The

Startup
Real
Book

Preface

Copyright

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International

License.
ii

To everyone
that has ever failed
and had the audacity
to admit it.

iii

Foreword
When all you have is a hammer,
everything looks like a nail.
Unknown

My first encounter with the term lean

sneakers, we need a great toolbox. And

startup introduced me to the concept of a

we need to know how to use it.

smoke test. The idea was elegant, place a

value proposition onto a landing page with
the intent to gauge customer demand. So
of course I applied it immediately.
When I heard about Sean Ellis How disappointed would you be survey, I used that.
When I heard about concierge testing, Wizard of Oz testing, paper prototyping, I
used them.
I used them without thought.
I used them because thats all I knew.
I used them because someone whose
name I recognized used them and wrote it
down on a blog, in a book, on a slide.
I used them with the same flawed logic
that says, Air Jordans makes great basketball players.
After 6 years of living lean, Im starting to
recognize that to build something great, to
build something that will last, to be a great
carpenter, we dont need a great pair of

iv

What's a Real Book?

Go to any jazz jam session and youll see

Of course I learned much later that the

one book one stage. The Real Book.

Real Book was illegal.

Every serious musician has it.

First published in 1971, it didnt pay any

Its a large, tome with text that looks like

someone took handwritten music charts,
photocopied them, and then stuck them in
a binder.
Each page is a jazz standard. All Blues by
Miles Davis, Autumn Leaves by Johnny
Mercer, A Night in Tunisia by Dizzy
Gillespie...even some more esoteric tunes
like Peaches in Regalia by Frank Zappa.
Unlike various fake books out there
which provided details on how to play
each note and where to put your fingers,
the Real Book was minimal. Each page
had the key signature, time signature,
chords, melody line, and not much else. It
was just enough detail to play the song. It
was vague enough to allow for the extensive improvisation that makes jazz jazz.
It was heaven.

royalties to the musicians who wrote the

songs. But it was the standard book that
everyone learned out of because it was the
most complete and accurate.
It was also published in multiple keys so
that musicians with varying instruments
would be able to refer to the same song,
with even identical page numbers, and not
miss a beat.
Nowadays, The Real Book is legit, and is
published by Hal Leonard who does pay
royalties as appropriate.
The Real Book answered a simple question for musicians, How do I play that
song?
Where a musicians job is play songs, the
startup product managers job is to run experiments and do research. Our job is to

challenge assumptions and test hypotheses.

We have unanswered questions and the answers lie out in the real world with real users. We gather these answers with re-

More importantly, please write on it. Scribble, scratch, and change it.
If you think its wrong, submit a change to

search and experiments.

[email protected].

The goal for the Startup Real Book is to

If you have a suggestion, send it in. If you

provide a single reference material to help

answer a simple question: What should
we do now?
Based on the question we ask about our
startup, there is an experimental or re-

learning a better way, let us know.

This book is creative common licensed
and is meant to be continually improved
and shared. So please help us by finding
problems and fixing them!

search method to answer it.

This book should help us find those answers by showing us what methods are
most appropriate and give us just enough
information to craft an appropriate experiment for our situation, in our industry, in
our country, in our business model.
It should not be overly dogmatic and
should leave sucient room for interpretation such that depending on our unique circumstances, we can still improvise.
This is not a text book, its not a How To
guide, and its not a fake book. Its a reference book.
Keep it, refer to it, and toss it to the side
when you need to.
6

Who is This Book For?

If youve ever recognized a giant hole in

Its ok if you havent heard of any of these

your business model and had no idea

terms, but youll get a lot more out of it if

how to go about filling in the unknown, this

you have.

book is for you. You may be asking:

Who are our customers?
What are the most important features of
our product?
Why are people doing that?
Will people actually pay for this?
This book is for managing innovation projects where the business model is partly or
completely unknown. Your job title might
be:
Product Manager
CEO of an early stage startup
Entrepreneur in Residence

Previous Experience
You should be familiar with concepts such

In particular, you should already be bought

into the idea that there are parts of your
business model that are unknown and the
way to figure that out is to do research and
experiments out of the building and in the
real world with your customers.

Innovation at Scale
This book is particularly useful for those
managing or assisting large numbers of innovation products. This includes:

Chief Innovation Ocer

VP of Innovation
Accelerator Manager
Lean Startup / Innovation Coach

as:
Lean Startup
User Experience
Human Centered Design / Design Thinking
Business Model Canvas

If this is you, youll find this book serves as

a versatile and handy quick reference
guide for almost any startup youll be dealing with. It can also be used to diagnose
typical startup problems.
It is also a Creative Commons project
which means you can use it as training ma-

terial for your startups without any additional cost.

Business Model
This book is best used to answer questions about certain business model elements such as the Customer, the Value
Proposition, Channel, Relationship, &
Revenue. In other words, the critical elements in Product / Market Fit.

Warnings: Academics and Existing

Businesses
This book is not for students trying to learn
in an static academic environment. Youll
have to go out and use this book in the
real world with real customers to get anything out of it. So if your teacher just
handed this to you, get ready to get kicked
out of the building to go talk to customers.
This book is also not for companies execut-

While many of the methods listed here can

ing on an existing business model. While

be used to investigate other business

some of the techniques listed here may

model elements such as Partners & Re-

work quite well for optimizing an existing

sources, it may take some interpretation

product or service, its not designed for

on the part of the reader.

that and traditional product management

Stage and Industry

methods might be more appropriate.

The methods here work fine for small, early

Continual Improvement

stage startups and equally fine for teams

Future improvements may change or

in large companies trying something new,

broaden the focus on this book. This is a

risky, and outside the normal business

living document which will be updated

model.

regularly.

It also works for any industry, but there is a

bias towards providing examples and case
studies from the technology industry.
Other industries will be included as case
studies become available. Please send any
such case studies to [email protected]
to be included.

How to Use This Book

Do not read this book straight through.

It is highly recommended that you read the

Read this Index thoroughly, then reference

index thoroughly. You will not get the major

other pages as needed.

benefit of this book without it.

When faced with an unknown aspect of

This book is not a step 1, step 2, step 3

guide to building a startup. Startups dont
work like that.
Think of this book as a toolbox.
Like any toolbox, its organized to help us
find what were looking for when we need
it. When we need a way to test market demand, theres a section on Evaluative Market Experiments. When were looking to

your business model, first figure out what

you need to learn. Whats your learning
goal? What question are you trying to ask?
Once you know what you need to learn,
consult the index to find a list of research
and experimental methods that will help.
Then read each method and determine
which will work best for your situation and
resources.
-

prioritize our ever growing feature list into

a Minimum Viable Product, theres a sec-

Each method section, you will find the fol-

tion on Generative Product Research.

lowing headers:

The index for navigating this book is not al-

In brief

phabetical, chronological, or ontological.

A quick 2-3 sentence description.

The index is ordered by what youre trying

to learn. Are you trying to learn about your
customer? How to price your product?

Helps Answer
A list of common questions that this

What will make your users come back?

method helps answer.

Tags

A list of terms that can also be used to

navigate through the book such as B2B
(for methods commonly used for
Business-to-Business models) and qualitative (for the type of data used by this
method.

Method
A more detailed description of the steps
normally taken to run this research or experiment method.

Potential Biases
A list of common errors that may distort
the results of the method and lead to bad
conclusions based on incorrect data.

Field Tips
Tips for startup practitioners who have
used this method.

Case Studies
Links to various case studies that might
serve as examples.

References
A list of additional material or resources for
those who want additional reading.

10

Contributors

Tristan Kromer, TriKro LLC, Blog

Kenny Nguyen, TriKro LLC, Linkedin
Jan Kennedy, Academy for Corporate Entrepreneurship, @innovationmojo
Luke Szyrmer, LaunchTomorrow,
@launchtomorrow
Phyo Pine, LinkedIn
Austin Elford, Linkedin
Casey Sakima, Portfolio, Linkedin
Jason Koprowski, Eortless Growth,
Linkedin
Dharanidhar Malladi, Linkedin
Gian Tapinassi, ArtDigiland, Linkedin
Hameed Haqparwar, Linkedin, @haqparwar
Rammohan Reddy, LeanMantra, Linkedin

xi

1
The Index

An index is a great leveler

George Bernard Shaw

13

What Are You Trying to Learn?

If I had an hour to solve a problem I'd

Right there in front of you, answers our

spend 55 minutes thinking about the prob-

teacher.

lem and 5 minutes thinking about solutions. - Albert Einstein

In school, were constantly taking tests to
gauge how well weve learned last weeks
material. We cram geographic boundaries,
the dates of battles, and multiplication tables into our heads and spit out the re-

Is there a right answer? we hesitantly inquire.

Yes there is, assures our teacher.
What are the questions? we plead.
Thats what you have to figure out.

sults.
As an entrepreneur (or intrapreneur) we
Sadly, those rote memorization skills and

cant just guess at the answers without

the ability to answer pre-formulated ques-

first identifying the right questions to ask.

tions doesnt help us when we embark on

If we just guess by building a fully function-

entrepreneurship. When building a new

ing product, its very likely that the market

business model, there is no test or quiz

will judge us wrong and punish us with

which we can cram for. Its as if we sat

zero sales and bankruptcy.

down for our final and open up the exam

book only to find a blank piece of paper in

Our job, as an entrepreneur, is to first ask

front of us.

the right questions and only then to find

the right answers.

Where is the test? we ask.

14

What is the Right Question?

For example, lets say were selling a new

type of shoe that cures plantar fasciitis. We

The questions we must answer are funda-

put up a landing page test (a type of

mental holes in our business model. Ques-

smoke test) with our value prop and a buy

tions like:

now button. Then we put $1000 in to Goo-

Who is our customer?

What job do they want done?

gle Adwords for shoes to drive trac

and sit back to wait for the money to start
rolling in

What channels can we use to reach

them?
Which features should we build for our
first product?
Is our solution good enough?
If we can identify the right question, there
is a corresponding method or methods
listed in this book to help answer that question. Depending on the resources and time
constraints, one of the methods may be

and our conversion rate is 0%

simpler to execute.
Should we give up? Thats what the land[insert pic of questions with lines drawn

ing page test says. There is insucient de-

to specific methods.]

mand for this product. But what is plantar

If we attempt to execute a method in this

fasciitis?

book without first identifying the right ques-

Exactly. All those people coming to our

tion to ask, the results of that experiment

site are asking the same thing.

are typically very dicult if not impossible

to interpret correctly.

Is our test failing because customers arent

interested? Or do they fail because they
simply cant understand the value proposi-

15

tion? Or are we just focused on the wrong

Based on this, if we have a clear hypothe-

channel?

sis of who our customer is and what we

In this case, we were asking Does anyone

want my product? when we should be
asking Does our customer understand
what plantar fasciitis is? or even Who is
our customer?

Focusing The Question

To simplify our search for the right method,
well ask two questions:
1. Do we need to learn about the market or
the product?
2. Do we have a clear hypothesis to evaluate or do we need to generate a clear
idea?
Mapping the intersection of these two
questions gives us a 2x2 matrix:

think they will pay for, we can conduct an

Evaluative Market Experiment such as a
smoke test. If we dont have a clear idea of
who our customer is, we can do Generative Market Research like data mining.
Similarly, if we have a clear hypothesis of
which features will solve the customers
problems, we can do an Evaluative Product Experiment such as Wizard of Oz testing. If we do not know which features will
lead to an acceptable solution, we can do
Generative Product Research such as a
Concierge Product to try and come up
with new ideas.

Warning: Any framework is an

over simplification of reality! This
Index is a quick way to navigate
to the correct method, but doesnt
mean you dont need to think.
The Index of Questions and the Index of
Methods show the complete list of questions and their corresponding methods.
But first well look at the details of Market
vs. Product and Generative vs. Evaluative.

16

Market vs. Product

Do we need to learn about the market or

the product?
To narrow down the large list of methods
to something actionable, we can first separate our questions into those about the
market and those about the product.
Market
Who is our customer?
What are their pains?
What job needs to be done?
Is our customer segment too broad?
How do we find them?
Is this customer segment really willing to
pay?

How much will this customer segment

pay?
How do we convince this customer segment to buy?
What is the cost to acquire a customer in
this customer segment?
Product
How can we solve this problem?
What form should this take?
How important is the design?
Whats the quickest solution?
What is the minimum feature set?
How should we prioritize?

17

 Is this solution working?

Are people using it?
Which solution is better?

side of the customer using it, but in this

case, we are again simplifying for navigation.

ment mostly or completely on the identity

If using the Business Model Canvas,

market questions are those on the
right side of the canvas including:
Customer, Channel, Relationship, &
Revenue. product questions are
those about the Value Proposition and
everything left of it including: Key Activities, Key Resources, Key Partners,
& Costs.

of the Customer segment. This is a neces-

Where should we start?

How should we optimize this?

What do people like / dislike?
Why do they do that?
In this case, market refers to any ele-

sary oversimplification that makes it easy

to find the right method.

This book is agnostic about where we

start. We may already have a product and

For example, market questions include

are investigating who to sell it to or we

those about which Channels we can use to

may have a customer segment with a

reach the Customers. We cannot use tradi-

strong pain point and be trying to find a so-

tional broadcast television advertising to

lution. However, when in doubt, start with

target customers who dont have a televi-

the customer.

sion set.
If the customer segment changes, then the
Product (or service) is simplified to mean

Product usually must be adapted to the

anything regarding the Value Proposition

Customer. However, if the product

or the production of it. This includes Re-

changes, Customers may simply use a dif-

sources needed to produce the Value

ferent product. Human behavior is notori-

Proposition, as well as any Key Activities,

ously dicult to change although it is not

Partners, or Costs.

impossible.

The Value Proposition really sits at the intersection of the Market needs and the Product itself. The Product has no value out-

18

Generative vs. Evaluative

Do we have a clear hypothesis to evaluate

Yet these types of flawed hypotheses are

or do we need to generate a clear idea?

common. Here is a slightly more subtle ex-

This distinction depends on our ability to

ample:

understand what makes a clear hypothesis.

If 250 Los Angeles teachers were asked

Our customers really want our product.

spect, then at least 50 teachers would do

This hypothesis is clearly bad for a number

to treat minority students with more reso.

of reasons. The most obvious is that its

While not as flawed as the first example, it

tautologically correct and not worth investi-

has fundamental problems that would pre-

gating. If they are our customers, then tech-

vent us from designing a good experiment.

nically they have already purchased our

If we force an experiment, we will most

product and that is a good sign they actu-

likely have ambiguous data or be unable to

ally want it.

interpret it correctly.

It is roughly equivalent to, If the piece of

In this case, several things are unclear:

paper is flammable, it will burn when ignited.

Which teachers? Teachers at schools

with a number of minority students? How
many minority students are sucient for
this test?

19

 How should we ask the teachers? Will

we ask each teacher dierently? Will we
let the principals ask them?
What is respect in this context? What behaviors would indicate more respect?
Without defining the hypothesis very
clearly, we might let the principals of
schools ask the teachers on our behalf
and they might ask them with varying degrees of persuasiveness.
We might also argue about the results. Is
calling a student Mr. instead of their first
name a sign or respect or a sign of sarcasm?
When we do not have a clear, well defined,
and falsifiable hypothesis we are best
served by doing generative research instead of an experiment. In this case, our
learning goal could be What teacher be-

Defining good hypotheses can be a challenge, so here are some things to look for
and a short checklist.

Simple and Unambiguous

The hypothesis should be clear and unambiguous so that anyone reading it will understand the context and be able to clearly
interpret the results.
If 250 Los Angeles teachers were asked
to treat minority students with more respect, then at least 50 teachers would do
so.
In this case, we may have dierent opinions as to what respect means. In order
for us to agree that someone is being
treated with more respect, we must
agree on what behaviors would indicate respect.

haviors indicate teacher respect to minor-

If 250 Los Angeles teachers were asked

ity students?

to treat minority students with more re-

Given this goal, we are better o doing customer discovery interviews (a.k.a. speaking

spect, then at least 50 teachers would refer to their students using an honorific.

to the students) rather that testing our

While this is more specific, not everyone

vague hypothesis. The outcome of the gen-

knows what an honorific is, so we should

erative research should be a clear, well de-

avoid using any specialized vocabulary or

fined, and falsifiable hypothesis that we

jargon.

can then go and test with an Evaluative Experiment.

20

If 250 Los Angeles teachers were asked

Students at Dalton High School that

to treat minority students with more re-

study less than four hours a week get a C

spect, then at least 50 teachers would call

or lower in at least one class per year.

their students using Mr./Ms. and their last

name instead of their first name.

There are still more issues, but the hypothe-

Measurable

each other.

Our customers have a strong desire to do-

Cause and Eect

nate to charitable causes.

sis must relate two or more variables to

During the summer, ice cream consump-

This hypothesis may be true, but it is not

tion increases and more people drown per

observable. At least not until we invent te-

day.

lepathy.

This is a true statement, but does not tell

Our customers donate to charitable

us how those two variables relate to one

causes twice per year.

another. Are people drowning because

This new hypothesis has some other issues, but it is at least something observable.

Describes a Relationship
50% of students at Dalton High School

they ate too much ice cream? Or are they

eating more ice cream because they are
sad about all the drownings?
During the summer, people who eat ice
cream will drown at a higher rate than people who do not eat ice cream.

get a C or lower in at least one class per

This specifies a clear relationship and the

year.

causal direction of that relationship. Simply

This again may be true and it is observable, but it doesnt tell us anything about
the cause of the low grades. A good hy-

using an IF _______, THEN _______ sentence structure can help make sure cause
and eect are apparent.

pothesis should allow us to change one

If we feed ice cream to people, then the

thing and observe the eect in another.

average # of drownings per day will increase.

21

Achievable

When it doubt, we can ask ourselves,

What evidence would prove this hypothe-

If an astronaut in a stable orbit around a

black hole extends one foot past the event
horizon of a black hole, then they will be

sis incorrect?
If there is no amount of evidence that

pulled in entirely.

would prove our hypothesis is invalid, then

There are many theoretical physicist who

very stubborn.

create a number of hypotheses which are

not testable now, but may be testable at
some point in the future. While this black
hole/astronaut hypothesis is theoretically

either the hypothesis is flawed or we are

Other Frameworks
There are a number of frameworks and

testable, it is not testable today.

checklists for forming hypothesis, one of

Unfortunately, as entrepreneurs, we should

avoid confusion:

restrict our hypotheses to ones that can be

tested within the immediate future or

which is popular enough to comment on to

We believe <this capability> will result in

within our current resources.

<this outcome> and we will know we have

[warning call out: Many things seem untes-

signal>

table today but clever application of lean

thinking can simplify the hypothesis into a

succeeded when <we see a measurable

The entire sentence is not the hypothesis.

testable first step.]

Lets break this into its parts:

Falsifiable

<this capability> will result in <this out-

All of these conditions add up to a hypothesis being falsifiable. If a hypothesis cannot

come>
That is the hypothesis.

be proven incorrect, then it is not relevant

we will know we have succeeded when

to run a test on it.

<we see a measurable signal>

There is an invisible, intangible tea cup

That is the data we will collect including

floating between the Earth and Mars.

any information about sample size, margin

of error, success conditions, or fail criteria.

22

We believe
That section just confirms we think the hypothesis is correct. It is not part of the hypothesis and there are many situations
where we may test a hypothesis that we
believe is incorrect.

23

Index of Questions

24

Generative Market

Generative Product

Who is our customer?

How can we solve this problem?

What are their pains?

What form should this take?

What job needs to be done?

How important is the design?

Is our customer segment too broad?

Whats the quickest solution?

How do we find them?

What is the minimum feature set?

How should we prioritize?

Evaluative Market
Are they really willing to pay?
How much will they pay?
How do we convince them to buy?
How much will it cost to sell?
Can we scale marketing?

Evaluative Product
Is this solution working?
Are people using it?
Which solution is better?
How should we optimize this?
What do people like / dislike?
Why do they do that?

25

Index of Methods

26

Generative Market

Generative Product

Customer Discovery Interviews

Solution Interview

Contextual Inquiry / Ethnography

Contextual Inquiry / Ethnography

Data Mining

Demo Pitch

Focus Groups*

Concierge Test / Consulting

Surveys* (open ended)

Competitor Usability
Picnic in the Graveyard

Evaluative Market

Evaluative Product
Paper prototypes

5 Second Tests

Clickable Prototypes

Comprehension

Usability

Conjoint Analysis

Hallway

Data Mining / Market Research

Live

Surveys* (closed)

Remote

Smoke Tests

Wizard of Oz

Video

Takeaway

Landing Page

Functioning Products

Sales Pitch

Analytics / Dashboards

Pre-Sales

Surveys*

Flyers

Net Promoter Score

Pocket Test

Product/Market Fit Survey

Event
Fake Door
High Bar

27

Tags & Other Frameworks

There are many great methods, books

and frameworks out there on how to identify and prioritize risky assumptions, hypotheses, and questions. This index will
work in conjunction with any of them
through the use of tags.
All the methods are tagged so as to be easily searchable depending on any other
frameworks we might use. This includes
simple tags such as qualitative or quantitative used to denote the type of information
that the method produces.
It also includes tags related to the type of
business model, such as:
B2B - For Business-to-Business
B2C - For Business-to-Consumer

2-sided market - For a business with buyers and sellers.

Etc.
Using these tags to navigate the methods
is not as simple as using the Index and
may result in a large selection of methods
not entirely suited to the learning goal, but
can be helpful to further narrow down the
methods, so weve included them.

Using the Business Model Canvas

The Business Model Canvas is a very
popular framework that identifies 9 basic
building blocks of any business model and
asks us to make assumptions as to what
our business will be. Those blocks are:

B2G - For Business-to-Government

28

Based on our completed canvas, we

For example, if the Customer is the big-

choose the area of greatest risk to our suc-

gest risk to our customer segment, then

cess. Sometimes this is the Customer seg-

we are asking Who is our customer? or

ment, but in the case of an existing market

Is this our correct customer segment?.

it may be the Value Proposition, Channels,

Based on that, there are several tools avail-

or even Key Partners.

able to learn more about our customer, in-

Each method in this book tagged with

these blocks. If we can identify the greatest risk to our business model via the Business Model Canvas, we can search the
tags for a complete list of experimental
methods relating to that building block.

cluding:
Customer Discovery Interviews
Ethnography
Data Mining
Surveys (close ended)

29

 Focus Groups

Warning: This wont dierentiate between Generative Research and

Evaluative Experiments, so youll still
need to take that extra step.

30

2
Generative Market Research

Lorem ipsum dolor sit

amet, donec ornare vitae.
Leo Venenatis

Customer Discovery!

In Brief
Customer Discovery is the early stage of Customer Development - an overarching methodology to discover and validate the right market for your product or service by applying a
scientific method to better understand your
customers. Discovery should be used at the
very beginning of developing new ideas in order to gain a deeper understanding of how
customers behave when confronted with a
problem you may be looking to solve. It is

very much focused on observing customers

and can be likened to ethnography.

Helps Answer
Who exactly is our customer?
How might we profile and segment our customers?
What are the characteristics or personas of
the customer?

32

 Do we understand the context surrounding

the problem?
What workaround solutions do they currently use?
What are their pains and how deep is that
pain?
Do you know if you are solving a real problem?
What are the jobs to be done?
Can we sell it?

Tags
B2C
B2B

tomer is likely to be an innovator or early

adopter someone who is interested to
solve a known problem that they already experience. Therefore, zooming in on an extreme user can help you identify the right person / people to observe. This is someone
who is confronted with the problem more
than most, or is more heavily impacted by it
than most.
Assume a Beginners Mindset
We all enter situations with assumptions that
may be misconceptions and stereotypes and
that may restrict the amount of empathy and
understanding you can build. Its therefore important to assume a beginners mindset
just how a child would and start your observation experiment from scratch to approach the
challenge with fresh eyes.

Qualitative
Some Tips from IDEO
Customer
Problem
Value Proposition

1. Dont judge. Just observe and engage users without the influence of value judgments
upon their actions, circumstances, decisions,
or issues.

Customer Observation

2. Question everything. Question even (and

especially) the things you think you already
understand.

Your experiment should be focused on observation techniques in order to understand

what the current situation is, through the
eyes of your customer. As with most new
ideas or new technologies, your first cus-

3. Ask questions to learn about how the user

perceives the world. Think about how a 4year-old asks Why? about everything. Follow up an answer to one why with a second
why.

Description

33

4. Be truly curious. Strive to assume a posture of wonder and curiosity, especially in circumstances that seem either familiar or uncomfortable.
5. Find patterns. Look for interesting threads
and themes that emerge across interactions
with users.
6. Listen. Really. Lose your agenda and let
the scene soak into your psyche. Absorb
what users say to you, and how they say it,
without thinking about the next thing youre
going to say.
Options
Make an informed decision on whom to observe, when and in what type of situation to
observe them. It does not have to be spying
but could take the form of shadowing, getting
users to conduct a video diary over time,
tracking peoples movement and location via
GPS etc.
A mixture or combination of 3 approaches
can typically be used for observational research (Wikipedia):
Covert observational research- The researchers do not identify themselves. Either
they mix in with the subjects undetected, or
they observe from a distance. The advantages of this approach are: (1) It is not necessary to get the subjects cooperation, and
(2) The subjects behaviour will not be contaminated by the presence of the re-

searcher. Some researchers have ethical

misgivings with the deceit involved in this
approach.
Overt observational research- The researchers identify themselves as researchers and explain the purpose of their observations. The problem with this approach is
subjects may modify their behaviour when
they know they are being watched. They
portray their ideal self rather than their
true self. The advantage that the overt approach has over the covert approach is that
there is no deception (seePCIA-II; Holigrocki, Kaminski, & Frieswyk, 1999, 2002).
Researcher Participation- The researcher
participates in what they are observing so
as to get a finer appreciation of the phenomena.

Time Commitment
From 2-3 hours for an initial study to several
days or weeks for a longer study.

How To
When you are in the field observing your customers, record what you see and apply
what, how and why to the behavior.
Start with concrete observations (What):
What is the person youre observing doing in a particular situation (when confronted with the problem)? Notice and

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write down the details. Try to be objective and refrain from making assumptions.
Move to understanding (How):
How is the person youre observing doing what they are doing? Does it require effort? Do they appear stressed
or rushed or annoyed? Does the activity or situation appear to be impacting
the users state of being either positive
or negative? Use descriptive phrases
packed with adjectives.

Interpreting Results
Step out on a limb of interpretation (Why):
Why is the person youre observing doing what theyre doing, and in the particular way that they are doing it? This
step usually requires that you make informed guesses regarding motivation
and emotions. Step out on a limb in order to project meaning into the situation
that you have been observing. This
step will reveal assumptions that you
should test with users, and often uncovers unexpected realizations about a particular situation. Your next step may be
to pursue a problem interview.

Potential Biases

to one at 7pm 9pm or when comparing

different days of the week.
Keep to a natural environment as much as
possible, rather than an artificially created
situation for accurate situational observation of your user.

Field Tips
Got a tip? Add a tweetable quote by emailing
us: [email protected]

Case Studies
Steve Blanks Lean Startup Works Brilliantly, Even If Youre Building Robots
Got a case study? Add a link by emailing
us: [email protected]

References & Contributors

Rob Fitzpatrick: The Mom Test
Stanford D-School: Method - Extreme Users
Wikipedia: Ethnography
Wikipedia: Observational Techniques
Got a reference? Add a link by emailing us:
[email protected]

Timing of Observations: An observation at

9am 11am may produce different insights

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In brief
Not finished! Were writing this book as
fast as we can.
Tweet us and well write more chapters:
Hey @trikro please write more chapters for
The Startup Real Book

36

Note

For You
This book wont make you successful. You
have to work for that.
Entrepreneurship is not an academic theory, its a practice.
So to get better at it, just do it!
Figure out what question you have about
your product or market, pick a method,
and start practicing.

For This Book

This book is not done, nor will it ever be.
We learn faster together.
Have you come up with a new method?
Got a new tip?
Let us know by emailing
[email protected]

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