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The Role of Early Customers in the Venture Creation Process

Author

Maya Kumar, The University of Western OntarioFollow

Degree

Doctor of Philosophy

Program

Business

Supervisor

Darren Meister

Abstract

While startups’ interactions with early potential customers may occur long before product creation, entrepreneurs often fail to recognize how these interactions impact startup development. My research proposes that early customers are central influences and develops a model of customer interactions. More specifically, my dissertation focuses on answering: When and how do startups interact with early customers during the venture creation process, and how do these interactions create path dependence for the type of organization being created?

I undertook an inductive, qualitative process study of nine startups located in incubators and studied customer interactions in near-real-time. My findings show that types of customers and validation received are important during new venture creation. First, I introduce a model of self-reinforcing mechanisms - the customer interaction-validation-spiral - that occurs when startups receive customer feedback. Positive feedback is interpreted as justification to move forward in revising the business to meet initial customers’ needs and in seeking out additional validation. Over time, other options for startups are gradually eliminated, efficiencies gained, and resources allocated to create processes and infrastructure that propel startups down a given path. Second, this spiral is incorporated into a novel model of customer interactions during the new venture creation process that requires multiple levels of validation to be met.

My contributions refresh existing theories of new venture creation and expand on customer-centric, practitioner-based lean startup concepts to demonstrate that customers not only provide validation on products and markets, but also on founders’ abilities to create fully functioning and productive organizations. Finally, I apply existing literature on path dependence to new venture creation and demonstrate that self-reinforcing mechanisms and multiple validation stages trigger a narrowing of options available to startups, making pivoting more challenging over time. The customer interaction-validation-spiral offers further insights into path dependence mechanisms, further opening the black box of organizational paths.

The practical implications of this research help startups understand the importance of thoughtfulness in early customer selection. Despite a narrowing development path, there is the potential for entrepreneurs to continue to exhibit agency and reflexivity in startups’ path formation by regularly reflecting on the results of their actions.

Recommended Citation

Kumar, Maya, "The Role of Early Customers in the Venture Creation Process" (2017). Electronic Thesis and Dissertation Repository. 5096.
https://ir.lib.uwo.ca/etd/5096