The old adage that “the customer is always right” can have dangerous effects for your business, especially if you are engaged in customer development.
This notion was reinforced with me recently when looking at the problems encountered by my former employer Linden Lab (makers of Second Life). Chances are that you know the story by now: virtual world, caught up in hype cycle, experiences mass media attention before the product holds mass appeal.
Somewhere in this maelstrom Second Life acquired an active and and vocal userbase. These users felt a strong sense of ownership of the product and were encouraged to do so because it provided the company growth and revenue at a time when it was sorely needed.
Along the way, the company continued to innovate and roll out new features. Every single one of these features was trashed mercilessly by the users who felt betrayed on a regular basis. Now the CEO and most of the management that had brought about these unpopular products/features are out in the cold.
Could this have been avoided if Second Life listened to its customers? Absolutely. Could Second Life have succeeded as a business if it listened to its customers? Not a chance in hell. You can’t build a successful technology product AND be beholden to the whims of techno-anarchist BDSM furries. Interesting and smart customers, but not the users you build a tech IPO company around.
All too often web startups become virtually held hostage by a community that does want to see them grow. Sometimes, the result is Startup Stockholm Syndrome. Web startups are essentially held captive by their community and begin to think that they should, against their better judgement, listen to their current userbase.
This brings us to a very crucial point. The users help a web startup get from A to B are often not the ones who will help the company go from C to Z. It’s important to be clear to yourself what your ultimate target market is before you build for them. More important than what the customers want is who the customers are and whether they are the customers you want. If they are the customers you want and who will enable you to grow as you had envisioned, then by all means, listen to them. Many times, however, feedback from a web startups initial userbase will not enable growth.
The dilemma this creates for entrepeneurs, especially of the lean startup variety, is how to create a business with a strong, loyal userbase that doesn’t kneecap your aspirations. Digg is a company that was hamstrung by it’s userbase and was unable to meet the true need of valuable user-centric news discovery, a void eventually filled by Twitter. Unsurprisigly, you can’t build a great company based on a fascination with lolwut.