Are you a first-time startup founder ready to turn the world upside down? I’m not going to lie to you — it may be challenging. 80% of business ideas fail in the first year.
But that is how it works — it’s the survival of the fittest. Your goal is to be one of the successful 20%. And here is a secret that can help you to climb the Mount Everest. It’s idea validation. Let me explain why it changes the game.
Here is a simple question: how do you test a business idea? If you have no answer to it, the idea realization can turn into money burning.
9 out of 10 startups fail precisely because neither the market nor customers need their ideas.
As a founder, you can follow your vision. But as a businessman, you need to be single-eyed and create products that people want to buy.
Validating your business idea helps you identify whether your vision will succeed on target market in real world. And, believed me, it really matters if you don’t want your product idea to fail.
But what is an idea validation framework? How to implement it properly? I have the answers you are looking for.
What is idea validation?
Idea validation is the process of testing business ideas to understand their viability. It helps to prove the market need and target audience’s willingness to pay.
Those founders, who prefer to skip the process and don’t clarify if their potential customers want to buy a product, fail too fast. No connection with real people makes your startup a money pit with no possibility for both successful sales or marketing.
Testing an idea can be anything from communicating with potential customers to special landing pages on the Internet.
Product validation lets you understand the market situation keeping from starting meaningless development if there’s no need.
Mailchimp is one of the most recognizable brands today. This company also began its journey with idea validation. Once being just a side-project, now Mailchimp has $600 million revenue.
Its founders were building an e-meeting website, but this side-project failed. Yet customers asked them to help with email marketing instead.
That particular product idea didn’t find a proper market niche. Instead, it helped to validate the customers’ willingness to pay for another product. This is how idea validation works.
The reasons to validate your idea
The validation of your business idea has two main reasons to be done.
The first is about market validation. Your idea could be the business achievement of the decade. But without a market need, the idea is worth nothing.
The second one is about risk mitigation. Testing of your startup idea is a cheap and confident way to ascertain there are early adopters. And to make sure they are ready to spend cash on your product.
Many founders fall into the same trap. They misunderstand the significance of the problem they want to solve.
The market loves ambition but not delusion. Make sure you stop wasting your resources and start producing products with a real world value.
How to validate idea?
Idea validation framework
- Write down a product concept. Before starting a testing process, you have to clarify what do you want to see as the final product. Here is what you need to do:
- Define a problem. The founders often face difficulties in business development because the world doesn’t need their product. Avoid this. Identify a pool of relevant problems, obvious and not, that you can solve more efficiently.
- Define a customer. You cannot cover the entire market from the very beginning. But you can gradually scale if the product goes well. Where does your client work? What is the size of the company? Which industry? And so on.
- Define an innovation. Do you solve the old problem in a new way? Or a new problem in the old way? Focus on the value you offer, but not the existing market players for now.
- Set validation goals. You need an evidence that your idea is viable in real world. Thus, set measurable and clear goals:
- approval of an idea from 10 potential customers
- 5 successful pitches in the companies
- 1 successful sale of a product concept and so on
- Formulate hypotheses. Your idea is a set of business hypotheses. A clear definition will give you a definite answer whether the hypothesis worked or not.
- Drivers would like to use mobile app in contrast to phone service.
- Teenagers would like to make short clips for their favorite songs.
- Students will share their thoughts in a short format of 140 characters.
- Develop a value proposition. What benefits can a user get from using your product in contrast to existing solutions? It could be literally anything. Make sure, you could convey it in a simple form to the customer from whom you expect to receive feedback.
- Validate. You can survey customers, create prototypes or build an MVP. Choose one of the 13 validation types, test hypotheses and unique value proposition.
- Processing with feedback. As a result of validation, you should get customers’ feedback on the key points. The task at this stage is to correctly interpret the results. What do they consider to be deserving attention? What will work? Why does this work?
- Decide. As soon as you finish with validation of idea, it is time to make a decision. You can continue developing a specific startup idea. Or you can make a pivot — change the concept of the product. The only rule here — always move forward to give the real value.
The good example of a clear product concept is Drift. It has more than 100,000 customers in 3 years. A good indicator. What is the reason for success? As Drift’s founder said, the team created the product concept and validate it from the day one.
Just look how clearly they indicated the problems.
Types of idea validation
Idea validation is a significant part of Customer Development framework. It was developed by a godfather of Silicon Valley, Steve Blank.
Along with validating an idea, a wanna-be-successful founder also needs to validate the buyer and the market. There are 3 ways to do so. Use Proof of Concept, prototyping or MVP.
There are 13 approaches to test startup idea. They will help you find the best evidence of viability of your product.
Proof of Concept
- Internet Research. Many founders have an abiding faith in uniqueness of their business idea. They do not use Google or Crunchbase to make sure. But they should. Since it’s the easiest way to find both list of direct competitors and target audience’s habitat.
- Scrape forums. Check the industry platforms, resources and relevant topics. You may find both indirect proofs of a business pain and contacts of relevant leads. Reddit is a good start point.
- Interview customers. It isn’t an elevator pitch to customers. It’s about collecting fair feedback. Ask about relevancy of pain, quality of concept, strong and weak points. You can use Quora or LinkedIn to reach the target audience. A good option here is to prepare a survey using TypeForm.
- Create a blog. Does it sound time-consuming? Partly it is. This is not the fastest way, but a good option to repeatedly validate new and new hypotheses. You have a two-way communication tool. Use it to the fullest. You can start with Medium or Blogger.
- Create a landing page. Any landing is a complex solution. It enables to collect feedback on the value proposition and particular features. You can even find the first customers without a single line of code. Use site-builders like Wix or Weebly.
- Start an ad campaign. Use Facebook Ads or Google Ads to reach your audience. Customize demographic and location. Use split campaigns to discover what customers like about your product — down to single features.
- Use pen and paper. It’s an easy and the most flexible way to let potential customers try what you aim to create. Draw an interface and a few screens. Let user try the workflow. You can modify the results anytime according to the customers’ feedback.
- Create wireframes. Digital prototypes is an effective way to create the user experience in the clearest detail. Use it to avoid significant issues before development starts. I’d recommend trying Balsamiq for prototyping.
- Make an explanatory video. Use video to explain how your product will work. Describe all benefits and useful features as Dropbox founder did. It’s both simple and effective way to reach audience and collect feedback.
Minimum Viable Product
- The Concierge. It is an MVP where you personally help customer to solve a problem. Automatic components of system replaced by a human. The most famous case of this type is Food on the Table. But why do you need to act so?
- It gives you a close touchpoint with early customers.
- It lets you better understand the required workflow.
- It’s free! (but don’t forget that it is time-consuming)
- The Wizard of Oz. Impress your customer without building any product. What do I mean? Aadvark is a Q&A service, that being at an MVP stage gave manual answers to all questions without any automation.
- At early stage it’s cheaper to pay people, than coding a service.
- It gives more useful insights about scaling possibility of a full product.
- The Piecemeal. It’s like a combination of the first and second type. In this case, there are two unconnected software products. You can use other existing apps to deliver your service as a final product to customer.
- The single-feature. This type of MVP works great for a product validation. There are no additional features, except the core ones. It gives clear picture of how customer would interact with a full version of product.
- It’s still a cheap solution.
- It gives the real picture of the product-market fit.
Results of idea validation
As soon as you validate the first set of hypotheses, you’ll have 4 options on how to continue the project. Let’s consider them:
- Develop or Continue MVP Development. Minimum Viable Product is a must-have for agile and fastest-to-market movement for any startup. Yet, it’s a more advanced way to continue testing the business hypotheses in conditions of the real-life market.
- Close the first sale. It’s a dream-like scenario. But if you could sell your concept at idea validation stage, you wouldn’t find the best evidence of the market need.
- Cancel inviable product idea. It’s hard to abandon the idea you dreamed about. But rather think about it as a valuable experience, that otherwise cannot be gained. So if your hypotheses failed, it’s useful anyway.
- Do a pivot. It’s about changing your approach to build a product without changing your vision. Discard hypotheses that failed the test. Offer the new ones, but for new business conditions. Test them again. This is the pivot.
Idea validation tools
Idea validation is a holistic process. The founder needs to collect and track the status of all hypotheses. It helps to systematically generate and compare assumptions.
There are a few idea validation frameworks in the most efficient way.
Validation Board by Lean Startup Machine is a tool that allows to visualize hypotheses and their status. It helps the founder to identify a potential customer and the problems to solve.
It also helps to define the business assumptions to each key point of a startup.
It’s a useful tool to keep the fast tempo of generating and validating ideas. This board also helps to set up goals and make decisions faster.
Thus, it doesn’t matter whether you test assumptions or think about a pivot — using Validation Board lets you simply and effectively organize the process.
Validation Canvas by Lean Service Creation is another tool to make a validation process more productive. In contrast to Validation Board, Canvas helps to find a proof that business hypotheses aren’t viable.
This tool helps you to clarify the following points:
- Validation of UVP — Unique Value Proposition
- How to find your target audience
- How to validate your customers’ willingness to pay
- How to analyze interview results
- How to make conclusion in a proper way
- What to decide: make a pivot or continue with current idea
Another tool by Lean Startup Machine is Javelin.
It’s an all-in-one solution, that helps you to validate assumptions using customers interview. It collects and analyzes data to let you make decision faster.
Javelin helps to record and transcribe interviews, test landings and provides ready-made surveys.
Product Validation Checklist
There is a system for validating market and product — Product Validation Checklist. It is an interactive checklist, that helps you to answer the questions:
- Target market — how to find and what to focus on?
- How to identify customer’s business challenge?
- How to find a new solution?
- How to find a value proposition?
- How to make sure about product/market fit?
Each of these tools assists in clarifying the idea validation process, making it repeatable and predictable.
Idea validation process
8% of startups fail because they burn out before they come into fruition. Here are some steps that can help you stay disciplined through idea validation process.
- Be as critical as possible. Inspiration and enthusiasm are important. The truth is, that even for a good idea there are a lot of bad options. Forbes did the list of 7 self-explanatory examples.
- Be simple. All of your hypotheses make sense in a particular way. Yet, the most important thing is to keep validation effective. Set up metrics and track the dynamic to identify and avoid unnecessary actions from the very beginning.
- Be systematic. Having a system in place helps keep to your goals and hypotheses. Be disciplined if you want to make sure your idea will make it in the real-world.
- Pay attention to others’ mistakes. It’s a cheap way to learn and improve. Ask other entrepreneurs about critical mistakes they faced during their early stages and learn from them. Again, use Reddit and so on to obtain useful contacts.
Before launching your product, it is important to assess the market and your chances of success.
This is something you should continue doing throughout the process to ensure you are creating a product with real-world value:
- The right time. Sometimes the wrong moment can become to be a costly error, even if your idea seemed to be groundbreaking.
- Early adopters. This is the term for the people who are first to use your software. It’s important to identify these customers, since their feedback will define the look of your product.
- Empathy. This refers to the way in which your solution covers your customers wants and needs. Find out what your audience wants by analyzing their feedback.
- Advantage. This is what makes you stand out from your competitors. It may be your business model, the way you provide your services or even how your product is designed.
- Complexity. Are you making the life of the customer easier or not? The best thing to do is to ask directly your users, not just assume.
- Simplicity. If you cannot explain what your product is in one sentence — stop. The unclear ideas do not help anyone. They should be simple enough for everyone to understand what you are doing.
Each product has its own specific requirements. These are the main tips, but following them you will definitely be on the way to building a successful business.
It is important to remember that idea validation doesn’t eliminate all the problems, but it does help you be more prepared to deal with them as they arise.
It is a effective way to minimize any risks and an MVP development costs. Consider all the steps to validate your idea to see if it has a potential market or can it be turned into a successful pivot.