Let's talk about customer discovery. I recently had the chance to hear from a experienced seed-stage VC about what she is looking for when it comes to customer discovery. Here's what I learned.

Early stage investors aren't expecting you to walk into their office with a million-dollar revenue sheet or a customer list the length of a CVS receipt.

🚨 But they are looking for something: evidence that you've done your homework. And by homework, I mean customer discovery.

Why? Because doing customer discovery shows that you're not just building based on your intuition. You're on a mission to deeply understand the problem you're trying to solve and the people who have that problem.

So, buckle up! Today we're talking about customer discovery – and specifically what early-stage investors want to see before they consider writing a check.

In the beginning, everything is fuzzy

When you first start your business, you may have a theory about the problem you're solving. And that theory may come with a vision of the type of person or business that has this problem.

But until you actually talk to customers, these theories and visions are fuzzy. It's like looking at an out-of-focus image. You can see the general shapes, but no details. And when it comes to building a multi-million-dollar business, details matter.

This is where customer discovery comes in. Customer discovery is your chance to sharpen that fuzzy picture. To prove or (more likely) disprove your theories... and to use those insights to get to product/market fit.

Customer discovery can help you go from this:

"I *think* our customer is a typical business with 50 employees, spending $100k annually on solving X type of problem in X sector.

to this:

"Our ideal customer is a fast-growing tech company with 100-250 employees, spending $250,000-$500,000 annually on this problem, and considers it a top 3 priority to solve in the next 6 months."

And this is what early-stage investors want to see. Even more than a bunch of dollar signs in the bank (especially at the early stage). They want to know who your target demographic is and – ⭐️ this is the important part ⭐️ – how you know that. Basically, they want you to show your work.

The silent startup killer

Here's what you're trying to discover in customer discovery calls:

1. Who has this problem?
2. Why is it a problem?
3. How are they solving this problem today?
4. Why is their current solution unsatisfactory?
5. What opportunity does this create for your solution?

But as you sit down to make your list of questions to ask your target customers, consider the problem of confirmation bias.

Ah, confirmation bias. It may be human nature, but it's also a startup killer.

See, confirmation bias in customer discovery happens when you ask questions of your target customer that will result in hearing the responses you want to hear, rather than what the person actually thinks or believes to be true.

If you're only hearing what you want to hear, you're setting yourself up for failure. You might end up:

1. Overestimating demand for this solution
2. Misunderstanding customer priorities
3. Developing a product that the market doesn't actually need

Yikes.

So, how do we avoid confirmation bias? By asking the right questions. Instead of just asking if something is a problem, dig deeper:

• How painful is this problem for you?
• Is this problem in your top three priorities to solve in the next 12 months?
• What results would you need to see from a solution to justify paying for it?
• If I explained my solution, would you be ready to pay for it immediately, or would you need more information

These questions will give you honest, valuable insights that can shape your business strategy.

There's a chance that your customer discovery leads you down a completely different path than the one you're on today. If that's the case, you should immediately start panicking and just shut down your business.

Just kidding!

Don't panic. In fact, this might be the best thing that could happen to your startup.

Changing your tune: it's a good thing

Here's a little secret: investors love it when founders come to them and say, "You know what? We thought our target customer was X, but after doing some deep customer discovery, we realized it's actually Y."

Why? Because it shows that you're not married to your initial idea. You're willing to learn, adapt, and pivot based on real market insights.

It's totally okay to change your perspective on your target customer or even the problem you're solving. In fact, it's more than okay – it's smart business.

But here's where it gets really interesting: Sometimes, customer discovery might lead you to realize that some of your initial customers aren't actually a good fit.

I know, I know. The idea of turning away paying customers might sound crazy. But serving customers that consume disproportionate resources without efficient revenue is like running a marathon with lead weights on your ankles. It's exhausting, inefficient, and ultimately holding you back.

For example... your customer discovery may lead you to realize that your ideal customer is actually a 100-person business. But your current customers are all 10-person businesses.

You may also realize that it takes as much effort to sell a 10-person team as it does to sell a 100-person team. And yet the 100-person team generates way more profit.

Investors want to see founders who can:

1. Recognize who is and isn't their ideal customer
2. Focus on the most profitable customer segments
3. Pivot based on customer discovery insights

This mindset shift shows that you're not just conducting customer discovery as a box-ticking exercise. You're using those insights to guide your business strategy and make tough decisions.

And let me tell you, that's the kind of founder that investors want to bet on.

Customer discovery is your superpower

Remember, early-stage investors aren't expecting perfection. They're looking for founders who are committed to understanding their market, validating their assumptions, and building a business based on real customer needs.

By mastering customer discovery, you're not just improving your chances of getting funded. You're setting your startup on a path to real, sustainable success.