Remember that old Kevin Costner movie Field of Dreams? “If you build it, they will come”, the ghostly voice prophesied. And in true Hollywood fashion, they did come, by the thousands.
This doesn’t happen in real life: if all you do is build it, I guarantee they will not come. Sorry to be the bearer of bad news. Many a startup has died in the field of dreams, waiting for customers to come to them.
This doesn’t have to be your fate.
But how do you avoid it? How do you get customers to come to your product when it doesn’t exist yet?
The answer is validation.
Every successful product has passed multiple rounds of validation.
Validation means different things at different stages of your product. But basically to validate means to prove that people will be willing to pay for it.
Using what I like to call a “stair step” approach to product validation (adapted from Rob Walling's Stair Step Approach to Launching Products), it is possible to pass many rounds of validation while moving your idea from idea, to pitch, to MVP, to shipping product. At each step of the way you validate that people have a pain or problem that you can solve, that your product actually solves that problem, and that people are willing to pay for your product to take away their pain or solve their problem.
You must validate three hypotheses for your business to be successful:
- Someone has a problem or pain, and your idea will solve it.
- There are people who have this pain, and you can reach them.
- People will pay for your product to solve their problem or pain.
Let’s look at each of these hypotheses:
1. Someone has a problem or pain, and your idea will solve it.
If you’re like most entrepreneurs, you’re probably naturally an idea person. You love to see the world in terms of how it could be. Where other people see problems, you see solutions. While this is a good trait to have, the danger at this stage is in coming up with a solution that is only slightly better. I know, your product is WAY better than the competition. I believe you. But I still want you to prove it. Unless your product is 10 times better, you're going to have a hard time convincing people to use it.
You want to create a painkiller, not a vitamin. Vitamins are good for you, but they’re harder to sell because they don’t have an immediate effect. Taking vitamins is not 10 times better than not taking vitamins. Painkillers, on the other hand, take away someone’s pain and make their life immediately better. When you have a migraine, the relief that you get from taking an Advil is 10 times (or more) better than just dealing with the pain.
If your solution is a vitamin, it’s going to be harder to get customers. It’ll be harder to convince new users to adopt your product, and it’ll be nearly impossible to get customers to switch away from your competitors’ products because of the cost of switching.
But if you create a painkiller, your product will make people’s lives better in some measurable way. It’ll save them money, or make them more efficient, or add hours to their work week.
To answer this questions you want to talk to your (potential) customers, in person. Find out what pain or problems they're dealing with. Listen to the way they describe the problem. What are the particular words that they use? How do they frame the issues? What other solutions have they tried? What's lacking about those solutions?
Keep the answers to these questions in a document. No need to get very fancy - a Google Doc or spreadsheet will do. We're not getting very scientific (yet), we're collecting evidence and clues to help us reach the next step of validation, which is….
2. There are people who experience this pain, and you can reach them.
Many a startup has washed out to sea because the founder fell so in love with their ideas that they didn't think through to who the solution is for, or whether or not it would be possible to market to them.
It may be the most elegant solution to the most vexing problem in the world, but if only a handful of people experience the problem, your potential market is going to be too small to build a business. While it is good (and I do advise) picking a well-defined business niche, if your focus is too narrow, it may be impossible to get enough customers just by the size of the market.
For example, I know an entrepreneur who wanted to build software for onsite shredding companies. It was a great idea, a tight niche, and a real need. At first glance it seemed like a winner. But the shredding industry was going through a consolidation phase: big companies were buying up small operators. These big companies already had software in place and did not want his solution. The total number of potential customers in the US was shrinking every year. Ultimately this shrinking customer base doomed the project. Fortunately for my friend, he realized this before investing very much in his project.
On the other hand, you may have an idea for a better solution to a problem that many people have, but there are already many other products in the marketplace solving that problem. In that case it’s going to be extremely difficult to reach your customers. Your solution is obviously far superior, but it’s also one among many in a crowded market.
For example, let’s say you’ve come up with an idea for the perfect project management software. It’ll be the best project management tool that has ever been created, and solves all project management problems that have ever been had. It may be true - it may actually be the best. But someone releases a new project management tool every single day. Yours may be a thousand times better, but you’re still going to have a very hard time breaking into the crowded market of project management tools, just because there are already so many existing options.
3. People will pay for your product to take away their pain.
One of the dangers of product validation is that people are usually very eager to please and give you compliments on your idea. But what we often see is that the same people who agreed that your idea would change the world will head for the hills when it comes time to pay.
One of the most effective tools for validating your customers’ willingness to pay is pre-sales. When pre-selling your product, you’re pitching your idea to the customer, and then promising them a special reward in exchange for their faith in your vision.
There are many ways to structure a pre-sales deal, but the one I’ve seen most commonly used is this: Once you’ve determined that your idea will be a good fit for your customer, and they’ve expressed interest in it, you offer them a special, discounted price for the solution that you’re pitching. For example, a full year of service at a steep discount. Hold on to that money: the point of getting paid at this time is not to pay your developer; it’s to validate that someone is willing to pay for your idea.
The moment you've received revenue for your product (even if it's just an idea), you've created a customer. You're in business!
I can’t overstate the importance of money when it comes to validation. Very few people will give you constructive negative feedback about your product idea. (Thank those people profusely!) Most people will congratulate you and tell you what a good idea it is. File that away as a confidence booster, but don’t bank on it. Find a few people willing to pay you actual real money for your product and you’ll be building your launchpad on much more solid ground.