Crowded’s Product Testing Strategy: How Manual Processes Led to Product-Market Fit
The conventional wisdom in tech startups is to automate everything from day one. But what if starting with manual processes could actually accelerate your path to product-market fit? In a recent episode of Category Visionaries, Daniel Grunstein shared how Crowded’s journey from manual payment tracking to automated platform offers a compelling case for embracing imperfect solutions.
The First Customer: A Story of Paper and Persistence
When Crowded landed their first client at the University of Michigan, their payment processing system wasn’t exactly sophisticated. As Daniel candidly reveals, “The database wasn’t actually registering the payments. So what I would do is I would get them on a call and I would literally go in and they would write, my dues for this semester is a grand, two grand, whatever it is. And I would actually write it on a piece of paper and then enter it in the database after.”
This manual approach might seem primitive, but it served a crucial purpose: it allowed Crowded to validate real user needs without investing heavily in technology that might miss the mark.
The Mom Test Methodology
Daniel’s approach to product development was heavily influenced by “The Mom Test,” a product management book that shaped their early decisions. “When I applied them, I felt that I made much better decisions as a Founder, taking things slow, not throwing a lot of money, and being very calculated with the investment you’re making in a new product,” he explains.
This methodical approach helped them avoid a common startup pitfall: building sophisticated features that users don’t actually need or want.
Creative User Engagement
Rather than waiting for a perfect product, Crowded found innovative ways to keep early users engaged. “In the early days, we used to do things like endorse them on LinkedIn or offer them an unpaid internship, which was really just giving us product feedback. And they love that because obviously college students want experience,” Daniel shares.
This strategy served multiple purposes: it provided value to users beyond the core product, created strong feedback loops, and built relationships with early adopters who could help shape the product’s evolution.
From Manual to Market Validation
The decision to start with college organizations proved crucial for this approach to work. As Daniel explains, “It was really easy to get them to use products that were half baked and to tell me what works and what doesn’t, because they find that cool and exciting, whereas users that are adults would just find that annoying.”
This willing audience allowed Crowded to test hypotheses and iterate quickly without the pressure of delivering a perfectly polished product from day one.
The Evolution to Enterprise
The real validation of their approach came as they began serving larger organizations. Daniel notes, “I don’t think we really realized there was something here until we really started to work with larger organizations… That only really came, if I’m honest, in the past sort of like twelve months.”
This progression from manual processes to automated platform wasn’t just about technical development – it was about deeply understanding user needs at each stage of growth.
Lessons for B2B Founders
Crowded’s journey offers several key insights for founders:
- Starting manual isn’t just acceptable – it can be advantageous for learning
- Choose early users who are willing to engage with imperfect solutions
- Find creative ways to provide value beyond your core product
- Use real user interactions to guide automation priorities
- Be patient with the evolution from manual to automated processes
Today, Crowded has evolved into a sophisticated platform that combines banking, payment processing, and compliance handling. But their early willingness to embrace manual processes and gradual automation played a crucial role in ensuring they built the right product for their market.
For B2B founders, the key takeaway isn’t that you should avoid automation – it’s that starting with manual processes can provide invaluable insights that inform what you should automate and why. Sometimes, the path to building sophisticated technology starts with a piece of paper and a pen.
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