A big mistake entrepreneurs make is thinking they know more than they know. I see this all the time: Someone comes from a specific industry and has domain expertise, so they don't think they need to do customer discovery. That’s a dangerous trap to fall into.

Oftentimes, your pain points are somewhat siloed. There's a subset of the industry that feels and operates the same way. They would buy what you're selling, you just have to find those people. At the same time, you want to understand your path to taking over the entire market.If it is a small market, what is your path to taking over? What does this wedge unlock into? 

In addition to that, you don't just want to interview your customer. You want to do discovery with a lot of different profiles of people, even though they might not be the right purchaser. 

When we were starting our HOA tech company, we interviewed literally everybody. We did about 100 customer discovery interviews across property management companies (small regional, middle market, large scale), private equity firms doing roll ups, board members of HOAs and condominiums, service providers, attorneys, other tech companies that had built software in the space, mortgage companies, and real estate agents.

That helped us shape our perspective. We didn't come from the industry, so we had to fill in a lot of knowledge gaps. I purchased a condo and was on the board of an HOA, but I really had to shape our thought process. How do we go to market? Who is the actual customer? Is this the right pain point to solve?

If there are 10 major pain points, you don’t want to solve the eighth-ranked one. You want to solve one of the top pain points - the ones somebody is going to buy, think about, and adopt. 

And early on, that matters more than making a ton of money. What matters is that your time to value is super fast.

The amount of meetings I have with entrepreneurs who say,  “I’ve talked to five companies. I don't need to do diligence. I am the customer,” is insane to me.

That's not even close to being enough. I can get just as many insights conducting diligence on the investment.

We want to meet people who have developed a secret about an industry through a combination of lived experiences and ruthless discovery. And because of rigor and experience, you will have shaped a unique perspective on the industry and your customer that is different from how others think. This perspective is a must before you start building a product and fundraising.

I really like it when entrepreneurs save all their transcripts from their customer discovery. When I'm doing due diligence on the company, we normally want to call industry experts or their customers. But if they have all the transcripts and recordings, I can just pop them into Claude or ChatGPT and query them. They're cutting the time of diligence for the VC firm as well as building trust.

It also shows the rigor and the work you put into what you're building. Every entrepreneur should have their discovery transcripts in their data room.

Customer discovery often gets overlooked. It is the most important thing that you can do when you're starting a company.