe it’s focus groups, maybe it’s some other approach to gathering user data.

There are dozens of ways to capture user feedback. Those can all be useful at some stages of your business, but when you’re getting started on a project initially…

  • You can’t rely on support, analytics, or customer feedback because… you need users (and a product to get those);
  • You can’t do focus groups, user tests, or eye-tracking research, because you need something for users to interact with
  • Running surveys is dangerous at best. Want it or not, surveys limit the scope of what you learn because they force you to frame your questions just to get respondents to answer.

Early on, your goal should be to discover the absolute best opportunity for your business, to uncover the underlying narratives and the reasoning of your prospects.

And the best way to do that is through a customer discovery process, leveraging series of customer interviews.

There’s nothing more impactful on your early stage business than truly understanding the people and businesses you’re building for and selling to.

For each hour of customer discovery / customer development, businesses tend to save 5 to 10 to 20 hours of wasted development time.Cindy Alvarez, Lean Customer Development Author

Although this data point comes from Microsoft, it tends to hold true across both large and small organizations.

But There’s a Method to Customer Discovery…

In this complete guide, I’ll show you exactly how to find the unmet needs of your customers, identify what to build, and continuously refine and improve your pitch and targeting.

Table of Contents

Let’s get started!

The Challenges of Customer Discovery in B2B

So, what’s so different about interviewing customers in B2B?

Let’s talk about the nature of businesses…

Imagine today you call Emma. Emma’s the wife of an ex-colleague of yours. She’ll talk to you, no biggie.

Buying Influencers – Coach or Recommender

She works at ABC Co, a company in just the market you’re thinking of for your new file storage product or feature.

You tell her about it. She gets excited.

Because she’s getting excited, you get excited as well.

You turn around, and your team also gets excited.

Emma and you agree to reconnect 2 months from now when your product is ready. At this point, you’ll close the sale and your business will be ready for full-on sales.

Now…

Emma’s really nice. She’s your ex-colleague’s wife after all. She really wants to help, so she’s encouraging you with your idea.

The problem is…

  • Emma doesn’t have purchasing authority;
  • She’s also not responsible for data storage;
  • She may be a VP, but she has no say over security and data management at ABC Co.

At ABC Co, the person responsible for security and data management is Mike. As the VP of a growing division, he has no time for this, so he delegates to Julie, his director of security. She makes all of the technical decisions.

Decision-making unit – The Technical Buyer

Now, Julie’s a great manager. Since her employees will be the ones using the product, she’ll want to get their take on any new product purchase. Especially since THEY HATE THE CURRENT SOLUTION.

Last year, Julie lost a good employee because of it. That’s still fresh on her mind.

If you manage to convince Julie and her team, you win.

Well… not quite… because, in an effort to reduce costs at ABC Co, the purchasing department gets to approve (or reject) all new technology purchases. And, in that team, Karl will try to slow down the purchase.

Mapping the Buyers – The Saboteur or Gatekeeper

Karl’s wife works for a direct competitor of yours, but you won’t know that.

This is complex sale in one organization.

Now, unless you’re going for a market of one, which you shouldn’t do, you’ll need to find a way to sell the same product repeatedly at DEF Corp, where the VP of IT is responsible for all storage decisions and the company doesn’t have a purchasing department; at GHI Ltd where the CEO makes all purchase decisions, and at countless other businesses you might have never heard of.

In B2B, decision-making processes are complex. On average, 6.8 customer stakeholders are involved in purchase decisions (that’s actually up from 5.4 in 2014!).

You need to build deep relationships with several stakeholders and provide value to all of these stakeholders if you want your product to be purchased, used, and renewed.

There are a lot of things you’ll need to uncover, so you can deliver and sell value repeatedly and effectively in organizations.

Overwhelmed?

Don’t be.

It’s an iterative process. I’ll show you exactly how to navigate the key parts below in this complete guide.

Ready to get started?

Who Am I to Tell You All This?

I’m the author of Lean B2B: Build Products Businesses Want, a framework used by thousands of entrepreneurs and innovators around the world to find traction in the market.

It’s a proven process:

  • Loopio in Toronto used Lean B2B to get from 0 to 10 customers. They now have more than 600 customers, and recently raised $11M in funding;
  • NLR Aerospace in the Netherlands use the Lean B2B methodology to prioritize innovation projects across the organization;
  • Verafin in Newfoundland, Canada has over 21 teams using the methodology to find and solve customer problems.

I’ve personally conducted thousands of customer development interviews, for dozens of businesses and startups as a founder, employee or consultant.

I’m also a serial entrepreneur, having experienced first-hand the successes and failures of customer discovery (read: Getting Out of Recruitment — The Story of B2B Startup HireVoice).

Along the way, the ability to do effective customer development may be the most valuable skill I’ve learned.

Done right, it gives you the ability to find game-changing insights and create new value. It can help you close sales, delight customers, and sustainably differentiate an offering on the market.

How Customer Discovery Works

Let me introduce the Double Diamond design process created by the UK Design Council. I adapted it for customer discovery during the writing of Lean B2B:

The Customer Discovery / Customer Development Process
The Four Steps of the Customer Development Process

It has both divergent and convergent phases, exploration and confirmation phases, where you learn from prospects and validate learnings through testing until you reach clarity and predictability in your business.

This post is all about continuous customer discovery. To this end, we’ll focus on the first 2 steps.

Customer discovery is not just for startups. It’s also very effective for innovations, growing organizations, and established organizations hoping to refine their offering or market segmentation.

Interviews and customer discovery can be used to gather insights throughout the business lifecycle.

You should never be done learning about your market and customers.

In fact, if you think you’re done learning about your market and customers, you’ll become complacent and open the door to disruption, like some of these unfortunate companies did:

Customer Development & Innovation – Disruption

A good way to think about the customer discovery process is that it is like the process of polishing a precious stone or a diamond to make it ever-more effective and impactful.

A diamond is actually the drawing you see on the cover of Lean B2B:

Lean B2B: Build Products Businesses Want

Getting Started with Customer Discovery

So, how do you actually get started?

To successfully bring new a innovation to market, a lot of things need to line up.

You need to find the right product for the right market, but also the right price point, business model, pitch, and acquisition channels in order to gain traction.

The challenge is that all of these variables are co-dependent, which is why entrepreneurs tend to talk in terms of fits:

I think you get the point.

The whole thing is a bit like a Rubik’s cube. By changing one part of the equation, you run the risk of breaking what you’ve already done on the other side.

This is why it’s so important to quickly find a fundamental truth for your innovation. A first validated assumption; something you can reliably build on in order to move forward and prioritize the next steps of your customer discovery program.

Although you can always pivot and change your assumptions as you move through the customer discovery process, some decisions will be much harder to revert than others.

Now, maybe the core assumption you start with is provided as part of the scope of your innovation:

  • The target market is X;
  • The buyer will be Y;
  • The underlying technology will be W.

But… if that’s the case, you have to take those requirements with great caution.

Take a step back and ask yourself whether those are real fundamental truths, or your team’s assumptions disguised as truths.

At HireVoice, my previous startup, we made the mistake of starting with what we felt was a core problem (employee brand monitoring), when this “problem” was actually just a symptom of a bigger challenge (a company’s branding and recruitment efforts).

This, right away, sent our customer discovery and customer validation process in the wrong direction. It made us lose a lot of precious time and money; time and money we didn’t really have to start with.

Where to Start

So, where should you start?

I created the following model during the writing of Lean B2B to highlight that:

Customer Discovery – Hypothesis Pyramid

Your vision, as an innovator, is your foundation; what often unites and mobilizes your team. The market is the group of businesses you’re targeting; the industry and/or market segment.

The jury is the buyer group, the people you’re actually selling to. The problem is what your product ultimately needs to alleviate.

Finally, the solution is obviously your product.

The lower you go on the pyramid, the more certainty you need to have. These assumptions will be harder to change once you’re in the process of building your startup.

Now… many businesses start with a product idea or a solution.

They then try to find markets and customers for those solutions.

It’s not impossible (I’ve done it, you’ll see below) but, more often than not, that process takes a long time with no guarantee that it will lead to the discovery of a market.

Not all products have markets, unfortunately.

Starting with a problem, leads to similar issues.

Sure, you know what problem you’re trying to solve, but you then need to figure out who in the market experiences this problem most acutely.

Starting with a business problem is easier than starting with a solution, but it’s still not the most effective path for your business.

Starting with a problem might also mean missing out on much bigger and better opportunities.

Now, the better way to kickstart customer discovery for a startup or new innovation is to start with a market, building off driving assumptions, your vision, and learning from stakeholders.

With the Lean B2B methodology, the first hypotheses are around the market, not the problem; it’s important to focus on the humans behind businesses.

When you start with people, you’re much less likely to invent a problem and start with false assumptions.

Customer discovery is about people and understanding how to repeatedly create and deliver value for those people.

How to Find the Right People to Interview

So, who should you interview?

Above, I compared customer discovery to the process of refining diamonds, but customer discovery is also like drilling for oil (I like metaphors. :-).

Oil fields are not alike.

You might not know exactly where you’ll find oil, but you can use best available data to find the areas that might have the best oil patches as starting points.

So, what are you trying to achieve?

Who would most benefit from this innovation? Who would have the problem you’re thinking of?

You can get a first feel on your market assumption definition…

  • By reading up on secondary research (e.g., surveys, reports, etc.);
  • By researching the competitive landscape;
  • By analogy, looking at what happened in similar markets or industries;
  • By meeting with third-party analysts like venture capitalists and industry analysts.

Although I strongly recommend starting with a broader definition of the market, and narrowing it down as you learn, this may take time; time you might not have.

How broadly or narrowly you’ll target the market will depend on how well you already know the market or industry, and the amount of time you have.

Do you know the specific roles or people who might benefit from your innovation in the market?

You’ll want to start with a hypothesis and create the ideal customer profile of your early adopters:

What Are Early Adopters

Early adopters have a great understanding of the technology landscape both inside and outside of their organizations. They also have a higher tolerance for risk and a greater ability to see the potential of new technology than most people.

We typically recognize early adopters by these signs:

  • They’re actively looking for a competitive edge;
  • They have the ability to find new uses for a technology;
  • They seek out and sign up for early trials and betas;
  • They like to be unique and share new products (it makes them feel good);
  • They exert some kind of technological leadership in their companies (although they may not be in a leadership position);
  • They will use a product which isn’t complete.

You’ll want to define a common profile of organizations.

The subtleties and differences in profiles will emerge as you learn and move forward doing customer interviews.

To get consistent data points, you’ll want to target a specific role within organizations.

As a rule of thumb, the founders are typically the best point person for companies under 100 employees. They act a bit like quarterbacks, forwarding requests, projects and assignments to other team members.

The best entry points for organizations between 100 to 250 people are at director-level. At this stage, functional leaders tend to have their own budgets and greater operational independence.

For larger organizations, you’ll need to uncover the start points via customer discovery.

It’s coming up below. 👇

Your target profile will be a hypothesis (maybe CEOs are the wrong place to start for your startup). We’ll refine these hypotheses as we move forward.

Note that the people you’ll interview can’t be friends or family members, and that if you can’t find early adopters, you can’t build a business.

If you can’t find early adopters, you can’t build a business.Trevor Owens, Lean Startup Machine CEO

How to Find Early Adopters

The first question to ask is whether you’ll be interviewing prospects face-to-face or over the phone.

Face-to-face customer interviews are always preferable.

With face-to-face interviews you’ll get undivided attention. It will give you the opportunity to learn about the work context and the organization. You’ll also be in a good position to start building relationships.

But this won’t always be possible…

If you’re not based in a prospect-rich environment for your target industry, you’ll need to get comfortable with phone or Skype customer interviews.

Although phone interviews are less effective than face-to-face interviews, they allow you to explore more broadly across countries and sectors.

Now, there are 2 main ways to find early adopters:

1) Via your professional network, asking for references;

In this case, you rely on other people to help you find good candidates. This tends to be less precise and might mean that some people will agree to speak to you solely based on the shared connections (remember Emma?).

2) Via expressed needs through online or offline watering holes, places where prospects gather for pleasure or for work.

In this case, you can be more precise with recruitment and have a higher level of certainty that those people care about the problem space. It might be harder to convince them to speak to you, which in my opinion is often a blessing in disguise as it forces you to refine your communications.

For this approach, you’re looking for pools of users. Where do the people that care about this problem space spend time?

  • At a conference around the topic?
  • On community sites like Quora, GrowthHackers or AngelList, depending on your target?
  • Maybe they can be found in directories of professional associations? I leveraged directories for both Highlights and HireVoice. For Highlights, we target the HubSpot agency directory. It’s just a list.
  • By analogy? People who care about X will also care about Y.
  • On forums? A friend of mine is a power user of Airliners.net. Everyday, he logs into the forum. Chances are, you’ve never heard of this forum, but if you work in aviation, that’s where you go to ask for help.

There are many ways to identify the folks you’ll want to reach out to for interviews. By far, the most effective way is to focus on places and platforms that will help you find targeted lists of prospects.

You can use the guide we created on finding early adopters to get started fast.

How to Recruit Early Adopters for Customer Discovery Interviews

So, why would influential business stakeholders want to speak to you?

They have time to kill?
They want to be nice?
Just ‘cause you asked?

People are busy enough.

If you’re reaching out to managers, more meetings are generally not what they’re after.

A well-functioning organization will usually have 3 to 5 key priorities.

Depending on the internal structure, those priorities will be funnelled down to directors and vice-presidents. Those VPs and directors will then break down the objectives into tasks that managers and team members will be accountable for executing on.

Now, each person in the company hierarchy will have successes, challenges, and objectives unfolding from those top priorities.

If you’re speaking with stakeholders with the foresight to define their own solutions – early adopters – they’ll want to engage based on the promise of a competitive advantage or a way to solve their problems.

Although there might be a lot of other reasons for them to want to engage, this is the core reason you’ll want to focus on.

Once we know why they should care, and we have a list of 40+ potential early adopters, we’ll want to reach out and get started recruiting interview candidates.

Contacting Early Adopters for Customer Interviews

There are a lot of ways to connect with early adopters. You can call them, which can be fast and effective, you can use social media platforms like Twitter or LinkedIn, you can meet them face-to-face at conferences, or you can use referrals and warm introductions to get to them.

Although each of these approaches have their own advantages, I’m increasingly-convinced that, unless there’s a conference or event coming up, cold emails – direct emails – are the way to go.

Not only do cold emails allow you to target the exact person you want to interview, they also allow you to test and evaluate value-segment fit; how well your pitch resonates with that segment.

You’ll need 4 things to run effective cold email campaigns and get interviews:

  1. A template;
  2. A high-level value proposition;
  3. A lead-in;
  4. The right email addresses.

I’m able to convert 30% of my cold emails into interviews by adapting the following template:

Subject: International growth

Hi Max,

I enjoyed your 2-part series on employee retention. I had tried to find a job with startups in Hong Kong when I was living there and I know it’s not easy.

I’m contacting you because I have a software company trying to improve how businesses expand internationally.

I’m not looking to sell anything but, since you have so much expertise with international growth, I’d love to get your input to make sure we don’t build the wrong thing.

Can I schedule a quick call with you next week? Monday or Tuesday perhaps?

Let me know, thank you.

Etienne

By re-using a proven template, you get to control some of the variables, which allows you to better assess email response (or the lack of response).

You’ll need a value proposition / problem to capture the attention of prospects. What is this about? What are they trying to achieve? What problem do they care about solving?

In the early days, when both the stakeholder and the exact problem won’t be entirely clear, you want to start with a broad problem or opportunity definition like, for example, international growth ☝️.

This will let stakeholders imagine a solution if the pain point resonates; it will increase the likelihood that they respond.

I often use the problem space in the subject line of the email, which helps create curiosity.

Since you don’t want your emails to be perceived as junk mail – business stakeholders do get a lot of unsolicited emails – you’ll want to use personalization as a way to stand out in the inbox.

Use their first name, and create a personal connection with a personalized lead-in. This will help establish relationships and capture their attention.

Based on my experience, these are the types of lead-ins that work best, ranked by their effectiveness:

  1. Personal success (job promotion, award, achievement, etc.);
  2. Company news (related to them, their work function or a significant company achievement);
  3. A shared experience, acquaintance, hobby or interest (ideally, not something about work);
  4. Recent posts (on LinkedIn, Medium or on their blog);
  5. Recent LinkedIn or Twitter updates.

You can find this type of information from your prospects’ social media profiles, their company or personal blogs, or by doing a search for them on Google.

You can find email addresses using various tools like Hunter.io and Zoom Info. But by far my favourite is a Gmail plugin called Clearbit Connect. It has some of the most accurate data (97% accuracy according to YesWare research), it’s fast, and it gives you 100 free credits per month.

You just input the domain name of the organization, search for the specific person, and voilà!

Once you have emails, lead ins, a value proposition, and a template, you’re able to put it all together.

You can send the emails manually, or use a cold email platform like MailShake or Woodpecker.

Using a cold email marketing platform will allow you to get stats to monitor and improve your customer recruitment efforts.

I personally use Streak. It allows me to send mass-personalized emails directly from Gmail. Here’s a quick tutorial I created to show how I use Streak.

Once you’re ready, hit send.

The factors that will influence the response rate will be 1) your targeting, 2) how well the problem resonates with the prospects, 3) the template you use, 4) your subject line, 5) your business or personal credibility, and 6) the timing of your message.

You can experiment with many of the variables and see how they affect the number of customer interviews you get.

How to Schedule Customer Interviews

CEOs and executives live in their inboxes.

If you’re contacting them on weekdays, even evenings most times, you’ll be able to see many prospects open your emails.

You’ll usually get the bulk of responses within a weekday or two.

You’ll want to respond fast and make scheduling work on their schedule.

Be appreciative. Offer a few time slots and make it easy for them to respond and book a time.

Although in sales it’s common to do 7 to 10 followups, I wouldn’t recommend doing more than 2-3 followups for customer discovery interviews.

Evaluating the Email Response

I used to think that cold email metrics and response rates were nothing more than that, metrics.

But in the past year, I probably reached out to 1,000+ business stakeholders for customer interviews.

The template I used for most of these reachouts was the email template you just saw.

The only parts that changed from segment to segment were 1) the people I was reaching out to and 2) the value proposition. Yet, the results were completely different from one series to the next.

Often times, the response I got to the emails was actually in line with the interest level I got during the customer interviews.

This is by no means a hard and fast rule, and it’s certainly not statistically significant but, when you have a benchmark for your value proposition or your target audience, these kinds of customer discovery metrics can be useful.

This is the value of controlling the variables with a proven email template.

How Long Does It Take to Schedule Customer Interviews?

Getting a first feel for a market segment will take at least 15 to 20 interviews. That’s for the purely divergent interview phase.

The more precise the segment and roles, the fewer interviews you’ll need to do to get a clear picture of the pain points and realities.

Assuming a positive response rate of 20%, you’ll need to invite 75 to 100 prospects to get 15 to 20 interview participants.

Should you reach out to 100 people in one go and get it over with?

The short answer is: No.

Since we’re working with hypotheses, and those hypotheses can be proven wrong, doing 15-20 interviews with the wrong people can be a drag.

The shorter your customer discovery evaluation cycles are, the faster you’ll learn.

To that end, it’s best to start with 40 invites, do 5-8 interviews, evaluate the fit, and re-adjust if need be.

It can go really quickly. You could send invites today and do 8 interviews within a week, no problem.

This will allow you to adjust (or move forward), based on data and interview quality.

If you’re starting out, you also need to take into consideration that some of your interviews won’t generate valid data.

This is, unfortunately, part of the learning process.

How to Conduct Customer Discovery Interviews

Time to get started interviewing prospects.

The first thing you need to understand is that interviews are not discussions.

You can’t evaluate the success of customer interviews the way you evaluate the success of discussions.

It’s not about being liked, having an enjoyable discussion, or leaving on a high note.

Customer development and customer discovery is “advocating for the business”, your business. It’s not something you do to makes customers happy.

To that end, the best interviews are 90% listening and 10% talking. You have to learn to stay quiet. This usually makes entrepreneurs feel uncomfortable, initially at least.

Asking “Good” Customer Interview Questions

You learn very little from closed questions like: “Do you like your job?”

Answer: Yes/No

90% of the learning will come from asking open questions like ‘Why’ or ‘How’, and by following up on emotion digging for the truth. Emotion is prioritization.

  • What do you mean by that?
  • Can you explain that a little more?
  • Why do you say that?
  • How do you feel about that?
  • Sounds like there’s a story here, can you tell me more?

Early on, the most important thing you can do is listen and truly learn.

To make sure you do that, avoid mentioning your idea and don’t view customer discovery as a process to land customers.

If you do, it will create a needy vibe.

Go in searching for partners or industry and customer advisors.

Moving forward, you also need to realize that everyone lies.

  • …because they don’t (yet) trust you;
  • …they think you’re planning to compete against them;
  • …the real answer doesn’t make them look good;
  • …it’s not the perception they’re trying to create;
  • …they’re being overly-optimistic.

As rules of thumb:

  • Anything involving the future is an over-optimistic lie;
  • The best predictor of future behaviour is current behavior;
  • People will lie if they think it’s what you want to hear;
  • If someone thinks your ego is on the line, they’ll give you mis-truths and compliments.

Always keep this in mind. You want to ground your innovation in truth and reality. This will be a lot easier if prospects feel comfortable and open up to you.

So, build relationships, make sure prospects understand you’re not planning to compete with their organization, and that everything they say will be kept confidential, and won’t be shared outside of your organization.

You need to overcome their defences to get to the truth.

It’s also easier to do face-to-face interviews because the prospects will be more focused.

When you’re on a call, there might be unexpected distractions, notifications popping up, colleagues showing up, emergencies, etc.

So you want to make sure you maintain your prospects’ attention the whole time through.

For this, it’s best to meet one person at a time. You want to learn about their personal pains, not their employer’s or their team’s.

Group interviews makes people defensive. It forces prospects to maintain a certain image in front of their colleagues, which often prevents prospects from truly opening up.

If you’re uncomfortable meeting with a high-ranked prospect (it happens), get them out of their office for lunch or coffee to even the odds.

A neutral location will make you feel more comfortable.

How to Structure Interviews to Get Valuable Insights

The biggest challenge when you’re starting out is making sure you’re getting valid data consistently to learn and, eventually, transition from pure discovery to confirmation and validation.

For this process, the real goal is learning, not sales or revenue.

You want to create a structure and a script to capture consistent information around your key assumptions.

Your goals with the first series of interviews are to:

  • Understand the problem space;
  • Validate the existence of the problem;
  • Evaluate the target segment.

As a rule of thumb — and this will depend on how talkative your prospects are — you can usually squeeze in three to five divergent questions in a 20-30 minute interview.

For this reason, it’s really important to always know what your top 3 questions are.

For the first generative interviews, they might be:

  • What are your top three challenges?
  • How much do you feel this problem is costing you/your company?
  • Within the organization, who’s responsible specifically for [specific problem]?

But we’ll get back to those…

You’ll want to plan for a structure like this:

  1. Greetings (two minutes): Greetings are exchanged and the prospect is made comfortable through shared context.
  2. Qualification (three minutes): You ask questions to understand the role and situation of your prospect.
  3. Open-ended questions (20 minutes): The bulk of the time allotted to the interview falls in this stage. Your goal is to understand and prioritize the problems of your prospects.
  4. Closing (five minutes): To move the relationship forward, you try to close a prospect on another meeting.
  5. Note review (ten minutes): After the meeting (and without the prospect), review your notes to make sure you’re not losing information and to be able to quickly adjust to the feedback.

Prior to the discussion, you’ll want to research the prospect thoroughly. This shows respect, and can keep you from asking questions that could have simply been answered by a Google search.

The greetings phase should last about two minutes.

In this phase, you’ll want to make small talk. This will help you (and them) feel more comfortable.

You can ask a question about their home city, a hobby, a mutual acquaintance, a blog post, or anything else that helps establish rapport.

You can then transition to a simple intro:

Thanks for taking the time to meet/speak with us.

We’re a young company working on [value proposition]. We’re currently exploring a few product alternatives.

We’d like to understand your needs and reality to avoid building the wrong thing.

I have roughly 10 questions for you today.

Before we begin, I’d like to stress that we don’t have a finished product yet and our objective is to learn from you — not to sell or pitch to you.

Does that make sense?

From there, you can move on to qualification for about 3 minutes:

There, you’ll ask questions to understand their role and situation within the organization.

This will allow you to establish patterns between roles, business dynamics, and the problems you’ll uncover.

Don’t feel like you need to talk or fill the silence.

Sample customer interview questions:

  • How would you describe your role as [role]?
  • What does success look like for you?

Then follows the meatiest part of the discussion: Open-ended questions.

The bulk of the time allotted to the interview falls in this stage. Your goal is to understand and prioritize the problems of your prospects.

Ask open questions, follow emotion, encourage complaints, ask follow-up questions, and don’t forget to empathize.

Sample customer interview questions:

  • Can you tell me how you deal with [general problem space] (e.g. recruitment, growth, finance, etc.)?
  • What’s preventing you from [specific problem] (e.g. acquiring customers, recruiting talented staff, etc.)?
  • What have you done to fix [specific problem]?
  • When was the last time you tried to solve that problem?
  • Why hasn’t it completely worked?
  • How much do you feel this problem is costing you/your company?

It’s often a good idea to use the first question to abstract your problem hypothesis by a level to explore more broadly.

For example, if you’re exploring social media recruitment, you can ask about “recruitment.” Starting with a general, “Tell me about how you deal with recruitment?” will help broaden the discussion.

Follow that up with 60 seconds of silence to set the tone. Let the interviewee talk.

For this phase, other core questions will be “How much is this problem costing you?” or “What are the implications of that?”

This helps you differentiate a problem they’ll want to pay to resolve and something that’s just somewhat annoying.

The last phase is about closing. Plan for five minutes there:

The core question will be:

Within the organization, who’s responsible specifically for [specific problem]?

This question helps home in on the existence (or absence) of the problem within the organization:

  • If they’re responsible for the problem, jackpot! 👍
  • If it’s ‘no one’, the problem either doesn’t exist or it’s not a priority at the moment;
  • If they say ‘someone else’, ask to speak to that person.

Don’t try to sell. Don’t tell them what you’re going to do.

That said, you want to close them on:

  • A new meeting to explore the problem further;
  • Referrals to confirm the existence of the market and have more discussions with prospects.

As you go through the series of interviews, it’s important to have a script and stick to it.

It’s okay to adjust the phrasing or add questions, but being able to compare the data points is a key part of the customer discovery process.

Get Started Fast – Download my Latest B2B Customer Interview Script for Free

Code of Conduct for Customer Interviews

As you’re conducting the interviews, I strongly suggest recording the discussion.

You can use your phone, your computer, or a recorder (if they are still around).

Make sure the prospect agrees to being recorded (you need to ask) and communicate that the recording will only be used for internal reference.

I prefer re-listening to interviews than interrupting the flow and holding back the discussion by taking notes.

The reality is you’ll miss 50% of what’s being said during the interview if you’re trying to take notes.

Record, take notes, and re-listen to the interviews with as much objectivity as possible.

Sometimes it will make sense to bring a partner in for the interviews.

In those situations, one person can lead the discussion while the other takes notes.

It might make your team appear more credible and will definitely accelerate share back with the team. Any more than two interviewers typically intimidate participants.

Don’t judge. Make sure you smile during the interviews, even when it’s just over the phone.

Being non-judgmental, empathic, and friendly helps prospects open up and feel more comfortable sharing truths.

Keep the discussion casual, and don’t forget that you’re building relationships.

Whenever the person starts to complain, listen. People will be more specific with complaints than praise. Specific examples will really help you learn about the problems and reality.

You can repeat the answers back to your prospect for further clarifications and to validate your understanding. Do this by saying, “So what you’re saying is…”

Keep an eye out for body language: strong reactions, posture, body positioning, language, tone variations, and eye movements can tell you a lot. Do they seem nervous? Tentative? Bored?

Try to restore your rapport and reassure them (“This is very helpful”). You can also ask what made them roll their eyes, sigh, laugh, frown, smirk, etc.

Prospects who are leaning forward, asking a lot of questions and who really get involved in the discussion give signs of interest. Prospects who are easily distracted, look through their emails or messages, slouch and talk without answering the questions are typically disinterested.

If you’re meeting face-to-face, have a look at your surroundings. Office walls and sticky notes can be gold. They can tell you about what truly matters to your prospects.

Watch out for compliments. Compliments can be very misleading and derail your interview process.

Focus on facts and what people actually do.

Unless you try to close someone, it’s hard to really know if the meeting went well, so make sure you close on referrals or a followup meeting first.

How to Turn Customer Interview Data into Valid Insights

It’s a good idea to write down your notes and impressions right after the interview to make sure you’re not forgetting anything.

Then, with the benefit of distance, listen to the interview.

By re-listening to the interview, you’re able to:

  • Objectively assess your performance as an interviewer;
  • Evaluate the quality and validity of the information collected.

Share the recordings (not your notes or a summary of the interview) with colleagues and team members.

If you share summarized versions of the interviews you won’t be able to get feedback on your interviewing techniques or the customer discovery process you’re going through.

It will also limit your team’s interpretation of the customer data; they’ll have a hard time helping you identify lies and half-truths. You might also have a hard time getting them to buy in afterwards.

Let your team and partners make their own opinions. This will lead to better internal discussions and limit the risks of working off false assumptions.

As an aside, if you’re a solo founder, you might want to get trusted advisors or mentors to listen to some of your interviews. This added step proved extremely useful for me when we were working on HireVoice.

Centralize customer interview data for rapid comparison and analysis by focusing on:

  • Qualification data (Role, Goals, Organization type, etc.);
  • Answers to your big questions (Business problems, priorities, etc.)
  • Next Steps/Follow ups/Referrals.

We’ll do the analysis below.

How to Improve Your Interviewing Skills

But first… Were you able to…

  • Sustain the interest of your prospect?
  • Make your prospect talk and dig deep into their problems?
  • Direct the discussion without controlling it?
  • Abstain from selling a vision or trying to convince your prospect?
  • Steer clear of confirmation, interviewer or response biases?
  • Learn about your prospects’ problems and situation?
  • Earn references or a follow up interview?

In other words, did you learn what you wanted to learn?

Run a retrospective on how the interviews went and how you could improve your interviewing techniques. Make the appropriate adjustments and move forward.

As a rule of thumb, if you were unable to find consistent problems and goals, you don’t yet have a specific enough customer segment.

Adjust your recruitment and keep slicing your segmentation into smaller pieces until you do.

Categorizing Customer Discovery Interviews

Fellow author Rob Fitzpatrick says that “You can’t build a business off a lukewarm reaction”.

To that end, you can’t simply average the response you got from the stakeholders you interviewed. If you were to do that, you’d focus on an opportunity that wouldn’t be particularly exciting for any of your prospects.

What you’re looking for is a problem…

  • In a business which is already aware of the existence of the problem;
  • That has already tried to solve the problem;
  • Is unhappy with the current solution to the problem;
  • Has a budget to get the problem fixed;
  • Knows how to evaluate the impact of a solution.

You want to be solving one of the top 3 problems of the organization. A problem that’s so visceral that they can’t live without a solution.

It’s getting harder and harder to get businesses to adopt technology from new, unproven vendors.

For this reason, if you’re solving a problem that’s business-critical, businesses will be more likely to overlook the costs of implementing a new solution (training time, risk, effort, etc.).

Home in on a core problem, park the remaining customer interview data and refine your segmentation.

Averages have no value here.

You’ll be better off expanding your segmentation to find more stakeholders with similar pain points, than building a solution to a secondary problem or building a nice-to-have solution.

When to Stop Doing Customer Interviews

At this point, you’re really looking for the existence of a market.

A market is a group of customers who share the same pain and will refer to one another for buying decisions.

So, you’re looking for:

  • A number of potential customers;
  • Sharing a pain, problem, or opportunity;
  • In a talkative market, willing to share the solutions they use.

This means that a good problem-market hypothesis requires several businesses in one segment sharing the same pain.

If you haven’t found real problems and goals, go back to the drawing board. Book more interviews, get prospects to open up, follow emotions, and find their biggest pains.

If you only find 1 business with a key pain, try to figure out what makes this business unique and recruit more prospects like them to confirm the existence of a market. Don’t build for a single customer, they may be an outlier, and lead to the creation of a market of one.

If you find businesses with the same pains across different segments, home in on the most lucrative segment, refine your recruitment, and keep going.

This phase of customer discovery ends when you’ve found at least 5 businesses in the same segment that share a similar pain or problem.

But let’s take this even further:

Analyzing the Customer Discovery Data

It’s important to understand that business problems were not created equal.

Choosing which problem to solve is one of the most critical decisions you’ll make in the course of the customer discovery process.

So, how do you identify the problems that matter most?

As we mentioned, it’s very hard to build a business based on a problem outside of an organization’s top 3 priorities.

So, the first key part of the equation is a problem that causes a lot of pain:

We can tell that a problem is painful if:

  • The same person repeats it frequently with passion during the interview. Repetition is a sign that the problem is current and top-of-mind.
  • The company is actively trying to solve the problem or has assigned a budget to solve the problem. In that case, the company thinks it’s critical and they have a vision for the solution.
  • The problem is frequently listed in the top three of your early adopters. If it’s not part of the top five, it may be too far ahead of the market.

That pain, however, must be the pain of a buyer or someone who has access to a budget in the organization:

How far removed is the budget? How is that money currently being spent?

You want to make sure that your business can actually get paid for solving the problem.

You also want to make sure that you’re actually going to be able to build a solution that’s incrementally superior to the current solution.

So, what’s the current solution?

Excel? A manual process? Legacy software? Another product?

If they haven’t looked for ways of solving the problem already, they’re not going to look for (or buy) your solution.

You’ve maybe heard of the 10x rule stating that your product needs to be 10 times better than the known alternative.

Well, your product needs to be 10x better than the competition on a key evaluation criterion to get businesses to buy and switch over. Is that actually possible?

What kind of ROI can you expect if you solve this problem? What impact will it have on the organization?

  • Will it increase revenue?
  • Decrease costs?
  • Increase customer satisfaction?

Those tend to be the main reasons why businesses buy. It will be easier if you can frame the value around one of these three reasons.

The clearer the outcome for the customer, the easier it will be to create a powerful value proposition.

Lastly, you’ll want to make sure that there’s as little market education required as possible.

Is there currently competition? Would you need to create a completely new paradigm?

You want to build a business, not educate the market on the virtues of solving the problem you’re hoping to solve.

When you take a step back, which parts of this are clear and can be considered as validated learning?

Now, which parts would you consider gaps preventing from making a sound decision?

Is it safe to move forward?

This analysis will help create specific tasks for validation. It will also help you refine your customer discovery process.

What to Do Next

According to research by CB Insights, the top reasons for startup failure are:

  • Lack of market need (42%);
  • Lack of cash (29%);
  • Wrong team (23%);
  • Too much competition (19%);
  • Pricing power (18%);
  • Poor product (17%);
  • Business model (17%);
  • Ineffective marketing (14%).

The biggest risks for your innovation will thus often be:

  1. Being able to sell the product and generate revenue;
  2. Being able to get it adopted and deliver value in organizations;
  3. Being able to effectively reach the buyers and decision-makers in businesses;
  4. Being able to differentiate your offering on the market and generate awareness to get the growth engines going.

Notice how these uncertainties stack up.

At this point, you’ll want to create an uncertainty map to understand your biggest risks and assumptions.

Focusing specifically on the risks with the potential to kill your innovation, identify the next step, decide on the next 3 key questions, and move forward.

In the next few sections, we’ll look at the next few steps of customer discovery and validation.

How to Define the Product Value & Expected Business Outcome

There are three parts to product-market fit:

  1. Revenue – being able to sell the innovation;
  2. Retention – being able to get the innovation used repeatedly over a period of time;
  3. Growth – being able to generate positive word of mouth from the product.
  4. The next phases of customer discovery are about capturing data on these 3 parts of the business.

    But by far, the one that hurts the most innovations is not being able to monetize the value created.

    To that end, the next phase is about finding balance between what your product does, the impact it has on organizations, and how much you charge for it.

    For this phase, your goals will be to:

    • Define / find agreement on the problem definition;
    • Define / find agreement on the outcome / expected return on investment;
    • Identify how to differentiate your solution on the market.

    Those questions will help enrich and re-validate your understanding of the problem.

    A lot of innovation issues stem from mis-alignments around defining what the problem really is. It’s best to get clear agreement on what the problem is as soon as possible.

    The problem statement is foundational. According to entrepreneur Lenny Rachitsky, it needs to be short, clear, reference a “need” that’s not being fulfilled, include a what and a why, and be agnostic of a solution.

    Here are good and bad examples:

    • ✅ Users are dropping off at too high a rate at the final step of the signup flow.
    • ❌ We need to build a loyalty program.

    Similarly, if your prospects have a different take on what needle the innovation needs to move, you won’t be able to build a clear solution.

    Now, since we have a better idea of the problem space, we can use our refined problem hypothesis to recruit new interview participants.

    This will help us confirm the existence of the problem in a wider market.

    It can also be a good idea to reconnect with the interview participants who agreed to do follow-up interviews for confirmation.

    In those cases, you’ll want to follow up simply and refine your recruitment from the previous phases.

    During the interviews, you’ll want to do problem drilldown, define the whole product (the minimum set of requirements), and understand how the value will be calculated.

    Here are a few sample customer interview questions for this phase:

    • How are you currently solving this problem?
    • How do you typically work around this problem?
    • What are the minimal criteria required to work with your company?
    • How did you decide on your current solution? What made this the best option for your organization?
    • What tells you it gives you a positive ROI?

    Get Started Fast – Download my Latest B2B Customer Interview Script for Free

    You’ll want to get to the root causes of the problem by asking why repeatedly. I recommend using the 5 Why technique for this.

    By the end of the interview series, you should have clarity as to what the exact problem is, a confirmation that this is a real problem you can solve, and have an idea of the expected ROI / what outcome needs to be delivered.

    • Problem: What problem is this solving?
    • Why: How do we know this is a real problem and worth solving?
    • Success: How do we know if we’ve solved this problem?
    • Audience: Who are we building for?

    These will go a long way in defining the pitch you use moving forward, but they also won’t be enough.

    To move forward, you need to confirm that, if you build a product that meets their needs, they’ll buy.

    At this point, and before going too far, you’ll want to make an offer and pre-sell your solution to get your first customers.

    You can do this over the course of a followup discussion – a solution interview – where you show a demo of a minimum viable product or a presentation, explain the value and the process for development, give a price and pre-sell it, by sticking to your price point and ask the prospects to buy your solutions.

    If they don’t buy, understand why before moving on.

    Pre-selling a product is the best way to confirm market need.

    I go into way more details on building an MVP, conducting solution interviews, and closing sales in the Lean B2B Course, but this should help you get started.

    How to Use Interviews to Map the Buying Process & Find the Influencers

    Once you have a clear picture of the pain point, the value businesses look for, and you’re able to confirm that a few organizations are willing to spend money to solve the problem, you’ll want to start understanding how sales play out in these organizations.

    Buying Influencers – Coach or Recommender

    Remember Emma, Mike, Julie, and Karl?

    Selling in B2B usually means convincing a group of influencers within an organization – a jury – to buy into your solution.

    Looking back at our previous example, the purchasing team (Karl) acts as the economic buyer.

    The economic buyer — through a form of veto over purchases — acts as gatekeeper of the budget. For this reason, he/she tends to be concerned with the ROI of the solution.

    Julie, not Mike her boss, acts as the Technical Buyer, the person most concerned that your solution does what you say it does.

    Julie’s team members are the user buyers, the people who will be using the product from day to day. Because of that, they’re particularly interested in the user experience of your product and the specific value that it delivers.

    Whether or not you’re able to quickly identify these buying influences, remember that someone always plays these roles. Maybe a single person plays all roles in a small business, but the influences are always there.

    Don’t make quick assumptions. The CEO is not always the decision maker and the technical buyer is not always in IT. You need to do your research.

    Just to complicate things, you’ll also need to consider Blockers or Saboteurs.

    Blockers are customer stakeholders who try to prevent a deal. They may: dislike your organization as a supplier, prefer a competing supplier, or want to maintain the status quo. In our case, Karl was the blocker.

    And if you’re lucky, you can get a Coach or an internal Change Agent to help you understand the internal dynamics of the organization.

    This is the role Emma could play for your organization, or at least she could help you find an appropriate coach in the organization.

    Based on early customer interviews, you’ll want to start mapping the internal processes, budgets and influencers.

    To do this, you’ll want to dive into problem ownership, decision-making and buying processes, and internal influencers.

    At this point, you should be able to have more regular interactions with the stakeholders who have bought your product.

    You’ll want to figure out who the four or six people making the decision are. Who also needs to get involved in decision-making?

    You can start mapping the process by asking questions like:

    • If you identify the need for a new product in your department, how does your team typically go about purchasing the solution?
    • Where does the money come from?
    • Who gets involved? At what moments?
    • Who else in your company shares these problems?
    • Who would most benefit from solving this problem?
    • Whom else in your company should we be speaking with regarding this problem?
    • Who is involved with doing X?

    Your goal is to find a way to repeat sales and identify ways to give value to the entire buying team.

    So, who needs to get involved?

    How to Use Interviews to Find Growth Channels & Refine Your Messaging

    Once the buying process and the influencers are becoming clearer, take a step back. Look across the various organizations you sold to.

    Are there any patterns? What are the key roles?

    This information will help drive and improve your early sales process. But it definitely doesn’t end there.

    To move things forward, set up customer acquisition processes, and improve your close rate, you’ll want to understand the people behind those roles.

    Take the lead. Work with your buyer or your change agent to get warm introductions to the other influencers in their organizations.

    Your goal is to:

    • Understand their realities;
    • Understand their win results – what they hope to gain by working with your company;
    • Understand their doubts and evaluation criteria;
    • Find ways to reach them effectively.

    You’ll want to ask customer interview questions like:

    • What are your objectives this year?
    • How will you be evaluated this year?
    • What keeps you up at night? Why?
    • What are your top three challenges?
    • How do you feel about the current situation?
    • What would be the impact of solving this problem?
    • How are you currently handling problem X?
    • What are the minimal criteria required to work with your company?
    • What will tell you that this solution’s implementation is successful?
    • Who are the visionaries you respect?
    • What are some of the blogs, websites or publications that you read?

    Sift through the data. Look for inconsistencies or clashes with your understanding of the business direction to find potential blockers.

    You can use this information to refine your pitch and handle objections.

    Reassuring the other buying influencers and meeting their expectations will improve the certainty that your solution actually gets used and adopted.

    Understanding what visionaries they respect and where they go for product research will help you find channels to scale your growth efforts once you’ve found product-market fit.

    There are a lot of things you can learn at this stage to improve your pitch and the fit of your solution within organizations, so keep at it.

    Get Started Fast – Download my Latest B2B Customer Interview Script for Free

    Continuous Customer Discovery

    As I mentioned before, customer discovery is never done.

    As customer development creator Steve Blank says, teams that build continuous customer discovery into their DNA become increasingly smart and adaptive to the ever-changing reality of the market.

    Because customer discovery allows you to find the optimal setup for your current model, teams with continuous customer discovery processes tend to build more successful companies and increase their longevity.

    Although, in this guide I’ve shown the full process from idea / vision to identification of a clear market and a sellable value proposition, it really is a continuum of discovery and refinement.

    What I’ve shown were the Lean Canvas hypotheses explored through series of customer discovery interviews:

    Customer Discovery – Lean Canvas Hypotheses

    Your business will probably have a different start point than what I’ve shown, but it doesn’t mean that you can’t follow a similar process.

    Start by understanding what you know that’s true and be really honest about what you don’t know: the gaps in your model.

    Many businesses will start with a product, a problem, or a few clients maybe, but they can still go through extensive customer discovery to clarify the rest of their business model.

    Customer Development: A Case Study

    Customer Discovery – Psykler Logo

    Following the publication of Lean B2B, I joined Psykler, a relationship profiling tool used during complex sales processes.

    When I joined, the founder had already signed up customers in pharmaceuticals, aviation, and consulting. Usage was low. I would say the business hadn’t really found product-market fit.

    We sat down and identified the 4 or 5 verticals where we felt Psykler could provide the most value: pharma, enterprise software, consulting, integrators.

    We did a short series of customer discovery interviews and realized that slow-moving industries, like healthcare, telcos, education and defence, were very hard to sell into.

    Sales required strategic preparation. Teams had to run account development meetings… where Psykler would be very useful.

    When customers were selling to large companies, there were many buyers; it forced complex sales and team selling with multiple salespeople working on the same deal.

    In the service industry, long-term relationships and upsell are key. There’s a big reward if you understand the full organization you’re selling in.

    We also realized that companies selling strategic IT services like business intelligence and security were forced to sell high to CIOs, CTOs, and VPs of Technology. This meant that there was a high cost of failure if those meetings didn’t go well.

    Based on all the validation that we did, we realized that Psykler, in its current form, was best-suited for consulting firms in the security industry.

    As we refined our pitch and understanding of the segment, the product really started to click with early adopters.

    From there, we could improve the product and marketing to meet the needs of our segment.

    This is a case where the business started with a defined product, and worked its way into figuring the best market for its product.

    Your customer development skills will improve as you go through the process.

    To make sure you’re truly learning and making progress, you have to be entirely clear as to what you know – your validated learning – and what you still need to validate – your hypotheses.

    Keep polishing those diamonds!

    Customer Discovery Isn’t Everything

    I’ve now shown you my complete process for continuous customer discovery.

    However, there’s more to building products that businesses buy than customer discovery:

    The Lean B2B Course will show you how to reach product-market fit in B2B.

    It goes way deeper into:

    • Finding early adopters;
    • Building credibility in the market;
    • Reaching decision-makers;
    • Selecting the right interview questions;
    • Defining a solution;
    • Closing pre-sales;
    • Building a minimum viable product;
    • Evaluating product-market fit;
    • How to apply the Lean Startup methodology in B2B;
    • Etc.

    Check it out, and thanks for reading!

    More on Customer Discovery

How to Raise a Seed Round in B2B

Tim Chaves, CEO of ZipBooks on How to Raise a Seed Round in B2B

This is a guest post by Tim Chaves.

Tim is CEO at ZipBooks, online accounting software for small businesses. Tim previously founded and sold two small businesses, and holds an MBA from Harvard Business School.
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Whether you’re a solopreneur or a team of founders, odds are, you’ll need funding if you want to grow quickly.

Fundraising is foreign territory to a lot of B2B companies—and inexperience can lead to regret. On the other hand, having a war chest is almost always a competitive advantage, so given the right terms, it can very often be worth the risk.

While fundraising is rarely neat and tidy, there are some steps that can help you raise a seed round with a bit more confidence.

Know if You’re Ready

If you want to have success raising a seed round, you’ll need to be ready first. So how do you know if you are?

First, you have more than an idea. I often see idea-driven founders trying to line up meetings with investors. Usually, this doesn’t work. Investors want proof (at the very least, hope) that your business is going to succeed. Research product-market fit by selling something, even if it’s not ready for the big stage. Gain some traction. Build an exceptional founding team. Investors need to believe that you are the only people who can capture this market potential.

Second, get some skin in the game. In some cases, you may need to tap into your own savings, but be cautious about being too aggressive with your own funds. Find novel ways to show that you’re all in, without betting the farm, especially if you have others relying on you. In my case, I built the first version of what’s now ZipBooks on the side while in grad school, and that was enough to get investor interest.

Third, practice telling your story. Start at the beginning, think back on the dream that birthed your company. Your origin story gives you purpose and drive—it’s part of your unique selling point. Make sure that you can convey this clearly to investors: what problem are you solving? And why now? Practice your pitch with family, friends, even low level investors. Once you’ve got the kinks ironed out, you’re ready for the big leagues.

As a bonus, you’ll know you’re ready if you’ve devised a way to be profitable—even without funding. This is a great sign to investors (and yourself) because it’s a promise that you’ll succeed no matter what—raising money will only help you do it faster.

Plan Your Attack

Once you’ve built up your idea and your story, plan out your fundraising strategy.

Paul Graham famously advised founders to talk to investors in parallel. While arranging fundraising meetings may not be time-intensive, the process of fundraising is thought-intensive, pulling your attention away from your work. Fundraising all at once helps you to focus and get it done quickly, so you can get back to what matters.

Plus, once you’ve got that first term sheet, others that have been dancing around your deal will suddenly switch into high gear (happens every time).

You should also create multiple growth plans dependent on the amount of funding you receive. Run lots of scenarios within a range of funding, then present the plans that best fit each investor. Planning for multiple scenarios will show that you’re prepared to build your business, no matter how fundraising turns out.

Set your fundraising goals strategically—actually do the math. Usually, startups raise in rounds to get to their next milestone (typically 12-18 months later). Calculate monthly operation costs and multiply by 18—voila! You’ve got a reasonable fundraising goal.

It’s important to note, however, that many economists are predicting a downturn some time in the next few years. I would also consider “overraising” and planning for a day when fundraising isn’t as easy as it is now, as you may be forced to figure out how to be profitable before you’re able to raise another round.

Get Introductions

When looking for seed investors, you’ll typically deal with 1. high-net-worth individuals (angels) and 2. Venture Capital firms (VCs) that invest institutionally.

B2Bs raising a seed round often start with angel investors in order to get the money flowing, then move onto VCs. You’ll probably find that VCs are less willing to invest in the seed round. VC’s do much more due diligence before funding a company, and at the idea stage, there’s usually too little information for them to be confident making an investment. But if they do invest, expect some serious cash (around $500K-$5M).

You’ll deal with angels and VCs very differently, but they’ve got two things in common:

  • They want to invest in things that already have fundraising momentum
  • They want to make a huge splash and get a real return, not fund a lifestyle business

This is why you don’t want to start fundraising before you’re ready. If you’ve got a tiny space or a flimsy team, you’re going to make a bad impression on investors. Introductions can be hard to get (warm introductions are best—from a founder of a company they’ve funded), so don’t waste them.

Quick note on debt raising: it’s rare for B2B, but not impossible. Odds are, you’ll be equity fundraising. But you can also seek out non-dilutive capital like grants and solicitations.

Follow Promising Investors

After you’ve had an introduction, immediately set a meeting and follow your most promising leads.

If you’ve been fundraising in parallel, hopefully you’re juggling a good number of investors. This is great! You should meet with as many investors as you can, but set your sights on the investors that are most likely to close—and who would be the best partners if they did.

B2B solutions can be very sought after, so find partners who stand to gain a lot. Know your audience and research firms with similar investments. Then, listen to the investor when you meet, get him or her to talk more than you. This kind of connection makes it more likely you’ll end up with a “yes.”

There will, of course, be some No’s. Don’t take offense by this, but part on good terms. If investors spent enough time with you, they probably came close to saying yes—you may have more luck in the next round.

And don’t be fooled by the No’s in disguise. Investors may try to wait around or lead you on. If they won’t clarify next steps or give a solid commitment, they’re just not that into you.

Close the Deal

The key to landing investors is to close quickly and keep moving forward. Get money in the bank and then get back to work improving your product and traction.

When you’ve heard a verbal yes, confirm it in writing. Y Combinator calls this the “Handshake Protocol”: You and Investor verbally say yes; then within 48 hours, You and Investor confirm in writing (text or email is fine).

Once this is done, you’ll get a term sheet with specifics and sign it (a term sheet lays out the basic structure of the deal, but is non-binding). Then, after some more diligence, final docs will be created by lawyers (who will charge way too much—you’re paying, by the way). This process usually takes at least a few weeks. Once they’re truly final, you’ll sign the papers and the investors will wire the money.

B2Bs can be risky, and even a day’s delay could cause an investor to change their mind. Once you’ve got the deal, get the money—always taking definite offers over potential offers.

The First Check is the Hardest

To hit the ground running, you just need to convince one investor. After that, it becomes increasingly easy to get more.

Don’t make the process complicated, and don’t let investors complicate things either. Simplify your pitch—stick to the essentials (the problem, the product, your team, your vision). Keep negotiations, documents and valuation straightforward in the seed round. Be confident and direct, but never arrogant—and always hold yourself to the highest ethical standards.

Once you’ve closed the deal, be smart with your resources. Continue to bootstrap where you can and don’t burn through your funds.

Fundraising is not the key to success, it’s only a means to an end. Get it over with and get back to building your company.

More on How to Raise a Seed Round in B2B

13+ B2B Conferences & Events to Accelerate Your Startup’s Growth in 2019

Startup founders often have difficulty seeing the forest for the trees. They get stuck on a business problem and can’t seem to find a solution.

B2B conferences are a great way to find inspiration. Interacting with other founders and executives can help generate new ideas and uncover strategies that truly move the needle.

Sometimes, a spark is all we need.

To help founders find the best conferences for their needs, I have put together a list of the best B2B conferences in 2019:

General Conferences for B2B SaaS Founders

  • SaaStr Annual – February 5-7, 2019 / San Francisco
    Founded 5 years ago by serial entrepreneur Jason Lemkin, SaaStr Annual brings together over 12,500 SaaS executives, founders, and VCs. It’s a good place to network, strike deals, and discuss a variety of topics (SaaS business, fundraising, enterprise sales, customer success, metrics, etc). Based in Europe? SaaStr Europa brings together 2,500 B2B founders, executives, and VCs in Paris, France.
  • Unleash – March 10-12, 2019 / San Diego
    Unleash (ex-Revenue Summit) was started by SalesHacker. It focuses on sales, marketing, and the intersection between both professions. With a strong emphasis on processes, account-based marketing and sales tech, it’s a good event to go a bit deeper into B2B sales and processes.
  • Marketing Nation Summit – March 24-28, 2019 / Las Vegas
    Marketo’s conference is all about marketing in the B2B space. It’s an interesting alternative to Salesforce’s conference, and it’s particularly relevant if you’re selling to marketing executives.
  • B2B Rocks – June 6-7, 2019 / Sydney, Australia & September 12, 2019 / Paris, France
    B2B Rocks focuses more on local expertise than SaaStock or SaaStr Europa. Because of that, the events attract a bit of a different crowd. Whether you attend in Paris or Sydney, you’ll learn tactics to grow your B2B SaaS product.
  • Inbound – September 3-6, 2019 / Boston
    Each year, HubSpot’s conference attracts thousands of sales and marketing professionals. Inbound is a really good event to network and learn about marketing automation, content marketing, and account-based selling.
  • Hyper-Growth – June 10 / London, United Kingdom, September 3 / Boston & November 18, 2019 / San Francisco
    Hyper-Growth is Drift’s growing sales and customer-centricity event. In early September, you can easily attend both the Hyper-Growth and Inbound conferences.
  • Business of Software – September 16-18, 2019 / Boston
    The Business of Software (BoS) conference focuses on networking opportunities, teaching participants how to build better products, and learning how to become better entrepreneurs.
  • SaaStock – October 14–16, 2019 / Dublin, Ireland
    The original European SaaStr. It covers a lot of the similar topics (Sales, Customer Success, Growth, and Financing) with a lot of the same speakers, but it’s an excellent opportunity to get acquainted with some of the best European founders and investors.
  • Dreamforce – November 19-22, 2019 / San Francisco
    Salesforce’s annual event. Dreamforce was one of the first B2B conferences and it’s by far the largest event with nearly 200,000 participants, 3,000 sessions, and a lot of deals and money being thrown around.

B2B Conferences Around Specific Business Challenges

Many B2B companies have created conferences around their customers’ pain points. If you share these challenges, or wish to dive deeper into topics, like customer success, content marketing or inside sales, there are other really great conferences you can attend:

B2B Content Marketing

Customer Success

B2B Sales

  • AA-ISP’s Digital Sales World 2019 – May 14 / London, United Kingdom, June 13 / Dallas & September 12, 2019 / Norwood

Industry Events & B2B Conferences

Events and conferences are shortcuts to target markets. To speed up product-market validation or accelerate your startup’s growth, you can attend your customers’ industry events or visit your customers’ watering hole.

Maybe it’s the HR Technology Expo if you’re targeting HR professionals or the DIA 2019 Global Annual Meeting if you sell pharma companies.

Before attending any conference, try to understand the types of professional targeted by the event organizers. You’ll get a positive return on investment if there’s a fit between the event’s attendees and your ideal customer profile.

If there’s no fit, the event might not be worth your time.