INSTANT MBA: You Don't Really Know What Your Customers Want

Nate Hanks, ReachLocal

Photo: Nathan Hanks//ReachLocal

Today’s advice comes from our interview with Nathan Hanks,co-founder and president of the online marketing company for local businesses ReachLocal:“It really is good to have a vision, but you increment your way toward that vision. I’ve mentored a lot of entrepreneurs, and I’ve always told them, you shouldn’t even take the risk of putting all your money into your business on day one. You build it piece by piece, and you reinvest in it as it gets bigger and stronger.”

Building your vision too big too quickly is a sure way to creating something more likely to collapse later on, says Hanks. You could be wasting time, energy and money building a product that won’t be successful. 

Instead, Hanks suggests building your business in stages. Put only as much money as you need to get your business off the ground, and as you raise the funds to make it bigger and learn what the customer is looking for, then continue to add onto it and make it bigger.

“The lesson from Silicon Valley is, as much as you think you know what your customer wants, you don’t really. You have to constantly and rapidly iterate. So making this big investment is just silly, putting all your money into the Taj Mahal, because sometimes you find out that your customer doesn’t want the Taj Mahal. Maybe they want the Empire State Building.”

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