5 Ways To Validate A Startup Idea
A few weeks ago in Day One, we were joined by two brilliant startup builders who shared with us their best advice on validating startup ideas. We spoke with T.A. McCann, Managing Director at Pioneer Square Labs, and Luke Vance, Product Manager at Twilio. Both T.A. and Luke have founded startups (successful and not so successful) and build products from the ground up. Here are 5 nuggets of gold we pulled out from our conversations with T.A. and Luke.
1) Identify - then quantify - the problem
Validating an idea starts with clearly knowing if your customer has a problem and if you have the potential to solve it. And the best way to make sure you know is to measure. While you don’t need to run a statistical analysis backed by large amounts of data (in the early days, you almost certainly won’t be able to get your hands on that kind of information), you should begin to quantify and measure even your qualitative research.
One way that T.A. recommends you do this is by scoring the potential customers you talk to on their willingness to purchase from you (or whatever is the most relevant final action you need someone to take), based on answers to qualitative questions. By scoring them on a 1-10 scale after asking qualitative questions, you turn your information into analyzable data, and you force yourself to be more rigorous. Start by putting a survey in front of 100 people who would be your target audience, and you should be on your way to really understanding if anyone (and who) has the problem you’re focused on.
2) Be clear about your ideal customer profile.
As you gain a sense that people have a real problem, you then need to define a specific customer profile and archetype, not only the market itself.
T.A. gives a great example to highlight what this looks like. You need to be clear enough to know if your customer is a CFO at a mid market company or a CEO at a 10-person startup. The best part is, you should have at least an indication of this from your earlier problem discovery. Who did you find - and score - as most likely to buy? Go deep into that persona and know everything about them, and make that person your sole focus as you go ahead. You may eventually build for a large and diverse market, but when validating an idea, you really are looking to be loved by just a narrow niche.
3) Quickly ship an MVP based on those findings.
Once your customer behavior and core buyer profile have been identified and defined, it’s time to build and ship. You really don’t know anything until the customer reacts to something you’ve created. Anything that gets you and your team away from hypotheticals and into data and learnings around purchasing and usage behavior is critical.
Luke points out how easy it is to focus on distracting features and not the core value you need to deliver for the customer. That’s why streamlining and staying focused is paramount. And one way to do that is to go fast. Luke recommends shipping quick paper prototypes, things you can make in a weekend. Or instead of a paper (or Figma) prototype, you can string together a host of digital tools or use no-code platforms to build something that isn’t fully complete and functional but still performs the core function you want to deliver and can track the responses you need to inform whether people like what you’ve built or not. Also, getting your thoughts down on a basic wireframe allows you to pin down the granularity of what value you’re providing without overinvesting time and effort.
Ultimately, if you're staying focused and you're doing it with the right people, you should be able to uncover the information you need from your customer - do they want/like and are they willing to use/buy your solution.
4) Dive into the competition.
A lot of startup advice says to ignore your competition. But if you really want to build a novel, new solution, and validate that your idea is any good, you can use the competition and alternatives to accelerate your path.
Here’s what you do, and this was advice T.A. gave to us. As you interview or survey potential customers, ask if they’ve heard of all your competitors, whether they’ve tried them, whether they like or don’t like them, and how they found out about them. If they haven’t heard about, looked for or tried your competitors, then you know you probably don’t have the right customer. But on the other end, if your customer has searched high and low, tried everything, and still thinks what’s out three doesn’t work… you’re onto something. And if you can make them happy with a new solution, now you’re cooking with gas.
5) Do things that don’t scale.
In the early stages of ideation, there’s a time when you can spend quality time with your earliest adopters and deeply connect with them about the problem that needs to be solved. This is a rare chance to glean insights about your target market that you won’t have the chance to do as your company begins to scale up. Don’t take it for granted.
This is no more true than when it comes to validating consumer demand with your first product, your MVP. Luke shared his experience standing outside a transit center selling tiny battery chargers in an attempt to validate the challenges travelers had with losing power on their phones. By being out in the world, “selling” a product that wasn’t anywhere close to the final thing, Luke learned valuable lessons about what the customer really wants, needs and does in the wild. When you place yourself in customers’ shoes in real time, it’s far easier to validate demand without getting to a fully functional product and wasting time on R&D.