The Customer Development Framework: A Startup’s Search Process
The Startup Owner's Manual: How Startups Replace Assumptions with Evidence Before They Scale
Before any startup can grow or scale, it must answer one fundamental question:
“Have we found a repeatable and scalable business model?”
Traditional business plans assume you know your customers, the right product, and how to sell it. But startups don’t begin with certainty—they begin with hypotheses. That’s why Steve Blank’s Customer Development framework isn’t about execution. It’s about search.
This methodology recognizes that startups are not smaller versions of large companies. A startup is:
A temporary organization designed to search for a repeatable, scalable, and profitable business model.
To find that model, startups must get outside the building and test their ideas in the real world. That’s the core of Customer Development.
How This Book Compares to The Lean Startup
Eric Ries, a student of Steve Blank, popularized the concept of the Build-Measure-Learn feedback loop and the Minimum Viable Product (MVP) in The Lean Startup. His book focuses on the philosophy and high-level framework of lean experimentation, rapid iteration, and startup agility.
Steve Blank’s The Startup Owner’s Manual is more like the field manual to that philosophy. It provides:
Step-by-step instructions for how to test hypotheses, conduct customer interviews, and structure the learning process
Deep dives into the operational workflows behind Customer Discovery and Customer Validation
Separate playbooks for web/mobile startups and physical channel startups
Detailed checklists, funnel analysis methods, and go/no-go criteria based on real customer behavior
In short:
The Lean Startup is why you should iterate and test.
The Startup Owner’s Manual is how to do it.
The Four Steps of Customer Development
The journey is divided into four iterative steps:
Customer Discovery
Test whether the problem you believe exists is real, and whether your solution matters.Customer Validation
Prove that you can sell your solution in a way that is repeatable and scalable.Customer Creation
Generate demand through marketing and sales efforts—only after you know the model works.Company Building
Transition from a search-based organization into a functional business, with roles, metrics, and processes.
This post focuses on the first two steps:
🔍 Customer Discovery and ✅ Customer Validation, where the most critical learnings—and pivots—happen.
These steps don’t guarantee success. But they radically reduce the risk of building something nobody wants.
🧠 Founder's Mindset Shift:
“You’re not building a product—you’re building a company. And that starts with understanding customers better than they understand themselves.”
🔍 Customer Discovery
Phase 1: State Your Business Model Hypotheses
Purpose: Document your best guesses about how your business will work—so you can test and revise them based on real-world feedback.
Before talking to customers or building anything, you need a clear map of what you believe to be true about your business. This phase is about capturing those assumptions explicitly, not operating on intuition.
Use the Business Model Canvas
The Business Model Canvas is your tool for structuring these hypotheses. It breaks your business down into nine interconnected parts:
Customer Segments
Who do you believe your customers are? Are there multiple types? What defines them?Value Propositions
What problems are you solving, and what value do you think you’re providing?Channels
Through which platforms or paths do you plan to reach and serve customers (e.g., web, mobile, partners)?Customer Relationships
How will you acquire, retain, and grow customers? (e.g., self-serve, sales reps, support?)Revenue Streams
What are customers paying for, and how? Subscription, transaction, licensing, etc.Key Resources
What critical assets—tech, IP, people, partnerships—are needed?Key Activities
What must the company do exceptionally well? (e.g., build software, operate a marketplace, deliver content)Key Partnerships
Which outside organizations are vital to delivering your value? (suppliers, platforms, manufacturers)Cost Structure
What are your biggest expenses? What’s fixed vs. variable?
✍️ Why this matters: You can’t validate what you haven’t defined. A startup is not about building—it’s about learning, and that learning starts with hypotheses you can test.
Best Practices
Start with the riskiest assumptions—the ones that could sink the business if wrong (usually around customer and value prop).
Don’t aim for perfection; this is a living document.
Keep hypotheses concise, clear, and testable. Think: “We believe that [customer X] has [problem Y] and will value [solution Z].”
Outputs by the End of Phase 1
A completed first version of your Business Model Canvas
A short list of testable hypotheses, prioritized by risk
A shared mental model across the founding team of how the business is supposed to work
Phase 2: “Get Out of the Building” and Test the Problem
Purpose: Validate whether your target customers actually experience the problem you think you're solving—and care enough to fix it.
At this point, you’re still not pitching a product. Your job is to deeply understand your customers’ world. What matters is whether the problem is real, painful, and urgent—not whether they like your idea.
Key Objectives
Listen, don’t sell. You're not testing your product yet.
Understand customer behavior, not opinions or hypotheticals.
Find evidence that customers:
Acknowledge the problem exists
Already spend time or money trying to solve it
Experience pain or inefficiency significant enough to seek a better solution
What You Do
Identify Target Interviewees
Focus on early adopters—people who most acutely feel the problem.
Aim for a minimum of 50 interviews to spot consistent patterns (not outliers).
Conduct Problem-Centric Interviews
Ask open-ended, exploratory questions:
“How do you currently deal with [problem]?”
“Tell me about the last time this happened.”
“What’s frustrating or broken about the current solution?”
“What would happen if this problem went unsolved for another year?”
Avoid leading or pitching. No demos, no solutions—just curiosity.
Capture Qualitative Data
Look for real stories, not opinions.
Write down exact quotes. Don’t summarize too early.
Pay attention to nonverbal cues: frustration, excitement, hesitation.
Build Customer Archetypes
From real patterns in interviews, define:
Who they are
What they care about
Their behavior and decision-making context
💡 You are discovering the customer, not proving a theory. Customers define your direction.
Common Pitfalls
Selling too early: Once you pitch, people stop being honest.
Talking to the wrong people: Validate with those who have the problem—not just people who are polite or curious.
Focusing on averages: Patterns matter, not individual reactions.
Deliverables by the End of Phase 2
At least 50 in-depth, problem-focused interviews across target segments
Clear evidence about:
Whether the problem is real
How customers solve it today
How painful or urgent the problem is
A set of refined customer archetypes based on real insights
Decision checkpoint: Is the problem worth solving? If not, pivot before wasting time building.
🧠 Steve Blank’s Law: “There are no facts inside your building, so get outside.”
Phase 3: “Get Out of the Building” and Test the Product Solution
Purpose: Determine whether your proposed solution (or MVP) actually resonates with real customers and solves their problem in a meaningful way.
Now that you’ve validated the problem exists and is painful, it’s time to see if your product concept—however rough—makes sense to customers. This phase is not about launching or selling. It’s about learning, again, directly from the field.
Key Objectives
Present a minimum viable product (MVP) or mockup that expresses your solution concept.
Understand if your product solves the right problem for the right customer.
Observe how customers react—not just what they say.
Refine your understanding of what features matter and what value propositions resonate.
What You Do
Build a Learning-Focused MVP
The MVP should be designed to test a specific hypothesis, not showcase the full product.
Common MVP forms:
Landing page or explainer video
Clickable prototype
Concierge service (manually delivering the solution)
Paper sketches or demo slides
Show, Don’t Sell
Present the MVP in user interviews or usability sessions.
Don’t frame it as “the final product”—frame it as “an idea we want your input on.”
Let customers walk through it or imagine using it.
Capture Reactions and Friction Points
Ask:
“What’s your first impression?”
“Would you use this? Why or why not?”
“How does this compare to how you solve this today?”
“What’s missing? What’s unnecessary?”
Take note of:
Confusion
Excitement
Hesitation
Surprise
Look for Strong Signals
Positive feedback isn’t enough. You're looking for commitment behavior:
“Can I try this now?”
“When can I get it?”
“I’d pay for this if you had X.”
Anything short of enthusiastic pull may indicate you’re not there yet.
The Mindset
You’re still validating. Every feature is a hypothesis.
The goal isn’t to make people like it—it’s to find out if it’s valuable enough to change their behavior.
🔁 “If they wouldn't use it for free, they won't pay for it.”
Common Pitfalls
Overbuilding the MVP: Don’t build more than necessary to test your assumptions.
Defensive listening: Don’t rationalize lukewarm feedback—take it seriously.
Testing too late: Don’t wait until you’ve coded something complex to learn it’s wrong.
Deliverables by the End of Phase 3
Direct customer feedback on your product idea or MVP
Clear data about:
Whether it solves the validated problem
Which features are most/least valuable
What customers are willing to do next (try, pay, refer, etc.)
A refined (or revised) value proposition and feature set
Insights into how to position and communicate the solution
🧠 Steve Blank’s Principle: “A startup’s job is to reduce uncertainty—not to build for building’s sake.”
Phase 4: Verify the Business Model and Decide to Pivot or Proceed
Purpose: Evaluate everything you’ve learned so far to determine whether your business model is sound—or if it needs to change.
After testing both the problem and the solution, it’s time to look at your entire business model and decide: Are you on the right track, or do you need to pivot? This phase marks a critical decision point before moving into Customer Validation.
Key Objectives
Synthesize insights from the first three phases
Assess which of your original business model hypotheses hold up—and which don’t
Decide whether your startup is ready to test its ability to sell at scale (i.e., move to Step 2), or if you must revise and repeat discovery
What You Do
Revisit Your Business Model Canvas
Go through each of the nine building blocks:
Which hypotheses have been validated by real customer data?
Which are still unproven or disproven?
What unexpected patterns emerged?
Color-code or mark each component:
✅ Validated
❓ Still uncertain
❌ Invalidated / contradicts data
Test for Internal Consistency
Do your segments match your value propositions?
Are your channels viable for reaching your actual customers?
Is your pricing model supported by what customers said they would pay?
Does your solution solve a must-have problem, not just a nice-to-have?
Quantify What You Can
What % of interviewed customers strongly resonated with the problem and solution?
How many asked for access, signed up, or committed resources (like time or money)?
What did conversion signals (e.g., email opt-ins, demo requests, pilot interest) tell you?
Identify Pivots
If some elements of the model failed, ask:
Do we need to target a different customer segment?
Should we change our value proposition or solution?
Is our revenue model flawed?
Are we solving a real but non-urgent problem?
The Pivot or Proceed Decision
At the end of this phase, you face two options:
Proceed
You have:
A validated customer segment
A clear, confirmed problem
A solution people care about
Evidence of interest or early commitment
You’re now ready to enter Customer Validation and test your ability to sell and scale.
Pivot
If your core assumptions were invalidated:
Return to Phase 1 with a new set of hypotheses
Change one business model element at a time and re-test
Common pivots:
Target customer segment
Problem framing
Value proposition
Delivery channel
Pricing model
📌 “Pivots are not failure—they are progress. Every invalidated hypothesis is a step closer to the truth.”
Deliverables by the End of Phase 4
An updated, reality-checked Business Model Canvas
Evidence-supported validation (or invalidation) of key assumptions
A team-level decision: Are we ready to sell—or do we need to explore again?
A documented “go” plan or pivot plan
Steve Blank’s Reminder:
“The goal of Customer Discovery isn’t to confirm your idea—it’s to disprove everything that’s wrong, so what’s left can work.”
✅ Customer Validation
Phase 1: Get Ready to Sell
Purpose: Prepare everything you need to test your ability to sell—without yet scaling your sales efforts.
Now that you’ve validated a real customer problem and tested your solution, it’s time to see whether you can actually sell it. But before you “get out of the building” again, this time to sell instead of to learn, you need to be fully prepared. This phase is all about setting up your sales foundation.
Key Objectives
Translate your validated hypotheses into a repeatable sales roadmap
Prepare sales tools, messaging, and materials that reflect what you’ve learned
Create systems to track results and learn from sales conversations
Define goals for what success looks like in the next phase
What You Do
Refine Your Business Model Canvas
Incorporate all validated customer discovery learnings:
Who is your actual customer?
What specific problem are you solving?
How do they describe the value?
What price points and sales channels seem viable?
Develop Foundational Sales Materials
Create lean versions of:
A customer-facing pitch deck
Landing page or product website
Email/message templates
A working product demo or explainer
All materials should speak directly to your early adopters—those who feel the pain most acutely
Build a Sales Learning Pipeline (Not a Revenue Engine)
Use a lightweight CRM or tracking spreadsheet to log every sales interaction
Define key data points to capture:
Who did we talk to?
What segment are they in?
What was their level of interest?
What objections came up?
Prepare Your Founders (Yes, Founders Must Sell)
Sales in this phase must be done by the founding team—you’re not outsourcing to a VP of Sales yet
Use each interaction to refine your pitch, uncover objections, and spot patterns
Practice objection handling and storytelling grounded in real customer language
Set Clear Success Criteria
What signals will tell you to proceed vs. pivot?
e.g., “3 out of 10 targeted customers agree to a paid pilot”
“At least 50% of demos convert to trials”
Define your early win conditions before you start
Mindset Shift: From Learning to Selling—But Still Learning
You’re not selling at scale—you’re still testing whether your sales process can be repeatable
Every rejection is useful data. You’re here to find what’s broken in the pitch, positioning, or price
📌 “You’re testing the sales roadmap, not hiring the sales team.”
Deliverables by the End of Phase 1
A complete and updated validated Business Model Canvas
Foundational sales materials: pitch, demo, landing page
CRM or tracking system for lead interactions
A prepared founder-led sales team
Clear metrics and thresholds to evaluate success in Phase 2
Common Pitfalls to Avoid
Outsourcing sales too early: Only founders know the product and vision well enough to close early deals
Using generic sales tactics: Use real language from your discovery interviews
Focusing only on positive signals: Rejections teach you more—track and analyze them
Phase 2: Get Out of the Building and Sell!
Purpose: Test whether you can sell your product to early customers in a repeatable, scalable way using real sales conversations—not theory.
In this phase, you stop learning about customers and start testing whether customers will actually buy. It's not about revenue maximization—it's about discovering whether your sales process, pricing, and messaging work reliably.
This is the moment of truth: can you generate paying customers?
Key Objectives
Test your sales roadmap in live conditions
Engage with early evangelists—the customers who most urgently need your solution
Track the full customer decision process: from first contact to closed sale
Identify patterns: who buys, why, and what stops others
What You Do
Target the Right Early Customers
Focus on earlyvangelists—not just “interested” users:
They recognize they have a problem
They've already tried to solve it
They are actively seeking a solution
They have a budget or willingness to act
They feel urgency
Execute Direct, High-Touch Sales
Founders do the selling. No one else has the context to adapt the message in real time.
Use a personal, consultative approach:
Schedule discovery and demo calls
Show how your product solves their specific problem
Address objections openly—this is learning, not just closing
Track Every Step in the Sales Funnel
Log and analyze:
Who did you contact?
Who responded?
Who agreed to a demo or trial?
Who converted—and why?
Who didn’t—and what blocked them?
Look for repeatable conversion patterns. That’s the goal.
Capture Objections and Iterate
Every “no” is a data point:
Was the pricing too high?
Did the product lack a key feature?
Was the buyer not the right decision-maker?
Use this feedback to refine:
Positioning
Messaging
Pricing
Target segment
Gauge Commitment Signals
Strong interest ≠ product/market fit.
Look for commitment behavior:
Will they pay?
Will they pilot or trial the product?
Will they introduce you to decision-makers?
Key Insight: You’re Testing Repeatability
This isn’t about getting lucky with one or two sales—it’s about proving that your process can work over and over with a similar customer profile.
📌 “One sale is a fluke. Five the same way is a signal. Ten is a pattern.”
Deliverables by the End of Phase 2
A documented, founder-led sales process
Sales data across stages (leads, demos, wins, losses, reasons why)
Clear definition of your ideal early customer
A refined understanding of what resonates—and what blocks deals
Early reference customers or pilot users
Common Pitfalls to Avoid
Selling too broadly: Stick to early adopters who feel real pain
Chasing vanity metrics: Focus on learning, not likes or newsletter signups
Overreacting to one customer: Look for patterns before pivoting
Relying on discounting: Early traction should be based on value, not price cuts
🧠 Steve Blank’s Law of Early Sales:
“If you can't sell your product directly to a few real customers, no one else can either.”
Phase 3: Develop Product and Company Positioning
Purpose: Craft a compelling, clear, and credible narrative about who your product is for, what problem it solves, and why it’s different—based on what you’ve learned from real customer interactions.
This phase is about translating discovery and sales learnings into positioning strategy. Positioning isn’t branding—it’s the foundation for how you talk to customers, what your sales team says, and how you shape perception in the market.
Key Objectives
Define how your product is perceived—and how you want it to be perceived
Align product features, customer needs, and messaging into a coherent story
Ensure internal consistency across product, marketing, and sales
Use positioning to prepare for scaling sales and marketing in the next phase
What You Do
Synthesize Customer Insights
Review what you’ve heard from successful and unsuccessful sales:
What words do customers use to describe the problem and solution?
What benefits resonate most?
What do customers compare you to?
Map patterns in objections, expectations, and buying triggers
Write a Positioning Statement
Use this template (inspired by Geoffrey Moore and used in the book):
“For [target customer]
who [statement of need or opportunity],
our product is a [product category]
that [key benefit/reason to buy].
Unlike [primary alternative],
our product [differentiator].”
Example:
“For small businesses that struggle with manual invoice tracking,
our product is a cloud-based invoicing tool
that automates billing and reduces late payments.
Unlike spreadsheets or bulky accounting software,
our product is simple to use and integrates with your existing tools.”
Align Internal Messaging
Ensure sales, marketing, and product teams use the same language
Update:
Landing pages
Demo scripts
Email templates
Product UI copy
Build internal consensus: everyone must tell the same story
Test Positioning Externally
A/B test messaging in landing pages, ads, and outreach
Observe how positioning affects lead quality and sales cycle
Refine and iterate based on customer response
Prepare to Scale with Consistency
Positioning must be clear, repeatable, and teachable
You’re preparing for Phase 4 and ultimately the Customer Creation step where marketing spend increases
Document positioning in internal playbooks and onboarding for future hires
Positioning Is Strategic Glue
Positioning connects:
Your customer (who they are)
Their problem (what’s urgent or broken)
Your solution (how it helps)
Your differentiation (why you’re uniquely qualified)
📌 “Without clear positioning, you confuse the market—and confusion kills conversion.”
Deliverables by the End of Phase 3
A validated and tested positioning statement
Aligned messaging across product, sales, and marketing
Updated materials (site, pitch, demo) reflecting new positioning
Early signs of improved resonance in outreach and conversions
A positioning foundation you can scale
Common Pitfalls to Avoid
Overhyping differentiation: Focus on what customers actually value
Confusing features with benefits: Talk about why it matters, not just what it does
Using jargon: Speak in the language your customers use—not internal lingo
Inconsistent messaging across teams: Every touchpoint must reinforce the same story
🧠 Steve Blank’s reminder:
“You’re not just building a product. You’re building how the world sees it.”
Phase 4: Pivot or Proceed
Purpose: Analyze your real-world sales and positioning results to make the most critical decision so far—should you scale, or do you need to change direction?
This phase is the final gate in Customer Validation. It determines whether your product has found a repeatable and scalable sales model—or whether your business model still needs adjustment. It’s the difference between getting ready to grow versus going back to learn more.
Key Objectives
Evaluate the repeatability of your sales process
Determine if you have a true Product/Market Fit with early customers
Make a fact-based decision: pivot, iterate, or proceed to Customer Creation
What You Do
Review All Metrics from Sales Efforts
Analyze your funnel:
Conversion rates (from lead to demo to close)
Sales cycle length and cost
Objections and losses
Renewal or expansion signals (if applicable)
Are these results consistent across a segment—not just one-off wins?
Assess Product/Market Fit Evidence
Can you predictably acquire and close similar customers?
Are your early adopters referenceable?
Do customers express urgency, budget, and satisfaction?
Do you have signs of organic pull (inbound interest, referrals, repeat use)?
Stress Test Repeatability
Can others replicate the sales process—or does it rely on founders only?
Do you have clear customer personas, positioning, and objections handled?
Would hiring 3–5 reps yield similar outcomes, or does success depend on exceptions?
Make the Decision: Pivot or Proceed
If You Proceed
You have achieved a repeatable, scalable sales model. That means:
You’ve validated core business model hypotheses
You’ve sold to multiple customers in a focused segment
Your sales process is teachable and measurable
You’ve aligned your product, messaging, and customer need
Next Step: Move into Customer Creation, where you begin scaling marketing and sales efforts to grow your customer base aggressively.
If You Pivot
You’ve learned that something critical isn’t working. Common pivot triggers:
You can’t consistently find customers who will pay
Sales cycles are too long or expensive
Customers don’t see the product as must-have
Objections repeat and aren’t fixable with messaging
What to do:
Go back to Customer Discovery or earlier phases of Validation
Change one element of your business model (e.g., target segment, value prop, pricing)
Re-test with new assumptions and iterate again
📌 “Pivots are not resets—they’re strategic adjustments based on validated learning.”
Decision Criteria to Proceed
Here’s what good evidence looks like:
Metric Proceed If... Customer Segment 3–5 paying customers in the same segment Conversion Rate 20–50%+ of qualified leads close Repeatable Sales Process Others can replicate early wins Positioning Resonates and is easily understood Pricing Matches value delivered and is accepted Customer Pull Referrals, follow-ups, inbound interest
Deliverables by the End of Phase 4
A clear go/no-go decision with supporting evidence
Documented and repeatable sales playbook
A refined and validated business model
Referenceable early customers and case studies
A team-aligned roadmap for either Customer Creation or a strategic pivot
Common Pitfalls to Avoid
Scaling prematurely: Growing before repeatability is proven leads to burn
Cherry-picking anecdotes: Look at patterns, not one-off successes
Avoiding hard calls: Pivoting early is far less costly than scaling a broken model
Confusing interest with intent: Only purchases, commitments, or strong pull validate product/market fit
🧠 Steve Blank’s core reminder:
“You’re not building a company until you have a proven, scalable business model. Until then, you’re still searching.”
Conclusion: From Search to Signal
The Customer Development process is not a checklist—it’s a mindset shift.
By completing Customer Discovery, you’ve replaced guesses with evidence about who your customers are and what problems they actually need solved. Through Customer Validation, you’ve tested whether your sales process is repeatable, whether your value proposition resonates, and whether there’s enough signal to proceed.
You now stand at a key inflection point:
If the answers are clear and consistent, you are ready to scale—with confidence, not just hope.
If not, you have the tools and discipline to pivot, adjust, and learn faster than your competitors.
This discipline—search before scale—is what separates successful startups from those that burn time, money, and talent chasing untested dreams.
“Startups that win are not the ones with the best ideas, but the ones with the most validated learning.”
In the next phase, Customer Creation, you’ll shift from learning to growing. But only because you've done the hard work to make sure you're growing in the right direction.