Startup Crash Course Idea Validation with The Startup Coach
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10 STEPS TO QUICKLY VALIDATE YOUR BUSINESS IDEA
The Startup Coach
Recorded live as part of TorontoStarts Free Startup Event Series
So tonight I’m gonna talk about idea validation and problem solution fit. So this is Trevor, it’s a real story, it’s a real name but it’s a fake picture. Trevor searched for a solution on Google. Haircuts in home services. He was looking to get his hair cut at home. Someone to come and do it and he found a website and he signed up for it. What Trevor didn’t know was the website only launch a day early, it only took one hour to build, and it cost zero dollars, oh and there’s no product and the company doesn’t exist yet. So when Trevor signed up and and put his e-mail in what do we do? We called him up or e-mail them depending the information this story actually…we called the people up because they gave us their phone number. We ask them why they were looking? Why were you looking for this product or service? Why would you use this product or service? How would it make your job easier? And what are the minimum features you would need in this product in order to solve your problem and for you to buy? Trevor in this story bought the real product when it was launched.
10 STEPS TO VALIDATE YOUR BUSINESS IDEA
So we’re gonna talk about ten secrets of quickly validating your idea. So lean Startup. I’m not sure if everyone is aware of lean startup? So everyone is aware of what Lean Startup is? So lean Startup came out of an idea of the seventy’s called lean manufacturing. It was Toyota and someone else that came up with that. They created the standard for lean manufacturing which was basically new standard how to create physical objects. So Eric Rice and Steve Blank came out with the Lean Startup. It’s a concept is how do we build Startups, not products but build Startups that succeed. And how do we do that in the least amount of time? With the most confidence so that you’re always learning. You’re always validating what you’re doing and you’re never guessing or at least not guessing too far, and that’s basically what Lean Startup is.
DOES YOUR BUSINESS IDEA SOLVE A PROBLEM
So we’re gonna talk a little about idea validation. So you have an idea. Does your idea solve a problem? Can you find the potential buyers? Is there a market? Does anyone care?
1. WRITE DOWN YOUR BUSINESS IDEA
So we’re talking about the ten steps for quickly validating your idea. So step number one write down your product concept. So just a simple act of writing forces you to consider things you may have previously glossed over. I’m not talking about writing a business plan. I mean you can do that later when someone’s asking for it from a VC (Venture Capitalist) financing point of view. But I’m talking about answering a few key questions and that you can go out and test. For this I usually use a tool like the business canvas that we taught last night and a lean validation board. I’m going to show you a little bit later. So we wanna write down our assumptions that sooner or later we wanna test and the sooner we test then the less risk you have as a Startup. Many Startups come to me they’ve already built a product. So I built this product. It’s out there to use, but I don’t know who or why they would use it? You have no idea who is a client, so don’t do that.
You’re coming out with this great thing! But do you know who do I sell it to? So this is why we wanna write down your concept? Write down your business plans, so who are your costumers? make some basic assumption if you say, everyone, you’re already setting up yourself for failure. If everybody is your client no one is your client. You can’t say, unless you have the miracle pill that will cure all your pain whoever you are, maybe everyone is your client. How do you target your customers? How do you find that person on Facebook or social media or target billboard ad, or radio ads or whatever? How are you going to get that message to the person? If you don’t know who they are, and what’s your value proposition to that person? If you don’t know who your user persona is? For example I am working with a few companies dealing with old age homes. They’re helping the elderly retire in different ways just two or three companies and working on different things ones with money, ones with home care, … The problem is who are their costumers? is it the person who needs that home care? Is it their daughter or their family who’s worried about that elderly person? Who are you marketing your product to? You really need to understand everyone involved in that buyer decision to understand who you need to target and what your message is. Because to that elderly person who needs that extra care its freedom, it’s lifestyle, its confidence. For that…the mother of two kids is worried about her mother in old age home or can’t take care of herself, it’s less stress it’s confident that she’s being taken care of. It’s all these other things. And you need to understand who you’re targeting, and how you’re gonna targeting, and when.
WHAT PROBLEM ARE YOU SOLVING FOR THE CUSTOMER?
So what problem are you solving for these customers? So many entrepreneurs wonder why their product has trouble getting traction. Just like the one who I mentioned before, that’s an honest to God true story somebody in our community. They built a product that no one wants. They don’t know why no one’s buying it. So start with the problem first. This means being explicit about the problems your product solves. By writing down the problems you can talk to whether the customer think that problem is worth solving or not. How does your product solve those problems? Only after writing down the problem, do you really have any good idea whether you can move on with this and whether you can show it to someone else. But writing it down and being able to explain it to someone and say is this really a problem? Are you experiencing this problem? And you can start the problem conversations with people. This is so important. So many people just don’t do this. When you are having problem conversations with people and talking about your Startup in general you’re going to get two types of responses from people. You’re gonna get the hmmm that’s interesting yeah, hmmm yeah, that’s a good idea. Those people aren’t interested walk away from those people as quickly as you can. End that conversation. Or you’re gonna get this you’re gonna get what I called a cookie monster look. Keep an eye open that. They lean in ”tell me more’,’ wait a minute, you do what? You know when you get that type of reaction you’re on to something. Think about what you said, how did you get that reaction? Who is that person? Because they’re feeling the pain they obviously interested in what you’re doing. Have those conversations.
WHAT ARE THE KEY FEATURES OF YOUR PRODUCT OR SERVICE?
What are the key features of the product? The features need to be more than cool they need to solve a specific problem. They need to be more qualitative save time, save money or more money the better. I’m encouraging you to think about a minimum viable product and set the limit. limit the feature as much as possible. One of the things I teach, when I teach my growth hacking courses, kill features. So don’t add features immediately you have to figure why your customer wants your product in the first place and what features they are actually buying for.
2. DECIDE AND TAKE ACTION
So what’s your minimum viable product look like? Once you’ve written it down its time. Time and resources are scarce. There isn’t time to spend agonizing over every detail which in the end, may not matter because you’re just writing stuff that are assumptions. Guesses of what might happen in the future. For that reason, Lean market validation helps a successful team just get enough information and data to make decisions. Then they can adhere to the eighty percent rule. They got to go out and find out whether this is true. Get enough data to say it looks like this is eighty percent valid. The feedback I’m getting, I’m getting eighty percent positive feedback or you can pretty much see that solution but you’re not a hundred percent there. You know you’re on the right track when you’re getting the right feedback from people. Getting to a hundred percent? Don’t agonize over time and details getting from that eighty to a hundred percent. You’re too early for that, you just want to get to the eighty percent. getting that idea that this is a valid and these are people are interested they’re saying yes to this. Time to move forward to the next step.
3. EXPERIMENT, EXPERIMENT, EXPERIMENT – THINK LIKE A SCIENTIST
So think like a scientist. Most of the time what you write down are assumptions. All the writing you do, the discussion that you do, the debating, the planning are all assumptions. Teams often take these discussions and they debate over weeks. They write seventy-page business plans. I like to think the scientific and use the scientific method when reviewing ideas and ask how can they be tested? I so often see teams debate over minor details and waste valuable time rather than making a guess or temporary decision and then getting out in the real world and test whether it’s the right idea. It’s important to just make a guess and get started. If you’re just looking for all this data based on guesses and pouring over it, you’re getting into analysis paralysis you need to really find out. because you need to stop guessing. You really need to find out, is this true. Because your assumptions may turn out to be wrong. And you would have spent valuable time and not to mention a lot of team dynamics, money and resources debating on something that didn’t really matter in the end. So test it, figure out what a positive outcome is for you, and what a negative outcome is for you and go test and analyze the result and decide whether you’re moving forward or not.
4. FIND THE TRUTH – REALITY CHECK
You wrote down your assumptions. You’ve decided to go forward. You’re thinking like a scientist for experiments. Now it’s time to get out there and find the truth. Find the truth by getting out and testing the assumptions. As soon as you made some basic decisions and written down your assumptions get out there and test them. See if they resonate with your potential customers I encourage any of our community to get out to the street. When I mentor Startup weekend it’s a fifty-four hour, seventy-two hour depending on how you’re doing it. We get people to go and talk to to customers. The more customer validation they do the better. The people that win usually get out, and talk to a hundred different customers and get that feedback. They’re really going out there and getting in front of people. People are afraid to tell people their idea. They think their idea is secret. They think their idea is holy. I can’t tell you because I think you’re going to steal it.
I tell everyone your idea is worthless I’ve heard it before. Maybe a little twist maybe, maybe not. I’ve talked to thousands of entrepreneurs, what matters is execution. Because all those people have given me the same idea you’re giving me. But are you actually going to do it? Someone else has your idea. There’s always gonna be competition. Startups always are disappointed ‘like oh someone else is doing this’; you know what angel investors and VC investors think? That if someone else is doing it that’s a good thing. That means there’s a market. Someone else thinks it is a business model they’re going after it. If no one else is doing it wait a minute, why is no one else going after it? Why isn’t there a market?
Competition is a good thing don’t be afraid of it. I don’t know any industry there isn’t competition in. So go and find the truth. Lean market validation relies on interviews with potential buyers of your product. You can also test the assumptions on interviewing experts for example analysts in the industry. People who have been employed by industry consultants. There are also great ways to test. Test digital ideas with landing pages and inexpensive ads. Starts with your network there’s lots of ways to get in interviews with people doing problem interviews. I’m going to give you of my growth hacks right now, Start a podcast. Start a webinar. Start a conference. Plan it six months or a year from now. Whatever your area happens to be. If you’re in the old age retirement home or you’re in the truck transportation problem industry. if you’re running a conference you’re gonna be looking for speakers, you’re looking for panelist, you’re looking for potential sponsors. Whatever you plan, the point is you’re calling these people up and you’re saying listen we’re doing a survey in your industry looking for the biggest problems you’re having, we’re looking for speakers and mentors and solutions. We’re gonna bring these people together. And you start having those conversations you’re not trying to sell them anything. What problems are you having? And guess what, we’re doing something on this, would you like to come and speak at this? Let me put your name down on my special guest list. Let me give you a free ticket for taking part in the survey. You plan it out for six months, eight months a year. You can go to WorkHaus, Brightlane, one eleven. Rent a room for two hundred, four hundred, eight hundred dollars depending on how big you want. it doesn’t have to be huge and in that six months, you have a hundred people in the room. Who are your target audience! Who you have personally called and contacted etc. Who you’ve promoted this thing, this is about solving their problems…your industry. That you’re prime and set to solve! There is your target audience ! Just a little bit of work you’re not reaching out and saying I’m trying to sell you something. You’re doing the problem interviews. We’re going to talk about what those questions look like in a minute
How I’m doing for time. How we doing for time Trevor alright.
5. START WITH YOUR NETWORK
So start with your network and then your mentor’s network, start with the TorontoStarts community we have our open pitch tonight there is fifty to a hundred people out depending on the day of the week. You can open pitch or just talk to people. Throw your idea out there the more feedback you get the better. Test, test, test. Talk to people and once you figure out who your target audience is, interview them.
6. DO INTERVIEWS
When I mention interviewing, I’m not talking about a cursory conversation or worse a survey. I’m talking about getting a list of problem questions. And trying not to deviate from them unless the conversation takes you down a hole. Approach the person with the sense of curiosity about the customer problem and their needs. Not about your solution. So when you’re talking about problem interviews, you never talk about your solution. You only talk about the problem. Talking about your product only impacts how they’re thinking about what you’re doing. You’re really trying to understand what their problem is when you’re doing a problem interview. If you’re doing a solution interview question that’s a different conversation. I suggest you always have those as two different meetings. Do all your problem interviews and then circle back to those people who are willing. And say you know let me talk to you about what I think might be a solution to your problem.
7. ASK WHY
And I’m gonna throw some questions up at how you would do some those in a bit. Ask lots of open-ended questions. Why? Why is far the most important question ask. Implement the five why’s, why do you do that? why do you feel that way? , why is that important to you? why? You know keep asking. You really get in the mood and feel light
People don’t buy on cold cognition they don’t buy on analytics, they don’t buy on hot cognition. They buy on passion. They buy on something that touches their heart. Their feelings. So when you’re finding a why; what is their pain point? What really is their feelings about this. You’re not selling features. You’re selling benefits. People think I’m selling you know bigger, faster, ..No, you’re selling more confidence or less stress or more money or something else. Not the thing you’re selling. And that’s the thing you are trying to find when you’re asking questions, in other words, What’s their motivation? And when you really understand that you can really deliver a solution that really appeals to them. That they’ll be willing to open up their wallet for. Find the value proposition.
8. FIND THE REAL “VALUE PROPOSITION”
So number eight, I encourage entrepreneurs to focus less on features and more on explaining the value proposition for the product. I already just said what that means, a value proposition is the expected gains that a customer would receive from using your product. It may be to save time, making more money, or maybe some social benefit. Like looking good or feeling good. Whatever it is, the value proposition relates diretly to the problems. You know the situation where someone is taking care of the elderly. What is the value proposition? it depends on who you’re talking to freedom and lifestyle, less stress, more confidence that your loved ones being taken care of and all that kinda stuff that’s what you’re selling. Not home care.
9. LIKING IS NOT THE SAME AS BUYING
Liking your idea is not the same as buying your product. When you talk to people your friends especially. Here is the problem talking to your friends and family. They feel obligated to give you advice because they wanna help you. They really do. When a family member comes to you with a problem, whether you are an expert or not, you feel that you should give them advice. You know what I think? I think this is what happened. You should should do this. So if your mother is never been in the Fintech industry and you’re coming to her with your finch thing she is going to give you advice. Now it might not be great advice, but she thinks it’s the best advice from her. So do your best to avoid friends and family when you’re having these types of conversations because they’re biased in a completely different direction. So when you’re talking to these people…when someone say hey that’s a good idea. That’s not enough. Would you buy it? would you pay twenty-nine ninety-nine a month? would you sign a letter intent? Letters of tent are very, very common. You know what a letter intent is? When a business says if you can deliver this product or service I’ll buy it at this rate. Not sure whether they’re legally binding and all that. You can ask Alex Koch about that next when she comes up. But these are really common. During my Startup Launch Program week one, not the last cohort, the cohort before that. The first mentor was in and one startup was talking and they had a synergy with what he was doing. I immediately said hey you guys should sit down and if you’re interested you should give him a letter of intent. A week later he had it. It’s not hard you got to ask. So push, challenge them would you really pay for this? Would you really?
10. JUST DO IT AND HAVE FUN
Now it’s time to just do it and have fun. You know running a Startup the community is a great opportunity for entrepreneurs to take a chance to pitch their idea in front of strangers. Like our open pitch event and really get some advice. Get some feedback on how to take it to the market. So go on enjoy and whatever you do validate before you build.
Validation sounds hard. People don’t want to do it, they simply don’t want to do it. But building a real company is harder, and building a real company and a product that no one wants is devastating.
I talk to lots of people who have spent a hundred and twenty thousand, two hundred and fifty thousand, or more doing something no one wanted. They lost their shirt and only come to me after.
So I’m gonna whip through a bunch of slides but if you’re interested in taking pictures have all the types of question you should be asking for all those interviews I got a bunch of them coming up so get your cameras ready because I’m over time my time on this so I’m gonna go through it.
RULES WHEN INVESTIGATING PAIN POINTS
Two golden rules to investigate the customer pain points:
- Never tell them your product idea when you’re investigating paying points
- Ask at least one question that has the potential to destroy your current imagined business
So here is the problem you don’t want to ask yes questions. When your asking questions ands you getting people answer yes, yes, yes. That’s not what you want. If when you’re doing these experiments you’re going out and you’re getting a yes back you’re asking the wrong questions. You need to flip that around and say things like what would make it better? What’s the one feature that is missing? Not oh is it good? Now what’s the one thing that you really wish it had? what is the one thing pisses you off about this product? Like seriously they’re telling you don’t be the oh what do you really love that’s great, awesome. But you need to check the other side of it.
(The questions from the presentation are below for your easier reuse.)
Alright cameras out we got a bunch of these slides we got to go through them quick everybody got them out I’m not gonna read these problems validation question click, click solution validation questions we have like eight of these slides sorry guys these are all different kinds of conversation problem discovery question, problem validation question, product discovery questions, product validation, product optimization question. All these different interviews you should be doing and ending interviews. When you’re ending an interview always have follow-ups that kind of stuff.
So that’s idea validation. Thank you very much if you have any questions I’m around afterward and on the panel thanks.
Startup Problem Validation Questions
Can you tell me more about the last time you did [X]?
What are the reasons you do [X]?
How often do you do [X]?
What are you trying to achieve/get done by doing [X]?
Could you describe step by step how you do [X]?
Have you ever tried to improve [X]?
What happens before/after you experience problem [X]?
What don’t you like about [X]?
Can you show me how you do [X]?
What is the most you would pay (to invest) to tackle problem [X]? (Is the user already paying for a solution today?)
Startup Solution Validation Questions
Does [X] solve your problem? Why not?
Where does [X] fall short of your expectations?
How does this product/feature compare to your current solutions?
Have you used something similar? What was the experience?
Would [solution X] create new problems or pains for you?
What needs to be before you use [X]?
What is the most critical/crucial feature of [X]?
What do you like or dislike about [solution X]? Why?
Why do you think this could be beneficial for other people? For whom?
Would you recommend this to someone? (Who? Ask to confirm.)
Startup Problem Discovery Questions
What’s the hardest part of your day?
What are some unmet needs you have?
What product do you wish you had that doesn’t exist yet?
What tasks take up the most time in your day?
What could be done to improve your experience with [process/role]?
What’s the hardest part about being a [demographic]?
What are your biggest/most important professional responsibilities/goals?
What are your biggest/most important personal responsibilities/goals?
Startup Problem Validation Questions
Do you find it hard to do this process/problem?
How important is the value you are delivering to them?
Tell me about the last time you did or used the process you are improving – make sure you listen for complaints
How motivated are you to solve/improve this problem or process?
If you had a solution to this problem, what would it mean
to you/how would it affect you?
Startup Product Discovery Questions
What do you think could be done to help you with this problem?
What would your ideal solution to this problem look like?
If you could wave a magic wand and instantly have any imaginable
solution to this problem, what would it look like?
What’s the hardest part about the process or product you are improving?
What are you currently doing to solve this problem/get this value?
What do you like and dislike about the other competing products or solutions?
Startup Product Validation Questions
What do you think of this product?
Would this product solve your problem?
How likely are you/would you be to tell your friends about this product?
Would you ever use this product?
Would you be willing to start using this right away?
What might prevent you from using this product?
Will you pay $x for this product?
Startup Product Optimization Questions
What could be done to improve this product?
What would make you want to tell your friends about this product?
What’s most appealing to you about this product?
What might improve your experience using the product?
What motivates you to continue using this product?
What’s the hardest part about using this product?
What features do you wish the product had?
Startup Ending Interviews Questions
[Summarize some of your key takeaways] – is that accurate?
– it’s best do this throughout the interview.
So based on the conversation, it sounds like x is really hard for you, but y is not.
How accurate is that?
It sounds like x is very important to you, while y is not. How accurate is that?
Is there anything else you think I should know about that I didn’t ask?
Do you know anyone else who might also have this problem that I could ask
similar questions to? – small form of validation if they’re willing to give you referrals
Can I keep you in the loop on how the product develops?
Can I follow up with you if I have more questions?
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