Speaker Q&A: How to Build Customer-centric Products.

May I have your attention please welcome TechCrunch reporter Christine Hall and Sandia van kachadalan partner Coastal Adventures Well great it's great to have you here Thank you so much thank you I always Love coming to TechCrunch yeah so um one Of the things that I wanted to start off With was Um in terms of like customer-centric Products what's your philosophy on that Thanks for asking that question Um Customer-centric products I think have Lots of different definitions Um so I'll just tell you what I mean by It uh I think To me it means the prioritization In everything not just building and Designing your product but also in how You build your company How you go to market how you think about Your users Everything is prioritized around the Idea of direct end user consumption And that's a little bit different than How software's been built for the Majority of the last 25 years yeah Um and so that's sort of how I Define it Yeah it's really interesting I've I've Interviewed a number of Founders that Talk about you know product-led growth And like talking to customers and Interestingly enough they say a lot of

Our competitors don't do this which is Why we took that approach is that Something similar that you're seeing as Well where there's just not a lot of Companies focusing on that area I think the biggest opportunity like why I think this is an important topic Especially for this crowd I assume Majority founders of relatively new Companies is The incumbents can't do this And to me this is the first time at Least I think or one of the few times in You know the history of technology and Building software and Hardware Where startups actually have an Advantage not just with technical Innovation because that's in Silicon Valley usually the thing like you know The faster chips or you know some Technical innovation Startups can actually have an advantage Over the large incumbent in design in End user mind share and then eventually In go to market With very little investment dollars Right so you don't have to compete with The hundreds of millions of dollars that Microsoft or Salesforce has right or Even some of the very Later stage startups uh the money that They sort of throw at you know these Sort of problems interesting and I think Too you know some things that Founders

Mention is that Even though there's not a lot of Investment that needs to happen at the Beginning they do have to take a little Bit of time to kind of design the Infrastructure from the beginning so You're seeing maybe a company that you Know instead of you know having like Take a year or something it could be Like two to three years before they Actually have a product ready to launch Or like that maybe they're in beta for a Really long time trying to figure out Everything Um you know what what are some of the Challenges that you see or that you talk To Founders about when they're trying to Do something customer Centric versus you Know the the other way of doing it so I Think the conflict or the the tension Always comes in when so when do I Release the product right because In general To do this well you need to understand Your users and you can theorize all you Want and make a hypothesis and even do Surveys but until you get a product out In the market and you start to get Feedback on that and we can talk about Ways to do that You really don't know And so You know we've talked about Lean Startup You know over the past five to ten years

Get your product out there but this is Not always possible especially if you're Trying to solve a much harder problem so I invest a lot in Ai and machine Learning and usually you know there's Not a product sometimes for a long time Because you're Gathering data you're Building models some of that's been Accelerated now so I think that's the The tension okay Um and so while it varies from sector to Sector and product to product I still Think getting your product out there and You can even have controlled Um you know Alpha releases beta releases Design Partners call it what you want Doesn't have to be everybody come get it I think it's really important to to get That user feedback even if it's Something that is taking a long time to Build Okay yeah and you you actually we were Talking earlier about kind of some of The you know three principles that you Have for customer-centric products why Don't you walk us through some of those Yeah so these are Categories to kind of think about Um the first is really understanding Your users and uh there's a lot that Goes into that but um I'll go through it The second is just around some product Design principles and the third is Really around how do you start thinking

About marketing and awareness even as You're Building Product and not as an Afterthought and the reason that's Important to think about even up front Is how you build your product Actually lays the groundwork for if you Want to do product-led growth or Self-serve these sorts of things it Can't be an afterthought okay Um so I think you know principle one Everyone talks about understand your User but what does that actually mean Like what are some tactical things that You can do so just ask yourself some Really key questions and always be Asking these questions so you know who Are my users what is the Urgent problem That I'm trying to solve And make sure that the problem that they Have that's so urgent make sure that Your solution is actually a big enough Deal right so you know it could be Incremental and people you know like Okay but is it really worth you know Shifting my focus to try something new And all of that to make sure it's you Know kind of astounding And You know people say well people never Respond to surveys this that's not the Way to get user feedback anymore I mean Yes put surveys in there and see if Someone will answer but there's a lot of Things you can do to instrument your

Product up front to track everything Track everything you can possibly Imagine and if you see people not using A feature that's information that means It's not useful or they're getting stuck If you get a lot of people to your Website and uh there's not that many That actually you know convert to using It maybe there's something wrong with Onboarding so I think these are the new Forms of data and the ways to understand Your users and then once people start Getting on your platform Keep Figuring out whether not only what They're doing but are they the best Users is there another segment of users Where this could actually be more useful That could actually monetize later so we Can talk about the other principles but Maybe if you have any one of the things That kind of stood out from from what You said was about the Possibly having to Pivot or figure out Something else when when you're talking With Founders who are you know wanting To get investment from you do you Like that they had tried maybe some Different things to figure it out or do You feel like that trying different Things means they really didn't have the Clear Vision of what they wanted to do In the first place So almost everyone has to try multiple

Things it's just whether they can do it In a short period of time or whether They run out of money and then it Becomes a big pivot and they have to Raise more money but everyone no matter How clear your vision is You have to iterate on your product and Actually I think sometimes the product And the adoption actually informs the Vision and you might take a slightly Different direction you can still be True to your vision but it might get Modified a little bit and so everybody Has to do this everybody has to iterate Everybody has to change yeah yeah we had A question um they were asking you know Which comes first Market the problem the Solution the customer team or something Else Um well I'll tell you which a lot of Them come together uh by the time you Talk to me but I personally think The The idea and the team meaning the Founding team Kind of happen at the same time There are folks that know they want to Work together And they might work really well together And they might have complementary skill Sets And 80 of the time that'll get you there but

If you don't actually have the same Amount of passion for the same problem And a way to you know the way you're Going to try to solve it Then that won't work for very long even If you love this person even if you guys Work really well together So What I see often Are people who are in a a similar space And they're both seeing a disconnect or A problem and they get to know each Other they understand they see it the Same way and they say hey maybe we have A shot at actually solving this and then You can brainstorm and iterate uh and See if you work well together Um but I think kind of both have to come Together at the same time yeah because I Would assume that a lot of Founders Start off with a one common vision and Then as things take place like like you Said you might have to iterate a couple Of times that Vision might Splinter Between you know the founding team yeah I think um and also just the commitment To as many of you who are doing this Already now You know things go More bad than good or a few good times And then lots of downs and so you just You have to be super passionate to the Point of being obsessed Um and so you need to make sure your

Co-founder is is the same Got it yeah yeah so second principle Yep so once you have understood your Users and you're tracking them and you Have some basis you know ongoing to to Measure things and understand You know I I mentioned don't just offer A solution Um We Now call it offer them a wow moment Right or that magic moment yeah and the Reason this is powerful is it really Gets your user not only hooked but Evangelical right and that leads to the Next principles which are around you Know virality and engagement but you Know all we mean by the wow moment or The Magic Moment is literally In a very short period of time hopefully Your user says Wow I can do that Or Wow like I need to tell someone like I Can't believe this one of my favorite Examples of this Um there's many you know in the history Of Technology but one of our portfolio Companies open AI uh released something Called Dalai 2 recently which is Literally Text box I'm just a lot behind the Scenes but it's a text box You type what you want and in a couple Of seconds right the AI models behind it

Generate an image from scratch that Matches your description Almost anyone in the world can look at That in four or five seconds and even if It's not perfect right even if it's not The unicorn in the surrealistic uh Style With the volcano exactly in the right Place or whatever your imagination wants To tell you It's still pretty damn good and you're Like wow Um and so it might take a little more Time They could have wrapped a big product Around that to launch but they Understood what the Magic Moment was how To get that attention and they got to it Really really fast Interesting is is the magic moment I Mean I think that when whenever you're Asking a company a question you're Always like what makes you unique and so I think you're kind of talking about the Magic moment as being sort of something Like that but like do Are there similar ones for everyone or Is it is it hard to find that that magic Moment I mean I is I mean somebody might Not think about it you know so how do They kind of work out What theirs is So I do think the Magic Moment is a Little different than what makes you Unique okay

Um They're similar so unique is sort of What makes you better sure Um or different uh than what's out there In the market It's the realization of what makes you Unique which is a Magic Moment yeah uh So they are obviously related Um and the idea being you know put very Simply It's giving value to your user okay so In a very short period of time They get immediate value that's not just Incremental that's big enough that they Say some version of wow right yes okay Yeah so we have a question Um how do you translate your long-term Vision into measurable smaller steps Today so I'll stop right there Oh wait I'm sorry hang on Oh they were saying especially for new Technologies on the on the frontier like Augmented reality Show there's a reason I'm a VC and you Guys are founders I mean that is the trick right so first Having A view that there's a market that's Interesting And really having when I say Vision it's That view of what does tomorrow look Like and that tomorrow should be ideally Significantly different than today Okay so you live in this future State

This is how I see the world and maybe Not that many other people see it that Way that's awesome that's good Now I the first question I always ask is Well how do you get you know from here To there And so what I've seen my portfolio Companies and other successful companies And Founders do You say okay That's great the future state I need to solve a problem for a certain Set of users today and ideally it's Either a big enough set of users that it Can grow or they're enough Adjacent users that kind of look like Them that need some flavor of this so It's big enough And I need to do that really well and I Need to create that wedge that magic Moment and sometimes it's really Specific and it seems like sort of a Smaller segment of users And then the trick right is to kind of Tie that together with what do I need to Keep building right to sort of you know Dominate the world And there's no prescription there's no Formula that's the magic of what you Guys do Um but don't worry I guess if it feels narrow in the Beginning because narrow super useful

Super loved by users is actually the Most important thing up front And then just figure out what are the Steps and actually I think the thing That changes the most are the steps Based on the information and the data You get from users the steps of okay how Am I going to get to that big Vision That's what actually ends up sometimes Changing course or like pivoting you Know as you asked before yeah yeah and Going back to your earlier comment about Founders Um we had a question about you know how Do you find a co-founder that you can Actually get along with long term and Finding in quotes of co-founder seems to Calculated No Um it's not too calculated Uh I think Being very intentional about every step In this process is actually okay you Know when we read the stories of when Companies you know raise it a billion or 10 billion or they go IPO it just seems Like all this magic happened but in Reality It's very intentional it's very Calculated decisions are made Constantly and it you know feels very Tactical so don't worry about sort of it Feeling calculated it should be uh

Especially in terms of finding you know A co-founder right so if you're really Passionate about something you have that Vision And you know the skill set that you need To compliment you go out and look for a Co-founder I think that's that's totally Fine if you don't already have one Um you know in the space that you're Working in or so forth and it's not easy Um getting out there asking great Founders that you know for referrals Just talking to friends I mean being Places like this There does need to be chemistry so you Know it's um not just okay we're very Complementary and you know you can do Rust programming and you know I can do This or whatever marketing and Um There has to be chemistry but that's Like everything in life right there has To be some chemistry so no be Intentional go talk to lots of people Have a set of questions that not only You've answered for yourself but Eventually they need to answer I've Actually even had some Founders and also Partners who become Partners or start a New Venture fund together go through Counseling not um in terms of like Fixing a problem but like are you a good Fit in the long term if you don't know Each other so there's no shame at least

To me in any of this do you have to have A co-founder or can you do it solo Show you absolutely can do it solo I Would say a third of the backers that I Have back are founders I have backed Have been solo Founders okay It is just harder and it's not that it's Harder because you have certain skills And you need to find somebody with Complementary skills it's actually not That hard to find that and that person Doesn't have to be a co-founder you Don't even have to be a technical Co-founder anymore you can hire really Great principal engineer give them Enough equity always give them enough Equity So to me that's not what gives me pause It's the many many conversations I've Had Where solo Founders just don't have Anyone to talk to and I you know Obviously you know your investors yeah I Should try to fill some of that but it's Not the same right as that person that's Like in it day in and day out yeah Um and just having that support so these Things may not sound important but They're critical so to me that's my view On why it's more helpful yeah Um if They were saying if Um if you if there were five different Startups that were were building kind of

The same exact thing right Um And probably had around the same Evaluation as well what are your what do You seek out to you know choose one of Them if if that if that one is even Interesting to you So we at Coastal Adventures have a Slightly different philosophy on Investing Um So vinod our founder likes to say if you Have a competitor in your slide deck we Don't invest And what he what he means by that is not Of course every startup that has a good Idea is eventually going to have Competitors but if you say we're going To go up and disrupt Oracle and Erp and By the way Oracle needs to be disrupted It's Erp is terrible Um So it's a good investment for someone It's going to be a big company But Our view Is that the truly transformational Companies Often come out of left field they have The founders have this vision of a Tomorrow that looks completely different It's not incremental today better Erp It's You know just a different perspective

Um on how people work it doesn't have to Be about everything about the one thing That you care about And often We haven't heard the idea and we don't Hear the idea for a while from anyone Else and what makes it interesting Versus just like a wacky idea Is that founder tends to have what we Call a unique Insight so some reason They believe in that tomorrow in that Future because in their experience they Saw a b and c or they collected this Data or they had access to users and They understood something or believed Something so we bet on that belief and a Lot of times we're just wrong so these Things when they fail they just Completely fail they don't get acquired By Oracle Um but we don't care about that we care About the really big transformational Companies Um So that's sort of our view now I can try To answer Perhaps for others of how they might Look at that or I know if that's Relevant Um well you know I actually have a uh Yeah really interesting question so to Your point about Catering to customers and then kind of Those and then adjacent customers to

That they someone was asking like if Your product serves multiple customer Segments how do you recommend focusing On the product design do you start Niche And and go broad or do you start Broad And then customize So the popular wisdom these days is to Go Niche right right make sure it Actually really works for someone and Then go Broad And I think that's true but for a very Short period of time Uh I think that once you've kind of Understood your users and you've Launched something and that launch can Be to early users or Alpha customers or Some small group When you then launch whatever that means Today right but like when anyone can go And access your your product I think you should be really Broad in Your Um funnel initially and in your Marketing because you just don't know You don't know how people are going to Actually use your product and so I think You want especially the beauty of a Customer-centric products especially if You have self-serve and at low cost Is that anyone can come come and try it And you can see what they're doing and It could end up being a completely Different set of use cases that are Interesting than what you originally

Thought yeah so Kind of go really narrow and then go Really big quickly It makes sense okay yeah and is there is There um a correlation in building a Customer-centric product while riding on The hype of exclusivity should the Former take precedence regarding the Outcome Um could you define they Define what Exclusivity means in those context so If by exclusive or exclusivity you mean A product that is status oriented So only a certain like a small number of People may have sort of access to it I Think a better way to do that versus Restricting usage is actually pricing So price it like the status brands of The history of the world have done right So you price it high and that becomes Your exclusivity versus things like wait Lists or other forms of restriction Because I I personally don't really know what a Waitlist does for you Um you don't get any data about usually The people on the waitlist and what They're sort of doing yes you don't Capture people when they have intent so Somebody wants to try your product and You're saying come back in three months So either don't tell them or don't spend Any money telling them for sure because Then you're crazy it's wasting money

Yeah no promising three months yeah Um so this is just again my view but I Think if you want a status product or Status brand use pricing not restricting Usage what's your what's your take or Your perspective on offering like with The tears you know always offering like A free option Is there I mean is there room for that Should people not do that eventually Because I think what what people Normally do is they'll have it free but Then they take all the really good Features of the app and then put them Behind you know a a pay tier and leave The free to like You know one one or two features so I I Agree with you and I've written about This extensively and I have a very Strong view of like the use of free so In the beginning Depending on your product but let's say Uh it's a Customer-centric and user-focused Product and you have a good self-serve Channel going or mechanism going Free is good to a certain extent Because you get that wide funnel right And you get a bunch of use cases you get A bunch of data hopefully you've built Stuff to track all this data If the cost of maintaining free users is Minimal Then fine I I still think they could be

It can be distracting after a certain Amount of time because you get feedback And you start prioritizing your road map Around a larger number of users than the Folks that are actually going to help You monetize But you know there's an argument if you Want to sort of be distracted or get That data If there is a cost associated with Supporting those free users I think you Need to be very very intentional and Very deliberate because then it's not Just time which by the way I think is Actually more valuable than Capital but Then also your Capital yeah so I have Seen over the last nine to 12 months Founders coming to me much more quickly Founders with self-serve sort of plg Motions And saying but I kind of Now understand Who my ICP is and who's going to Monetize should I still have freemium And I say no And by the way you can actually always Turn it back on but what I think is more Useful Is sort of the concept of free trials Okay absolutely let people try your Product for free for sure in the early Stages don't charge until you deliver That magic moment until you deliver that Value and you can by the way have a free Trial for three months it doesn't have

To be seven days play around experiment But at some point They have to make the decision to Convert and you will find very quickly The folks that are just dabbling and are Never going to be that interested in Converting And what I found What my Founders have found Is that the period is actually usually Within 14 to 30 days because people who Care about your product Again they have intent they search right They're looking for something that Solves their problem they find you And if it works they actually don't mind Paying right at least in most B2B right Consumers are slightly different thing And so Um get them to pay and if you do not Give those users a good experience and You give them some crappy version for You know ever yeah even if it's free They're going to say okay well I guess This is not what I thought it was so I'm Not going to continue so you've lost That opportunity so I completely agree With you yeah okay perfect yeah I think We are out of time so thank you so much Yeah


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