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The Mean Startup (or a failure in customer development)

A few years ago, almost straight out of college, I was in charge of developing innovative products for a global service provider in the telecom industry. My job was to pitch ideas internally, get budget approval, then work with engineering and sales teams globally until the first sale was made. Getting paid to build corporate ventures and then travel around the world, that was definitely a hell of an experience for someone with not much experience.

The first venture our team built was a huge success: more than 150 mobile operators bought the product in less than a year for a total yearly revenue of $7M. It gave us a lot of credibility internally for our second venture which, as you will see, failed miserably. What I didn’t know at the time though, was that the first product (the successful one) had known features and known customer needs! This product was based on specifications from the GSM Association and mobile operators were mandated to comply with this new specification before a set date. Our job was then to develop a solution with core features as per the specifications, some value-added services, and then try to persuade as many customers as possible that they should comply with this new specification and they should choose our product instead of our competitors’. As I said: known features and known customer needs.

In that sense, our second venture was very different. We were building a business intelligence solution for mobile operators but, this time, without any specifications for the GSMA. Said differently, unknown features and unknown customer needs. In our initial business plan, we had 1 year to sign the first customers and then, for the following years, we were gradually going to sign most mobile operators in the planet as we were convinced this product was going to be a must-have in the ecosystem. In terms of features, we had a small list of features we believed were the core ones and a huge list of features we wanted to test with the first customers. So you know, the core features had been validated by one test customer.

To our team’s defense, we didn’t completely rush to develop all the features on our list without talking to customers. We built a first prototype of the solution in a couple of months and then I started travelling around the world to demo the prototype to as many potential customers as possible. And every time, it was the same positive reception: customers loved and validated the concept. In parallel, our development team was continuing to add more and more features as these were validated every time by the potential customers I was meeting.

It’s only by the end of the first year that we started to realize we were wrong. A few months earlier, we started to sign off potential customers for free trials but very few of them actually tried the product (what is free has no value). Just two potential customers actually came back to us with productive feedback. And God, it was bad. Conceptually we had everything right but all the features were wrong. For example, we thought customers wanted predictive algorithms but they wanted to import their own predictions in the tool (this was in 2009, way before big data went mainstream). And the list went on and on…

At the end of the first year, we had spent more than $1M developing a great product that no one wanted. My management decided it was enough and shortly after shut down the project. I personnally moved to another position within the company. A few months later, I met with one of our former potential customers who told me that he purchased our competitor’s solution. Then he said (I’ll remember this my whole life): “this is really a shame as you guys were right and evangelized the market but did not manage to get the product right”.