A simple way to validate your startup idea
Here’s a simple way to validate your startup idea: take a piece of paper, and write out the names of 5 people that need your product.
Just 5 people.
This is an effective test, because it makes it real. If you built this thing, who would buy it?
Can’t think of 5 people? That’s a red flag. Are you targeting a product at a group of people you don’t yet have a connection with?
“Having a connection with people is really important. A lot of people build tools without thinking about the people that are using them.” – Alex Hillman
Eventually, when you’re bigger and more successful, you might have anonymous customers – people that find you on the web and click the buy button without any social interaction.
But at the beginning, when you’re deciding what to build, knowing a few potential customers by name proves something. It shows that you’re involved in their community; that you’ve been listening to their problems. When you can name your first customers, the people you know need a solution, you can build your product with confidence.
(When I say “know people by name”, this includes the online personas of folks you’ve met through forums, Twitter and other online communities.)
Recently, Nathan Barry gave me some good writing advice that also applies to products:
“To write good content that people care about, write to one person. A specific person. My book Designing Web Applications was written to my brother-in-law, Philip. I wrote what I knew would help him. If your writing is truly valuable to that one person, your ideas will be valuable to many.”
Make sure your idea connects with a genuine human need. Before you get too excited about building something, think about who you’re building it for.
How (not) to validate your idea
“How do I validate my idea?” is one of the top questions Kyle and I get on our podcast: Product People. Based on the interviews we’ve done, and my own experience, I’d like outline what I’ve seen work, and what hasn’t.
How not to validate your idea
Let’s start with what doesn’t work. These are some of the common traps that people building a business fall into:
Just because you’ve been published in Techcrunch, doesn’t mean you have a marketable idea. Early on, a company I founded received a lot of press (primarily newspaper coverage, magazine articles, blog posts). But we couldn’t convert that hype into paying customers. Getting covered in the media won’t turn a bad idea into a good one.
Likewise, getting a lot of traffic to your site or landing page doesn’t mean you’ve succeeded either. The problem with traffic is that it’s hard to quantify why people are visiting. Are they just curious? Bored? Our SaaS app’s homepage received a spike in traffic due to a mention in a HN post. But none of that traffic converted because people were just curious; they weren’t in our target market, or looking to buy.
This is one of the most dangerous forms of flattery. When I owned a retail shop we won “New Business of the Year”. Guess how many customers cared that we’d won that award? Zero. Customers only care about their problems; they don’t care about what accolades you’ve been given.
People that “like your idea”
You can’t validate a business based on people saying they “like” your idea. In fact, I think it’s the kiss of death for startup ideas. When you hear comments like “Oh yeah, that sounds interesting”, “That sounds neat”, or “Cool concept” it’s probably time to kill that idea. Why? You can’t build a business on a mediocre response. What you’re looking for is: “please take my money and let me use this”.
How to (really) validate your idea
If you’re creating a startup, where the end goal is to make money, the only real way to validate your idea is if people are willing to pay you for it.
For his new product, Drip, Rob Walling emailed 17 founders (like Hiten Shah of Kissmetrics). He said very specifically: “I don’t want you to tell me that you think this is an interesting idea; I want to know if you would actually use and pay for it.” Out of the 17 people he asked, he got 11 people that said “yes” (ref: at 7:00 of this podcast).
Jason Cohen, of WP Engine, puts it best: “When ten people say they’ll give you money if you build this thing, that’s the only validation that counts.”Published on February 24, 2013
Starting a business is easy
Do you know how easy it is to start a business?
I used to fawn over myself for having started businesses in the past. Everyone thinks starting a business is hard. But the truth is that starting a business is not that hard. Starting a business is easy; starting the right business is hard. You could start most businesses by choosing an idea out of a hat, filling out a bit of paperwork, and sending out a press release (bingo! you’ve started).
The challenge isn’t starting a business; it’s starting a business that will give you something back. It’s running a company that won’t suck the life out of you. It’s building a product or service that people love and pay you money for.
Starting a business is like getting married
Have you ever had a crush on someone? You experience powerful romantic feelings, and day dream about spending your life with that person. Your crush is all you can think about. But if you asked that person to marry you (without getting to know them first) they would think that you were crazy. Why? Because marriage is for life (and your crush doesn’t want to marry a crazy person).
Starting a business is similar to marriage in that you need to:
- choose the right thing (person)
- invest time and resources to make it work
- be committed for life
The difference, is that when you decide to start a business, the business (unlike a person) can’t say “no”. Even worse: while your friends would dissuade you from marrying someone you just met in Vegas, they will do the exact opposite when you’re starting a business. Instead of critically questioning your decision, they’ll encourage you with maxims like: “Yeah, you should follow your dream!”
The wrong business will give you pain every day
The wrong business will suck you dry. I should know: when I started my retail company, I was infatuated with my idea. But running my store was a different experience: I would invest time and resources, but wouldn’t get anything back. Instead of making money, it was losing money. Instead of giving me more freedom, I spent most of my time just trying to keep things afloat. Instead of enjoying my work, going into the shop became a sad grind.
Every time my business treated me badly, I dug in deeper, because I wanted to be a committed entrepreneur. But ultimately I was committed to a business that could never love me back: after 5 years, I pulled the plug (and lost over $80,000 in cash investment).
The Startup Stooge
5by5’s Dan Benjamin talks about “the corporate stooge” on his show Quit:
You have to work relatively long hours and it’s thankless. And you go back and forth to work every day and it’s the same thing over and over again like Groundhog Day. And you say, “what am I doing? Is this what my life was? Is this what I went to college for? And it’s a soul-sucking job. It’s sad, and there’s no end to it.
Ironically, I’ve seen this same scenario played out with my friends that have started the wrong business. The idea of starting a coffee shop, software product, or service company sounded exciting so they jumped in. But soon they become the Startup Stooge. Every day they face a miserable drudgery: committed to a business they no longer enjoy, and that barely makes a living (or worse yet, continues to drive them into debt).
I’ll take my pain upfront, thank you
The mistake my friends and I made is this: we never paused to think about the huge life commitment we were making. We never asked: Who will my customers be (and do I like these people)? What do they desperately need? And can I market to them, and still make a profit?*
Before you get married, you probably want to take your future spouse on some dates. In the midst of dating, you might find out you’re not compatible; then you break up. Breaking up is painful (and so is letting go of your “brilliant” startup idea), but it’s way less painful than a lifetime in a miserable marriage.
I’m dating the customer, not the idea
Don’t get married to your startup idea. The idea itself is actually not that important. Businesses run on customers + dollars not ideas + excitement. In fact, you might be “dating” a bad idea right now. If so, you should break up.
When I asked Amy Hoy about building a product, she gave me simple advice: “Go spend time in communities that you’re a part of, that you like, and who spend money. Start observing their pain.”
So instead of dating a bunch of ideas, I’m dating different customers. I’m hanging out. Spending time with different communities, and seeing what they need. It’s going to take some time, and it’s going to take some work. But I’d rather do this work up-front, and really discover where I can add value, than have a messy “divorce” later on.
You can listen to the audio version of this post here. I have also haven an email newsletter where I write about business, working smart, and marketing; you can subscribe here.
Special thanks to Amy Hoy who shared the marriage metaphor with me, and has been working really hard at helping me understand all of this.
* These questions are straight from Amy Hoy and Rob Walling.Published on February 20, 2013
Why people buy software
You want to build software that people will use, and that will make you money.
How do you find opportunities?
One trick is to listen to the things people say (and think) when they’re struggling. I call these the “inner thoughts of customers”. Listening and identifying pain are the keys to finding great product ideas.
Listen to customers’ “inner thoughts”
These are examples of inner thoughts people have before going out to find software to solve their problem. Expressions like this are opportunities for creating a marketable solution. Note: Most of these have a B2B market in mind.
“I wish I could hire someone to do this for me.”
“I wish I understood this.”
“Why is using this so frustrating?”
“Why can’t I make this do what I want?”
“I want to impress my boss.”
“I wish there was an easier way to do this.”
“I hate doing this every month.”
“I never remember how to do this.”
“Why is this process so complicated?”
“I don’t trust myself to do this properly.”
“I want this project to make me feel good about my career.”
“I don’t know how other people manage this so well; I can never make sense of it.”
“I feel stuck; I can’t move forward until I figure this out.”
“I wish I was better at this.”
“I don’t have time for this.”
“I don’t want to manage this.”
“Why are there so many steps?”
“Why is this so slow?”
“How do I make this automatic?”
“Working on this is stressful.”
“I always forget that step and mess everything up!”
“I have to set this up every time.”
“I know this is important, but I never have time to deal with it.”
“Every time I use this I get lost.”
“I want to manage my time better.”
“This is boring.”
“This makes my work look like crap.”
“I want to feel creative.”
“This process feels clunky.”
How do you hear a customer’s inner thoughts?
Be attentive! Customers will let out these “inner thoughts” almost accidentally. It might be on a support call, in an email, in a forum, on Twitter, or during a customer development interview. You’re looking for those things people utter under their breath while using software or trying to accomplish something.
What do you do next?
You dig deeper: find out what is causing them to say these things. For example, every time Patrick Collison tried to accept payments online he felt overwhelmed, and that the process was too complicated. This led him to build Stripe.
Keep asking the customer to “tell you more”. Write down the notable things you hear. Talk to more people, and see if they complain about the same things. Draw out the strongest pain, and build your app’s prototype based on that.
It takes practice, but once you learn to identify these undercurrents, you’ll be on your way to creating products that people love.
Discuss this post on Hacker NewsPublished on November 9, 2012
Your idea needs a passionate believer
Just watched Derek Sivers’ great video on leadership. It reminded me of when I decided to start a wedding video company.
I was young, 18 years old, and in my first year of college. (more…)Published on January 4, 2012