Lecture Notes: Alan Michaels and the Importance of Customer Discovery

Introduction

• Speaker's Experience: Personal anecdotes about working with Alan Michaels, founder of Convergent Technologies.

Alan Michaels and Convergent Technologies

• Background: Alan Michaels left Intel to start Convergent Technologies.
• Initial Product: Single board computer in early 1980s.
• Sales Strategy:
  • Presented to computer companies expecting large orders.
  • Companies were skeptical due to lack of case, OS, and applications.

Realization and Pivot

• Burrows Engagement:
  • Interest in the product if it included a box, OS, and applications.
  • Alan realized a need for comprehensive product features beyond the basic concept.
• Solution: Hired talent from Xerox PARC to develop necessary software.

Success of Convergent Technologies

• Outcome: Sold the company to Burrows for $400 million four years later.
• Key Insight: Alan was good at listening to what the market wanted.

Alan Michaels and Ardent

• New Venture: Graphics supercomputer combining Cray and Silicon Graphics features.
• Mistake: Alan stayed in the office focusing on investors rather than customer feedback.

Challenges at Ardent

• Customer Feedback:
  • Customers found the product to be a poor combination of features.
  • Feedback suggested demand for a product 20% different from what was being developed.
• Communication with Alan:
  • Feedback was not well-received; the speaker (VP of Marketing) was fired.

Lessons Learned

• Customer Discovery:
  • Not an outsourceable task; founders must engage directly with customers.
  • Importance of receiving feedback firsthand to pivot strategy effectively.
  • Consultants or salespeople alone cannot replace founder's engagement.

Conclusion

• Entrepreneurial Insight: Direct customer engagement is crucial for product success.
• Final Warning: Relying solely on investors and staying detached from the market can lead to failure.