If you can't find 10 people who say they'll buy it...

http://blog.asmartbear.com/customer-validation.html

by amirmc • 16 years ago

212 93 16 years ago

blog.asmartbear.com

edw519• 16 years ago

Great post.

Better yet: find 10 people to write you a check.

If you're building something that your prospects want and your demo is so compelling, then smart people will crawl over each other to get their deposit in first. I've even had propects beg me to leave my laptop after a demo so they could play with it while I built it out.

10 people saying they'll buy it is a good start, but a deposit check separates the talkers from the doers.

Sometime I think investors should require 10 deposits prior to pitching. Imagine what a difference that would make.

RiderOfGiraffes2• 16 years ago

I've had three people send me money the first day early-bird registration opened for the event I'm running in November.

It's such a fantastic buzz having people send you money in exchange for product/service. Such a buzz.

Vindexus• 16 years ago

Go ahead, link to your event. You've got me curious and you know you want to.

noodle• 16 years ago

depends on what you're pitching. 10 deposits on a $5/mo service might not carry much weight to a VC. but 10 letters of intent on a more expensive b2b service is golden.

enjo• 16 years ago

You'll be hard pressed to find a V.C. willing to invest in a company at this early stage anyways.

I would argue that finding folks willing to give you $5 is as valuable as LOI's. The point is to validate your model. It's never enough to simply ask people "would you be willing to buy this?" You have to figure out how to validate that when push comes to shove that they'll actually take action to do it.

Talk is cheap after all. So if you can find a handful of folks to throw $5 your way, or at the very least enter into the purchase process for a $5/month subscription... well then you probably have something. Just as a LOI for a larger ticket product shows commitment from those larger companies.

Both show that you have a product your target market is willing to actually pay for. That's huge.

SMrF• 16 years ago

In the past I've done something similar where I asked potential customers to pay me to build a product and learned, before I wrote a line of code, nobody wanted what I was selling.

On the other hand, I've run into a situation recently where this didn't work as I expected. My current project is sold to businesses. When I asked a few of the businesses I was talking to if they would pay me the price I was going to charge for the service to actually make the product, something strange happened. Even though the amount of money I was asking for was quite small this request still went through the entire purchasing apparatus of the business. I figured the manager I was talking to could just write me a check, but I was wrong. Long story short they wanted to own a part of the business if they payed me money to make it, so I opted to not take their check.

I figured this was good enough validation and I'm plowing ahead on development even though I am a tad worried about what my sales cycle is going to look like. But I never would have learned this if I hadn't straight up asked for money before I even built it.

jonknee3• 16 years ago

I've had success going the other way--having a meeting about making software for a company and then figuring out it makes more sense if I retain ownership and sell it multiple times. They save money up front and I can get paid while still having something to sell down the line. Everyone wins.

stingraycharles• 16 years ago

What if you're making a product that caters to enterprises?

Sukotto• 16 years ago

Then you follow the excellent advice given by "Sanity" in this Reddit thread: http://www.reddit.com/r/programming/comments/94hab/is_mba_im...

DanielRibeiro• 16 years ago

Paul Bucheit said something similar on Startup School 2008 (http://www.youtube.com/watch?v=EZxP0i9ah8E): "You should aim for 100 happy users". And he mentions that being happy is quite hard to accomplish, as happy users will not put up with any unevenness they see. I find this more useful for startups that are still looking for a business model (mostly consumer oriented startups).

dotBen3• 16 years ago

Paul Bucheit is lucky, however, that neither of his two big projects (Gmail and then FriendFeed) has ever had to sell anything.

In it's fair to say neither have been profitable (Gmail is a loss-leader to Google).

Now, I'm not dissing him or downing on his achievement. I'm just saying, he's done well out of building + propositioning free products.

alexrodygin3• 16 years ago

Alternatively, be so damn good in what you do that 'they' won't be able to 'ignore' you

michael_dorfman2• 16 years ago

That's not really an alternative-- how do you know you're so damn good if you can't find 10 people willing to pay?

sprout2• 16 years ago

How can you find 10 people willing to pay for something that doesn't exist, has no analogue, and will have no understanding of what it is until they use it?

mattm2• 16 years ago

I believe Tim Ferris wrote that for his business ideas he would first create the actual site to sell it and then spend a few hundred dollars on adwords. When the user clicked to purchase, they would be shown a page saying "Sorry, this product is still in development page. Please enter your email to find out when it will be available."

That would let him know exactly how many people were willing to buy.

It's a pretty clever idea. For only a few hundred dollars and a little bit of time building the website, you will be able to find out what your conversion rate would be. I may do this for an idea that I am just starting work on.

michael_dorfman2• 16 years ago

That's called a Dry Test. It's not original with Tim; there are quite a number of sources on the subject.

mattm2• 16 years ago

Fair enough. It just happened to be where I learned of the concept.

steveklabnik2• 16 years ago

The other advantage to this (at least from what I've read, I have yet to try this) is that since they've basically already declared intent, they're also much more likely to enter that email. I mean, if it's interesting, why wouldn't you want to hear about it when it's released?

Silhouette3• 16 years ago

> I mean, if it's interesting, why wouldn't you want to hear about it when it's released?

(a) Because I no longer give any e-mail address to a business unless I'm starting to deal with it Right Now. Insisting on one is a good way to make sure I never deal with you again.

(b) Because I wouldn't trust a company anyway after I discovered that it was advertising a product or service as though it were real but actually it was just messing me around and wasting my time.

vaksel7• 16 years ago

if you are going to do this, make the checkout form look completely functional(credit card, email, address etc). Why? Because there is something like a 90% cart abandonment rate...and this way you get the real numbers.

Silhouette3• 16 years ago

If you set up a fake web site, took credit card numbers, and then said "Sorry, we're fake", then I think you would rapidly have other concerns, starting with whether you would even be legally permitted to run a business any more by the time several different groups of lawyers had finished chewing you over and you'd served your time for the fraud and identity theft convictions.

raganwald2• 16 years ago

Do it politely. I saw a massive banner on the side of an industrial building advertising loft condominiums. I called, only to be told, "Sorry, we're just gauging market interest." That was a major turn-off and when they did get around to selling the units for real, I wasn't interested.

nadam• 16 years ago

Did Sony, Intel, Microsoft, Apple, Amazon, Google have 10 people who said they will buy their first product? (I am asking because I am not completely sure. Maybe it is a bit more complicated in case of very technology-heavy/research-based/very innovative startups?)

BobbyH• 16 years ago

No, but they were "fat startups" aka startups that weren't founded on lean startup principles, like customer validation and customer development. Fat startups definitely can be successful, but it's more of a crap shoot. Lean startup advocates would claim that the probability of a lean startup succeeding is much higher.

euroclydon• 16 years ago

Apple wasn't fat. They got money up front to build the first machines, and the parts on credit. No initial order -> no machines.

Hoff• 16 years ago

Don't get too literal.

Each launch is different, and the environment for each business differs.

For some prospective projects, you might well get a launch with just one (good) customer to start with.

And from your list of businesses, you're also looking back at companies that launched years or decades ago, and into vastly different environments and markets than exist now.

byoung2• 16 years ago

Some did:

  Sony: started in 1945 as an electronics repair shop.  Built-in audience
  Microsoft: in 1975, MITS requested Bill Gates and Paul Allen sell their BASIC interpreter for the Altair before it was even written
  Amazon: started in 1994.  Everyone buys books, they just needed people to do it online

Intel, Apple, and Google were much riskier. Google wanted to sell its search technology to giants like Yahoo, but Yahoo refused. Apple built products no one knew they needed, but now we can't live without (hackable PC). They continue this today (iPod, iPhone, iPad, etc.).

infinite8s• 16 years ago

According to Founders at Work, Steve Wozniak designed the original Apple I for fun (and as a challenge), and later when he showed it to Steve Jobs and other people at the Homebrew Computer Club they realized that lots of people (well, members of the computer club) wanted something similar.

jonafato• 16 years ago

Microsoft and Apple did, at the very least. Apple started out with a bunch of people trying to buy more of Steve Wozniak's hand built computers than he could keep up with, and Bill Gates sold IBM an operating system well before he had an actual product to show them.

dagw• 16 years ago

Bill Gates and Microsoft started selling BASIC interpreters for the Altair computer. The IBM and DOS thing was several years later.

philwelch• 16 years ago

DOS had one customer with at least thousands of units sold before MS even started on it. Apple and Google were projects-turned-businesses, but the original Apple computer had more orders than inventory at the very beginning. (Funny, their latest iPhone still has more orders than inventory.)

DanielBMarkham• 16 years ago

I would like to get this put on T-shirts, in big bold red letters, and hand them out and the next startup/VC/hack-a-whatever

orblivion• 16 years ago

You'd better see if 10 people would be willing to buy it first though.

hop2• 16 years ago

If you are not intuitive enough to know what people will buy and need outside validation, it may be a tough road to being a successful entrepreneur. To build great products, you have to know what people want. Maybe if your product had massive upfront capital costs - like a chip fab - you would get some signed purchase orders before hand, but if its a web app, you should be confident enough to just do it.

bryanh2• 16 years ago

I don't really understand the downvotes here, he speaks the truth. Every rule has exceptions, especially the "get 10 signed customers" rule. If you are passionate about the idea, then you should be confident and let it ride.

NEPatriot• 16 years ago

The issue as I see it is that not everyone has great vision when it comes to building products/services one could turn a business into. In fact most don't which is why the 10-will-you-buy test is a good way of hacking around this lack of vision.

DrJokepu• 16 years ago

The problem with that, as far as I see it, is that even the most brilliant people are wrong sometimes, especially if they're less experienced. If you can afford being wrong (maybe multiple times) and you really believe that you're right and everyone else is wrong, that's really cool, but otherwise it's a good idea to see what potential customers might think of your concepts.

ryanwaggoner4• 16 years ago

Sorry, but I completely disagree. Do some contract development work for awhile. People start pouring out of every crevice and crack with their brilliant ideas that they're absolutely sure will work. I know from experience that very few of them will go anywhere. Sad, but true.

The only way to build great products using your gut it to scratch your own itch. This is a completely valid approach that can work really well, but even then, you're better off doing this customer validation thing. You might be the only customer out there. And yeah, web apps are cheap to build compared to chip fab plants, but why spend several months building something and then another 6-24 months pushing it to get traction (the really hard part) if you can find out that there's no market with a few days of work?

Finally, I know quite a few successful entrepreneurs who are huge advocates of the customer development model, so I hardly think that being a great entrepreneur requires you to avoid talking to your potential customers before you start building, and hoping that you're just the 1 in a million genius who really does get it. You're almost certainly not Steve Jobs, my friend. Survivorship bias is the only reason we think we might be...we don't see the millions of failures who thought they could predict the market's desires without talking to them.

hop2• 16 years ago

I own a product design company and people come to us all the day with ideas for products they want brought to market

Folks unsure of their product/idea tend to not have a great product or are just not good at starting a business. But the people that know a market exists for their idea and just need it implemented are more than likely to succeed.

I'm racking my brain to think of any successful entrepreneurs that had to get validation before they started. Jeff Bezos? No, he had an idea for an online bookstore, quit his job, moved to Seattle and started one. 37Signals? I bet Jason Fried asked for lots of validation. Steve Jobs? No, they built the Apple 1 and started selling it. Henry Ford famously said "If I had asked people what they wanted, they would have said faster horses."

rama_vadakattu• 16 years ago

How to validate the product which does not have price tag?

jasonlbaptiste3• 16 years ago

Have a general price range in mind. Or just ask: what is this worth to you?

chmike• 16 years ago

Offer variants of your product with different prices. The prices are the test points. See which one people would buy. Apple does it all the time and provide three products (16gb, 32gb,64gb). With three points you can interpolate a curve and locate the maxima. Note that the price difference of the products should not correspond to the production cost difference. It should be the test points.

jasonlbaptiste3• 16 years ago

We did this with flow.cloudomatic.com a few months back. We knew there was a need for affiliate software for web apps from our own problems, but that seemed like horseshit. So we did the whole MVP smoke test thing with a sign-up page before we even started developing it. Best decision I've ever made. We have a number much larger than ten and we saved ourselves the possibility of building something people didn't want.

cloudkj• 16 years ago

Out of curiosity, how'd you drive traffic to the MVP/smoke test landing page?

jasonlbaptiste3• 16 years ago

It's kind of funny and part of the validation - an interested customer/user posted it to HN before we were even ready to announce it. I was on a call and all of a sudden the live stats counter goes apeshit and the referral traffic is from HN. The user said: "Sorry if this wasn't meant to be posted yet, but I'm so excited by it, I had to share it"

bryanh2• 16 years ago

Alternatively, make sure that they are already buying it through an existing service. Now you need to make a better, easier to use product and price competitively. In a marketplace where you can harvest demand (IE: PPC) this is very effective. However, make sure that by pricing competitively you don't have a wide disconnect between acquisition costs and revenue.

tomwalker• 16 years ago

I have been running a product based company without investment based entirely on sales.

I put in my own money to buy a small supply, sold it based on direct sales.

Used the profit to buy more supply and get basic marketing material printed, sold that next supply.

Improved my packaging/printed marketing material/got a website built etc.

It has been slower but this is my first proper business so it means that I am learning fast, maintaining control and proving myself.

I would recommend this way to anyone that isnt doing a "next big thing" project. It keeps you on the cutting edge of customer feedback.

startuprules3• 16 years ago

The post needs a modification.

If you're building an incremental product, please do ask 10 people.

If you're building a revolutionary product, build a prototype first, then ask 10 people. Otherwise people will just ask for horses with wheels.

wolfrom• 16 years ago

I think that there are important distinctions between incremental and revolutionary products, and I agree that this advice may not work for the latter... now, how do you stop founders from thinking their latest idea is revolutionary just because they haven't done enough research to know any better? (This is what I wonder about with my ideas)

startuprules3• 16 years ago

If the founders don't know whether the product is revolutionary or evolutionary, they don't understand the market. If they don't understand the market, why the heck are they building a product for it in the first place? Get some experience first by working in that market, using someone else's money.

pella• 16 years ago

Is it possible to test a "revolutionary product" before prototyping?

startuprules3• 16 years ago

You would need to ask other visionaries who also understands your market (hard to find). Of course, chances are they would steal it, since it is revolutionary ;)

iamelgringo• 16 years ago

I wonder if the guys at Google, Ebay, Skype, Twitter, Yelp, Foursquare, Facebook had 10 people that were willing to purchase their software or service before they started? Did Apple have 10 people lined up to purchase their first product? Were they able to pre-sell the Mac?

I understand what the author is getting at, and it may work for a certain class of startups, but I don't think that it works 's terribly realistic to apply that to all startups. Yes, talking to people about what they want or would be willing to pay for is a good idea, but there's a lot of products that people just aren't going to understand until they see other people using it.

The vast majority of successful startups end up building a completely different product than the one they set out to build. I'd much rather build a minimal product, put it in front of people and then iterate the product until you have something that people want and use.

raganwald2• 16 years ago

Actually, Apple did have orders for units they later built. Furthermore, as members of the Homebrew club they were very much in touch with what features their market wanted to buy and what they were willing to pay.

jonknee3• 16 years ago

Besides Apple, you mentioned no companies that actually sell products so this advice isn't applicable.

Both Apple and Microsoft famously had orders before product, but that's really common in product oriented businesses. Dell made a whole company around that philosophy.

webwright• 16 years ago

I think that's his point. Selling software is only one kind of startup. Would be interesting to apply the "get outside the building" thinking to:

1) Games - how to you verify that a game is "fun" before you build it? Cardboard cutouts and early play testing?

2) Marketplaces - You can verify that people hate eBay or VRBO, but what sort of early validation could you do to take them on?

3) User generated content - What could Yelp have done to validate the market?

Those are just a few off the top of my head. Not saying that you can't "get outside the building"-- just that it might take a different type of thinking...

kenjackson• 16 years ago

This is a very fair point. Take Google for example, people may not remember, but they actually were trying to sell a product when they started. They were trying to sell enterprise search. And generally people didn't want to buy it.

But they had technology so compelling that business model fell into their lap.

Maybe they were lucky, but I would say that if you have a technology that no one wants to buy, but everyone wants to use... stick with it. There's something to it.

ariels• 16 years ago

Advice that basically boils down to you should have customers and revenue doesn't seem incredibly helpful.

decadentcactus• 16 years ago

> If you're still not convinced, think of it as project risk management. In a big software project do you tackle the high-risk, ill-defined stuff first, or do you postpone that to the end? Obviously you address the unpredictable stuff first — most of the project risk is due to the unknown, so the earlier you can sort out uncertainty the more time you have to deal with the consequences.

That definitely opened my eyes a bit. I usually do the difficult parts of a purely software fun app first, but when it comes time to making a bigger public facing app I just build it too.

Good post.

chaosmachine• 16 years ago

Unfortunately, I think this is one of those lessons you only really learn after you've built a product no one wants. Until it happens to you, you'll always think your idea is the exception.

thentic• 16 years ago

Appropriate pricing strategies are key here. We were able to get 10 'charter members' who paid $500 for a lifetime membership when our idea was just notes on 2 pieces of paper. Currently we're offering a beta, which is 2 years for the price of one and shortly we'll reach critical mass and change it again.

mpc• 16 years ago

What if your product is Foursquare or Twitter? There are obvious business models down the road but only until you achieve massive adoption.

I think the question to potential users is "Would you use this everyday?". This is more important than going to Starbucks and asking if they would pay to promote within the service (it's a no-brainer).

dtegart• 16 years ago

The business model for Foursquare requires that both users and businesses find their respective propositions valuable. So essentially you have two sets of customers and you would have to ask both. Users: would you use this everyday Businesses: Would you pay to reach X number of your loyal customers

tieTYT• 16 years ago

What if you have a startup idea that you think is great but you don't want to tell anyone because you're afraid they will steal your idea?

Martin2010• 16 years ago

You wake up and realize ideas are worth nothing, everyone has them, and they would much rather work on their own, than steal a half baked idea from some random guy.

awt• 16 years ago

I would really like to see some advice on how to do customer development for consumer apps. This is really targeted at b2b people.

If you can't find 10 people who say they'll buy it...

Related Stories