Many collaborative entrepreneurs wonder if there is a silver bullet that would help them get their company to work right now.
And there is a truth that every serial entrepreneur knows. There is a way to “succeed” systematically, and there is a way to “struggle” systematically.
It’s a mindset difference.
Those who struggle always build a product before making sure people will buy it.
Those who succeed, make sure others really want and buy their new products before they exist.
By selling their product or service before it’s ready, when time comes to build, they know that they’ll create a product or service that people really want.
To see what I mean, these are three examples of this mindset applied to entrepreneurial celebrities in their beginnings:
- Before creating an airline, Richard Branson got his flight to Puerto Rico cancelled which left him and a few others stranded on an island. He figured he had a problem and went to find a solution. He picked up the phone to find out how much a charter would cost. But instead of paying a whole charter on his own, he divided the price of the charter among the number of passengers and charged them $39 to rebook their seats. He offered the other passengers to pay and they were glad someone took care of it. This pre-sale Branson’s first experience in the airline industry, and the one who led him to create Virgin Airlines.
- Before building a company, Steve Jobs also started selling blue boxes that allowed users to get free phone services illegally. First it was a hobby invention by his friend Wozniak. When he realized people were ready to pay for it, he knew he was in business. Then someone tried to rob him at gunpoint (a story for another tab) and he decided to try selling computers, which ended up being another pretty good business for him.
- Before Starting Paypal, Tesla and Space X, Elon Musk learned how to run a business and pay his rent by hosting epic night-parties. He first rented a house and threw parties that attracted thousands of college students. Once he knew how to make money with his projects and was comfortable with a business, he either sold it or moved on to something harder and more complex.
- In 2005 before turning Arduino into a company, the Arduino founders created micro-controllers to teach their students programming and prototyping with electronics. When they realized people were asking in droves how to buy it, this is when they realized it was time to turn it into a business.
Can you see what’s going on here?
They all looked for people interested in what they were offering before they had anything to sell or made any significant investment. They avoided any risk.
If you are a budding entrepreneur, you might think that you can skip this step. You know in your gut that everybody wants your idea.
But from my experience, as we mentioned in the previous post, this is an excuse that helps us hide from the fear of being rejected or being stolen by others.
In this previous post you also learned how to come up with a pretty big list of things to sell. In this post we’ll take the idea you want to do most, and validate if it has the potential of becoming a business.
When you validate, you have to do it one idea at a time.
“Perfect” ideas don’t exist.
OpenROV started with a “simple” underwater robot for submarine exploration and have improved it over time to a much more polished and refined Underwater drone.
Open Source Ecology started with a Brick Press to create building materials. Once they validated people needed it, they went on to develop the rest of the Global Village Construction Set to create a new open and ecological civilization from nothing.
So don’t worry if your idea doesn’t have a 20 year plan to change the world and a huge community behind it.
First things first. You have found a few ideas. Congrats. Not everyone takes the time to lay them down.
Now, if you want to turn them into reality, you must find if people want it enough to pay for your idea.
This is hard and challenging. People might not be interested at first. You’ll have to tweak your idea or accept that it’s not a priority to others around you. You might even have to leave your idea and pick another one you had.
But you will eventually start to see that your idea can help and have an actual impact on others. And this will be incredibly exciting and rewarding.
The community and the 20 year plan will eventually come after that, if this is what you really want you think is necessary.
Don’t worry if you think your ideas aren’t good enough or might be too hard to sell. The real value of this exercise lies in learning how to quickly validate any idea you have.
When you know how to validate any business idea, you’ll never wonder anymore “should I have tried this?”.
One last reminder:
You may successfully validate your idea or not. If not, your main goal here is to keep moving forward with other ideas and repeating the process without spending a lot of money or time on a website, landing page, app or whatever. You really don’t need it. Just go after the low-hanging fruit and go manual without building a website or hiring anyone until forced to do otherwise.
If you already have a business you want to try, let’s stick to this one. If you don’t have any idea, go back to this post and come up with your own list of ideas. The point is to get started.
If you don’t know how much to charge for it, think how much value it brings to the person you want to help, and divide it by 3x or 10x. For example, if you are selling a course, or a product that you know will make the other person 1000€, you can easily sell it for anything between 100€ or 300€.
If you still don’t know how much your product or service is worth, go with 10€. You’ll see what are the reactions from people before and after you deliver your services or product. Their feedback will guide you into increasing or decreasing the price.
But always make sure that your price is always above your costs to build and deliver the product.
Otherwise you’ll be selling a service that will become a black hole of money for you.
How can you validate your idea in 48 hours?
You already have done some great work with your list. Let’s keep up the momentum to find your first customer and see how easy it is to sell your idea and to gather interest.
I/ Help people individually
The best way to start a business is to start helping people individually (even for free).
This will help you see what they are most excited to pay you for.
It doesn’t look very scalable, but it will give you amazing insights. When you start getting too busy helping others, it’s time to start building your platform, website or whatever you are planning, not before.
Hone your skills and craft first and build your customer base one by one at the beginning.
You’ll have the money, knowledge and proof you need to scale once you’ve got enough people interested.
And keep track of the questions that keep coming. This will guide you when making your product or service.
When you get too busy helping people one on one and making things manually is when you can justify building the actual course, book or product…
- If you wanted to create something like Ifixit, you could go work at a repair café or at a repair shop and see what products people are repairing or what tools they need. Then make repair guides for the products that appear most often, and sell tools that people don’t have and need to take care of their repairs.
- Nathan Seidle, from Sparkfun, first started selling his open source electronics in small batches, and then diversified his products once he saw what people were interested in.
- Before starting Amazon, Jeff Bezos learnt how to keep an actual book shop. Once he knew how to solve logistical problems and how to satisfy his customers, he went on to develop his platform.
II/ Don’t develop an app, website or physical product, do a crappy sketch
Before we start our business, most of us think we need to develop an app or website, and spend money for some reason. I’ve been guilty of spending time and money on websites before validating people wanted them.
I’ve done this with four projects. It has cost me a lot of money and 2 years of working on projects that could have been way more successful if I had actually asked people if they were ready to use them.
So if I can give you an advice it would be: “Don’t do it!”
Don’t invest in anything before you meet your users.
If you want to create a website, app, marketplace, or even a physical product, don’t start by hiring a designer, developer or engineer.
To make sure what you build will be used, all you need is paper and pencil, Google Draw, Powerpoint or a basic paper Mock-up you can make with Balsamiq or Pencil. It’s cheap, quick and extremely effective.
Imagine you wanted to create an OpenDesk-like platform, but instead of customizable furniture, you want to offer customizable garden-gnomes.
Instead of building your app, just draw it on a piece of paper as it would look like.
My OpenGardenGnome marketplace could look something like this:
Once you get your first low-tech prototypes, show it to others and get their feedback.
If you have a gnome-selling website, ask them if they want to pre-buy a gnome. If you have a subscription website, ask them if they want to pre-book a subscription to the website…
If they do, you can invest your own time and money in it. But not before.
What people want are SOLUTIONS, not another web, app or product. If you can validate that people want your app or your gnome, then you should build it.
If you fail to validate it, that’s great as well. The point is to learn, and move on quickly to the next idea.
Don’t spend more than 48 hours validating an idea. If it takes longer, look for another customer profile that could be interested.
Once you’ve tried with enough people you thought would be interested, adapted your offer to their needs and it seems hard to find early customers, move on. Trying to sell something hard will only get harder with time.
Note: If you are making a marketplace, you wouldn’t be asking your customers to pay for the marketplace, but for an item you are offering on the platform, like a rental at a someone’s place for Airbnb or an hand-made product for Etsy.
But more on this later.
You want an example? Here is one:
He did a few sketches and hung them up on a whiteboard to show how it would work. This way he could see if they wanted it or not, if they were missing any features, and if they would be serious about buying his service.
Luckily for him, it turned out they wanted it and were willing to pay, so he built it.
Tip: Focus on the root problem your idea solves, and make sure people are ready to pay for it.
III/ DIH (Do It Home)
This technique is specially useful if you are launching a product that requires retail presence.
When you consider opening a physical space like a fablab, a makerspace, a school, a virtual reality cinema or a hardware store, your costs, time and risk are very high. So to prevent this risk, it is better to start validating your business at home.
Your costs are lower, and you can start making a profit, building your customer base and polishing your offering.
When time is ready you will have people ready to open your physical space.
If you want to launch a fablab to offer courses on 3D Printing or CNC Machining you can invite some friends at your place .
You can charge them through Eventbrite or Paypal. If people pay, you got yourself a business. If they don’t you can move on to your next idea.
If you want to invite your friends to try your future physical offering, here is a template you can use to send the invitations:
I’m going to run a workshop to learn in one hour how to use a 3D printer, so you can start prototyping your next product designs 10 times faster. [EXPLAIN WHAT YOU OFFER, AND WHAT WILL BE THE RESULTS FOR THEM]
7pm at [your place/ coworking space]. It’s going to be pretty nice 🙂 [TELL THEM WHEN AND WHERE IT WILL HAPPEN]
I will charge 15€ for an hour and your first 3D impressions. [TELL HOW MUCH IT WILL COST]
This template also applies If you are going to do a yoga studio, a gym, a restaurant or any other retail businesses.
You just have to tweak the email to fit your idea.
IV/ The Public Billboard Technique
Post your low-tech idea on an Internet billboard like Craigslist, LeBonCoin or whatever billboard website that’s popular in your country. Any section will do: for sale, gigs, community chats or services.
Using this kind of platform is an amazing validation and will save you tons of time and money building a website, buying a domain, and so on…
You want to make an Open Source custom-clothing platform?
Offer to sell some custom costumes on Craigslist and see if people are ready to buy.
Once you have people willing to pay for your product, but you don’t have any product, you can deliver them yourself or post your own request for tailors in gig billboards to fulfill your orders.
When Airbnb was beginning they posted their listings in Craigslits, this is how they found their initial customers. To grow the offerings on their platform they also emailed people who were listing their properties on Craigslist.
Here is an email example written by the founders of Airbnb looking for more people to fulfill their orders:
V/ The Low-tech email technique
If you want to create a marketplace or website, this is the best technique. Instead of developing your platform straight away, just email your friends. Manually connect people via your email list and charge for the connection.
Offer a service, connect people via your email list and charge for the connection.
If they pay you for what you want to offer, then you can consider making it happen.
Imagine you want to create a food delivery marketplace like Deliveroo. You consider making it Open Source and cooperatively owned. But first you need to find out if it will make money to support the people involved.
So you first email 15 of your busiest friends. If they are interested, you tell them to pay you 20€ through Paypal and deliver food on the night they choose.
Then you post on the Craiglist from your region – or Le Bon Coin if you are in France – that you need a caterer. You then pick up the caterers that would be a good fit, just like in the previous method.
This will validate that people want to pay for the service and that people are ready to deliver the service.
First example – Delivery marketplace:
If you wanted to create a food delivery platform you could use this email template to test your idea. You can also tweak this template for many other types of businesses:
I’ve realized I don’t have much time to cook after I get home or am too tired to make a proper dinner. [EXPLAIN THE PROBLEM]
I wanted to invite you, with a select few others, to test a business idea with me. (Lucky you 🙂 ) [EXPLAIN WHAT YOU THINK OF DOING ABOUT IT]
Convenient quality restaurant food delivered at your place.
On [date], for 25€ I’ll be delivering sushi, french food and vegan gastronomy. You could choose any of the three, and I’ll deliver it right to your door for your enjoyment! [EXPLAIN WHAT YOU OFFER]
If this sounds like something interesting to you, you can paypal 25€ to firstname.lastname@example.org [ASK FOR THE PAYMENT]
Any feedback is welcome.
Have a great day,
PS: Please let me know if you have any preference. I guarantee that the meals will be great.”
Second Example – Oomph:
When Oomph (now Crew) started their own marketplace they wanted to match freelance developers with people looking for freelancers.
But instead of spending time and money developing a complex platform, they just used a Mailchimp newsletter and a Wufoo contact form to get their business started.
When people were looking for developers, they just had to enter their project idea and their budget.
Then Oomph would send a newsletter with the project to their list of developer friends who could provide solutions.
This way they started selling $25,000 of projects in 3 months without any complexity, validating people were ready to use their service and pay for it.
If you want to launch your own platform cooperative, don’t build the platform, just set up a contact form to those who want to buy from you, and then add your providers in a Mailchimp newsletter. If there is a match you’ve got a business.
Third Example – Arcade City:
When Uber and Lyft were banned from Austin, Arcade City set up an invite-only Facebook Group where people could request a lift by posting it on their wall, and drivers could match those requests. Potential Drivers could respond with their time of arrival, estimated price and phone to confirm the pickup.
This validation helped them get their first 40.000 users and providers, and they’ll be sure it makes sense to invest in developing a platform.
Key Takeaway: Can you match your requests and service providers with a very simple platform at first to validate that there is enough demand and offering?
Wrapping Everything up
We’ve covered a lot of ground in this post. Here is what you should remember:
- Pick your one idea
- Pick above a validation technique you think is best for your idea
- Test it quickly with people in your network who you think would be interested
- If nobody buys, move on to the next idea
- If people buy, deliver them your product or service, and invest the money into improving it
- Help people with your fantastic ideas
- Rinse and repeat
I understand that the examples I have given above may be different than what you may have in mind.
The point is to share a system that you can adapt to your own ideas so you don’t risk your finances or over-committing to others. I encourage you to try ideas that will help bring more life, openness and transparency to the world.
It might be permaculture products, a sensor, a textile, a book, a new software or anything else you came up with.
Whatever it is, validating will ensure that your creation is a win-win for yourself and for those around you. For yourself because you can make a living, and for those around you because they’ll want what you offer so much that they’ll be ready to pay you for it.
Do you have any additional questions?
I’ve done my best to be as thorough as possible and to give many examples in a hopefully entertaining way, but this topic allows for infinite possibilities and many ideas might remain unanswered.
If you are still having a hard time applying this process to your own idea you can leave a comment and I’ll do my best to give you a hand. If you want to keep it more personal and between you and me, you can email me too.
PS2: Here is some more cool reading on the validation topic:
When should you start making products?, by Paul Jarvis
9 Entrepreneurs Reveal How They Validated Their Business Idea
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Latest posts by Jaime Arredondo (see all)
- The 5 steps to turn a Collaborative Business into a Unicorn like Red Hat - June 8, 2017
- How to stop the 1%, solve inequality and grow rich - May 18, 2017
- Exponential growth: Why it’s distracting you from your real needs - April 13, 2017