The idea that startups should talk to users is conventional wisdom. Great founders talk to users, so most founders signal their greatness by making a point that they do it too. But empirically talking to users is so hard that people make excuses not to do it, and then convince themselves that they’re extremely user focused.
The problem is that “talk to users” is too vague to be falsifiable. How do you know if you’re doing it right? Here is a quick rule of thumb. You’re doing it right if you can get a third of potential users to pay you money within a month of initial contact.
The numbers aren’t exact, but they’re ballpark right. If you’re off by ten percentage points or a month or two, you’re probably ok. If you can only get 1% of potential users to pay you after a year of back and forth, your company will probably die. What if your company is different? It might be, but it probably isn’t. Unless you really know what you’re doing, the balance of probabilities is that you’re making excuses and convincing yourself that it’s ok.
Beyond giving you the tools to falsify your own beliefs, this rule of thumb has a few other very useful properties.
Firstly, getting a ~.3 probability of close is really hard. Shooting for this number will force you to do two things: (a) build a product someone other than you actually finds valuable, and (b) dramatically tighten the definition of your target market. This will instantly put you on the right track because most successful startups do this well, while most failed startups do the inverse (bad product for an overly broad market).
Secondly, when you start hiring sales people, they’ll love you. The two biggest challenges in early sales is (a) deciding whether a new lead is worth pursuing, and (b) deciding when to cut your losses on an opportunity. A narrow target market definition helps with the first part, and having a concrete time bound helps with the second.
Thirdly, when you start hiring marketing people, they’ll love you too. The biggest challenge in marketing is how to cost-effectively generate high quality leads. A great product built for a narrow market solves this problem nearly automatically.
Fourthly, a combination of great product, sales, and marketing fundamentals is a solid foundation for growth. Assuming you’ve picked a market that’s growing fast, your startup will grow fast with it.
Finally, actually focusing on getting paid will get you revenue early. That will put you in a dramatically better negotiating position in every VC deal, make it easier to recruit great talent, and supercharge morale in your company. Since startups live and die by momentum, tangible early success built on real discipline tends to turn into a self-fulfilling prophecy.