In this presentation Michael Staton outlines a comprehensive approach to de‑risking early‑stage startups by putting customer discovery ahead of product and market development. He begins by citing a Startup Compass study that 74% of startups fail, often because founders prioritize marketing, sales hiring, or scaling before validating demand. Staton stresses the need for divergent thinking followed by convergent action, and argues that customer development must precede product development, which in turn precedes market development. He introduces “artifact‑driven customer development,” a practice of recording, transcribing, and sharing interview data to combat confirmatory bias and provide a factual basis for team decisions, investor pitches, and feature prioritization. He then details the creation and sequencing of personas, emphasizing the importance of identifying a beachhead persona, mapping personas onto the technology adoption curve, and recognizing unaddressable or overly demanding customers. The Kano model is presented as a tool to categorize must‑have, want, and wow features, linking its use to achieving product‑market fit. Staton provides a market‑beachhead planning worksheet that forces founders to prioritize personas, identify adjacent opportunities, and discard out‑of‑play segments. Finally, he critiques superficial differentiation matrices and advocates a layered differentiation strategy using a blue‑ocean canvas (eliminate, reduce, raise, create) to build distinct product, target customer, acquisition channel, and go‑to‑market advantages. Throughout, he warns against premature execution and highlights the value of systematic, data‑driven discovery to align the team and investors around validated customer insights.
Chapters
So, the resonate with customers. This is getting to you here, right. Mm-hmm. This is kind of my version of synthesizing, you know, Steve Blank and a lot of other stuff, right. But, what I see is discovery, validation, strategy, team and process, efficiency, and scaling. Yeah. There was a paper, written by Startup Compass, which is now just called Compass, that goes through and demonstrates that 74% of all companies fail. The ones that don't fail because of founder breakup fail because of what they call inconsistent practices. And what they mean by that is they get their priorities out of order. So they do a mass marketing campaign before they validated that People want the product. They hire a head of sales before the founder has clarified the process, a repeatable process for selling, right? Et cetera, et cetera, et cetera. Anyway, so you have to go through a lot of divergent thinking and activities here, and then you move towards convergent action. And so, And then, in general, you know, I think customer development has to come before product development, which has to come before market development. This is if you are trying to de-risk your startup. And again, a lot of these activities are about de-risking. So, if you've built an MVP and you have 10,000 users coming to your app every single day, you can probably skip a lot of this early stuff. I don't think you should, because I actually think once you start hiring people, the knowledge that you get from here, you can actually share with people that are joining your team. Right? So a lot of companies get a lot of headaches because the founders learn things from customers in the market, and they hire 2 more people, and those 2 people, it turns out, have no idea what the founder knows. Right? Anyway. So, as I was stating earlier, many entrepreneurs go out and execute before they do discovery. Right. And so, the act of discovery, or the set of things you do during the discovery phase, is trying to get you to see the world through the eyes of the customer rather than through the eyes of the entrepreneur or the company. Right. So, it starts with customer development. So, you guys have been doing this for 5 weeks, right. So, I can probably skip through all this, right. Mmhmm. Skip through. Have you had 30+ conversations with potential customers? Did you guys record those conversations and transcribed them? Did anybody record every conversation and transcribe it? No? They're all over email. They're all over email? OK. Did you get it, did you get your conversations on video, by chance? No. OK. So, the, I have a practice that I am trying to write about in my book, which I call artifact-driven customer development. So, one of the things that happens in customer development is you get all this knowledge, and then you take away from it basically whatever you want to take away from it at the time. One of the things about the human mind is we tend to be looking for what's called confirmatory, we have a confirmatory bias. We, we are looking for things that confirm our existing thinking, right. And so you talk to 30 people, and then you run away and be like, I was right. You know. And then you tell your product and engineering teams, I was right. Build this. And then they go, you know, OK, dictator. Like, why, why am I building this? Cause I heard from 30 customers this is what we have to build. Right. And the process of developing artifacts, right, as in recording the conversations, creating videos, transcribing things, acting like a social scientist and encoding your interviews, right, all help create a data set which then you can share with investors, with prospective team members, with your own team. And then when you're gonna fight about whether or not you should build this feature first or that feature first, you actually have information that you can share with people. As opposed to, so instead of fighting about it, you just You just show them the data, right. Have you created personas from your customer development? How many of you guys have personas? 1, 2, 3, 4. OK. Personas become very, very helpful when, once you have a team. Investors also look for personas, but they really only want to see your beachhead persona. Right. They want to see who's the one person you're building this for now, right. But in order to choose the correct persona, it helps to build many personas, right. And as you move forward with your team, having personas helps to make important decisions, right. One of the things that people forget when they're developing personas, something that I think about a lot, is, Are they, do you guys know about the adoption curve? Red crossing the chasm, all that? Okay, so are these guys innovators, early adopters, or majority or laggards, right? Because even though there might be an extremely attractive customer persona, an attractive customer persona 'cause they're willing to pay a lot, or they have really big problems, right? Or sometimes, you know, you have, a connection through a friend, and the next thing you know, you're meeting with a decision maker at a really huge company. And they say, this is what I need. And you run away going, this is what we need to do. But if they're not early on the adoption curve, they're not going to adopt your product. Or if you build for personas that are innovators, they will leave you by the time you ever get any traction. Because innovators, that's how they do. They use the next cool app. They try it out for a while. They tell everybody about it. And then they're on to the next big thing. Right. And so, sequencing personas is extremely helpful. And then, in terms of delighting customers, you know about this, like, Kano model of product development? Product design and development. Kano model. Basically, musts, wants, and wows. In order to wow somebody, you have to meet needs that they didn't even know they had. In order to satisfy them, you have to meet the needs that they're able to tell you about. And then there are a bunch of musts that they're not even telling you about because they're taking them for granted because other things already solve them. Right? Does that make sense? Mm-hmm. Yeah. So a lot of people when they come out with their original product, they're satisfying wants or— they're satisfying wants, but they never found any wows and they don't— they forgot a lot of the musts. So they're not finding product-market fit. If you have your musts, wants, and wows, you should have product market fit. So this is the market beachhead kind of planning exercise worksheet thing. So if we had the workbook, this would be in it. So what I would want you to do is prioritize your personas. So if you have 8 personas, I want to know who's, who's first. Who's your market beachhead? Then who's next? Who are the adjacent possible? And then who's much later? And then who would be out of the market? Right. If you can't tell me who's out of the market, I think that you're a delusional entrepreneur. Right. You have to tell me, here's a persona I found, and here's why they're never gonna be my customer. Because it's just not gonna work for whatever reason. So there's out of play, too demanding. As in, you met, you met a big decision maker at Oracle, and they want your, like, you know, whatever, next-generation SaaS software. And the reality is, is they're probably too demanding. You can get that customer, and no matter how much they pay you, they occupy all your time, and they're never satisfied, and they leave you anyway. And then there's also customers that are unaddressable. That, for whatever reason, they're just, like, either they can't access your product, or you can't get it to them in any kind of meaningful way or price point. And all Companies start at the margins of— this is the disruptive theory, disruptive innovation. You have to start by people that are unserved by the existing market, and then you move your way into the mass market, middle market. The other strategy is like a Tesla. Tesla's not bringing cars to people that don't have transportation. Tesla's serving what are called extreme users. Right. dissatisfied. They know why they're dissatisfied. They can tell you why they're dissatisfied. And they're willing to pay you more if you can satisfy them. Right. And you have to start on those ends and then work your way towards the middle. It's very rare that companies just start out in the middle. And when they do, it's kind of a crapshoot as to whether or not it works. Right. So, differentiating your product. or service, right? Or company, sorry. Most founders come in and they show me this little matrix where they're really good and everyone else sucks. I think that that's, like, not very information-driven. I want to see a differentiated product, differentiated target customers and beachhead markets, differentiated customer acquisition channels, differentiated path to market. So, for me, a differentiated company isn't good enough. I need, like, like an onion, layers of differentiation. And this blue ocean versus red ocean strategy is a good way to go through this exercise. So, what are you gonna eliminate? What are you gonna reduce? What are you gonna raise? What are you gonna create? Anyway, so this is kind of what you end up with. So, this is Minerva. Out on a strategy canvas against Harvard.
