Looking for the “3 easy steps to validate your new business idea”?
Turn around, this article isn’t for you. Validating an idea isn’t easy. In fact, it's one of the biggest things we struggled with when building our own products.
We started the way most people do. We put together a landing page with an email signup form and drove traffic to it. The fastest way to do this is with Google Adwords. In our case, we were broke, so we did it by tweeting...a lot.
The problem is, someone giving you their email address doesn’t mean they’re going to give you their credit card. The data you get from experiments like this is very superficial as long as you’re not charging customers.
Note: We go over the trick to using a landing page to test your pricing and get additional validation the right way in this post in the Entrepreneur's Handbook.
Adora Cheung illustrated this point with a simple graph in a talk at Stanford. The first line, in black, shows the usefulness of feedback for a free product. The second line, in green, shows the usefulness of feedback when you're asking customers for money. It ranges from your mom who cares about you a lot to random strangers who don't care about you at all.
If you're not asking for money, random strangers won't give you very useful feedback. They don’t have anything on the line, so their feedback is likely to be inaccurate.. If you are asking for money, they'll give you perfect feedback. They don't care about you — they care about the value they get for their money. And they're not going to pay you unless you're solving their problems. Your mom will never give you super useful feedback.
Adora Cheung, former CEO of Homejoy, explaining the usefulness of feedback from customers for paid vs fee products. Free products are in black and paid products are in green. The x-axis ranges from your mom to total strangers. While the y-axis ranges from completely useless to incredibly useful.
Talking to Customers
To get meaningful feedback on your idea before you are ready to ask people for money, you have to talk to potential customers. Of course, how you talk to them matters a lot.
But before we talk about that, we need to discuss separating your idea from the problem you’re trying to solve. Most clients come to us with an idea for an app. An app is a potential solution to a problem. It doesn't matter how great the solution is if the problem isn't painful enough to make people open their wallets.
It doesn’t matter how great your solution is if the problem isn’t painful enough for people to open their wallets.
Instead of talking about cool ideas, we’re going to focus on validating that the problem is there. This problem should be your focus above all else. Write it on your ceiling above your bed and stare at it as you fall asleep each night. At the end of the day, no one cares about your idea, they care that you’re solving their problems. If you can find a painful problem that a lot of people are facing, you have a decent chance of stumbling your way to a solution.
Defining Your Target Audience
Before going to talk to customers you have to decide who you should talk to - your target audience. Justin Wilcox from Customer Dev Labs has an awesome process for defining your target audience (as well as a ton of great content on customer development):
One important thing to keep in mind. Being more descriptive about your target market early on is better. Focus on a smaller group of people. It’s better to have 10 people who are passionate about what you’re doing than 100 people who don’t truly care.
Questions for defining your market:
- Is your customer a business or a consumer?
- If business, what size business are they? 5 people? 50 people? 100 people?
- Where are they? Where do they spend their time? This can be a physical location, online community, etc.
- What do they care about?
- What kind of language do they use?
Let’s use an example!
I ride my bike to and from work every day. I wear a helmet because I like my head and I’d rather not have it split open.
The problem: my helmet makes me look like even more of a goober than I already am. I have this idea to build a sexy bike helmet...but first, I want to make sure other people care about this problem.
Bike helmets are ugly.
About the market:
- Often young, hip, middle class
- Environmentally conscious
- Likely active on Reddit, Twitter
- Specifically targeting commuters rather than sports cyclists
- Bike racks may be a good place to find people in person
Now it’s time to go talk to potential customers. In-person interviews are best, so sometimes you have to get creative. I could go stand beside a bike rack for a few hours on a work day and give people a $5 Starbucks gift card in exchange for talking to me. As another example, one of my friends working on a beer startup left business cards in bars with his phone number and elevator pitch.
But wait, 😱 remember that how you conduct these interviews matters more than almost anything else.
Don't even mention your idea during the problem validation stage. Your first step is confirming that the problem actually exists. Getting a “no” might be painful now. But it's a hell of a lot less painful than wasting months and thousands of dollars building the wrong thing.
Remember that this is a conversation, not a sales pitch. You do not want to convince people. You want to listen to and learn from them. And you want to begin to build relationships. These people could be your first customers!
So keep it light and conversational and don't try to sell them.
Take my sexy bicycle helmet. The wrong approach would be to ask, “Hey would you like a bicycle helmet that made you look like a Greek adonis?”
Instead I would start off easy. I would ask, “Hey, do you commute or ride just for fun? How long is your ride each day?”
I could also ask, “Hey, where did you get your bike? I like it a lot. Are you a big gear-head?” This tells me what channels they use, and how I can reach them with products in the future.
“I see you don’t wear a helmet, why not?” Now I’m getting to my problem, but see how it feels like part of the conversation, instead of a sales pitch.
“Have you ever bought a helmet in the past? Why did you like it or dislike it?” Awkward wording aside, this is the real meat and potatoes. Someone agreeing your problem exists is good, but words don’t speak the same way their wallet does. The most accurate validation comes from someone giving you money for your product. However, their past spending can tell me what they’re willing to pay for, even before I have something to sell them.
A customer's past spending can tell you what they’re willing to pay for before you have something to sell them.
This now tells me if they would be willing to buy a helmet or not. I can take it further and start to figure out pricing. I could ask how much they spent. This gives me much more accurate info than, “how much would you spend for a super sexy helmet?”
Where this becomes an art is when they tell me they haven’t ever bought a helmet before. It’s possible they’ve never bought a helmet because they’re ugly as sin, which is the exact problem we’re trying to solve. So a no doesn’t necessarily mean our idea is a bad one.
We can look for other buying indicators by asking them about other kinds of gear they’ve bought. Maybe they haven’t bought a helmet, but they bought an expensive light, indicating that safety does matter to them. We don’t want to give up too soon, but we also don’t want to delude ourselves. It’s a tough line to walk.
Finally, if and only if they mentioned your problem directly and seem like a good fit, you can mention what you’re working on. Try something like, “Hey I’m designing a super sexy helmet, I’d love to get your feedback once I have some solid progress on the designs! Mind if I reach out to you in the future?” This is your chance to convert them to a real, paying customer. And maybe even a best friend! (Probably just a customer though.)
You should start to notice a pattern after four or five interviews, but you may need to do up to 10. This is way cheaper than building the wrong product, and it’s a chance to start to flex your sales muscles. Your first sales calls should reflect this exact same process, only with a pitch at the end. It’s hard and scary, but the more interviews you do the better feel you’ll start to get for the process.
To validate your new startup idea:
- Define your target audience
- Look for where your audience is hanging out naturally
- Conduct user interviews
- Keep the interviews light and casual
- DON'T try to pitch users on your idea
- Look for patterns
- Look at past spending habits
Thanks for reading the post, I hope it was helpful! If you have any questions at all, you can always reach out to me on Twitter@AndrewAskins, or via email at email@example.com.
If you have a startup idea of your own and you're not sure if you've done enough validation yet run it through our Super Ridiculously Hard Startup Idea Validation Quiz! Think your idea can pass the test?
P.S. You can find a sample validation guide here (you don't even have to give us your email address to get it). https://docs.google.com/document/d/19bHS8HbBxAox-RzfFR9g0wk-Syf0q2mjYlaCY3_O9Vc/edit