[davidroetzel]

This kind of advice pops up on HN from time to time and while I believe it to be valuable, I guess it is at least incomplete. Here are two stories from my failed ventures to augment this advice:

1) Years ago I started a small side-business with a few colleagues. It was a web-based service for a very specific group of clients. Best of all: The idea had already been validated. We had our first paying customer before we even built the product. And we quickly found a few other customers. But after a few sign-ups things were not looking so good anymore. Even though our early adopters were well known in the industry, other companies would not follow. Everyone we talked to loved the product, but as we had to learn the hard way nobody was willing to pay for it. Some even went so far as to implement possibly illegal solutions instead of paying us a few bucks.

Lesson learned: Even if you talk to a few possible customers, question hard if those really are representative of your target audience. Also, liking a product/idea is not the same as being willing (or able) to pay for it.

2) A while back I wanted to find out if there would be any commercial interest in an app I had already built. So I set up a landing page and collected email addresses. Since I had already built the app I could easily hand out demo accounts for every interested party. I quickly collected around 60 addresses and set them all up with a demo account. Only a single person ever logged in at all! I sent out reminder emails but did not get a single response. To this day I do not fully understand what went wrong.

Lesson learned: Newsletter- or Beta-signups from your landing page is NOT the same as validation for your idea.

[bane]

> but as we had to learn the hard way nobody was willing to pay for it.

I was part of a startup a few years ago with some really cool technology and good market validation. Somehow we got connected to a very well known media and technology company and were brought in to sell our product to them. The founders, star struck, pulled out all the stops on our presentation, flying people cross country, buying up demo data, the works. They saw the potential install base * our license cost (even at discount) and were thinking immediate exit.

During the demo there were oohs and ahhs at all the appropriate places especially around certain features we really wanted to show off. Questions were constant and detailed and follow ups were planned before we even left the room. High fives were given in the parking lot.

Over the following weeks calls were vague, "hard to coordinate all these people" "he's on travel" "she's changed departments"

Weeks turned into months, calls just stopped being returned.

The deal was put into back burner status with lots of finger pointing.

One day, a year or so later, one of our employees came back from a tradeshow pointing at a flyer they had picked up from that company's booth. It described a new feature in their technology offering that was an exact copy of some of what we had shown in our demo. The copy even used a term we had coined for the demo. The screenshot looked more or less like that piece of our product, reskined for their technology.

Lawyers were consulted.

The end result was that they hadn't done anything wrong, just copied an "idea" they had seen. But as a result we were effectively locked out of their market segment. They had simply done the math, develop it in house or pay a license fee per use and it had been cheaper to do it all in house. By buying relevant data and making a demo so complete you could make actual decisions off of it, we had even shown them what they should aim for, what worked, what didn't work. We helped them optimize their development process and made the decision to do it all in house even easier.

[jrmiii]

Been there. I think you have to hold some trade secrets back to avoid this fate.

[wpietri]

Definitely true. The landing-page thing is the IT equivalent of "is it plugged in?" If you can't get anybody to give you an email address, then you'll never get them to give you money. But just because people are interested doesn't mean they'll pay.

In both these cases, I would have taken them as signs that I had some unarticulated, untested hypothesis in my head, and that I'd have to do user interviews to figure out what the issue was. People are weird, and business is extra-weird. Debugging a value chain is often way harder than debugging software.

[DanielBMarkham]

Yeah.

1) You are not looking for somebody to "like" your idea. You're looking for something to build a machine around. That usually means "I'm ready to write the check"

2) You are not validating the market, you are validating the machine. As you point out, it's possible to run into a few folks that have checkbooks. Doesn't mean you can find any more of them. The "machine" part is "I go out on the street corner every day and run into 5 new people that will give me money" This is something that can scale. To build that, of course, you have to talk to those first 5 people.

For what it's worth, the web is a sucky place to try to get anything done. Everybody is on and they're all trying to automate everything. While the landing page/email thing is great, probably much more useful to physically interact with as many people as possible.

[jonnathanson]

The problem with the landing-page-and-email-addresses method is that it's impersonal. It's also a low-commitment activity. It's so easy to sign up for something, and it requires so little conscious thought. You will get a lot of false positives because of that.

It's counterintuitive to some extent, but consider a two-phase signup process: a landing page plus an email validation of some kind, or perhaps a two-step signup process on the landing page. There will be a noticeable drop-off between Step 1 and Step 2, and that's good. Those are probably people who would have washed out anyway, and you no longer have to waste time catering to them as false positives. [1]

I'm not saying this was necessarily your issue, but a lot of people run into problems with hypothesis testing by conflating it with marketing or growth hacking. It's not. You're not trying to optimize a hypothesis test for pure signup volume. You're trying to use a hypothesis test as a filter: for the right audience, for your problem/solution statement, and for the value proposition you've chosen to test.

You don't want signup to be a total pain in the ass, but at the same time, you don't want it to be so easy that it loses meaning as a signal of intent.

[1] Caveat being that you still want to probe, and perhaps ask people who've bounced between 1 and 2 why they did so. Sometimes it really is just a UX issue. But in my experience, if someone really has the problem you're addressing, he or she will stick through a two-step signup or validation process.

[gchokov]

That's is all well put together, and illustrates my idea in the other comments, why validation is not the silver bullet. Thank you for sharing your experience!

[mason55]

> Also, liking a product/idea is not the same as being willing (or able) to pay for it.

A great thing to do is when you're validating products you ask the prospect how much they'll pay. Then say "Ok, so if I put a contract in front of you that says you'll pay $x if I deliver this product you will sign it?"

You'll find out very quickly whether someone is just being nice or whether they are serious.

[wpietri]

Indeed, rather than just asking if they'll sign a contract, you can pull out a Letter of Intent [1] and ask them to actually sign it. You can explain that they're not legally binding if you need to keep people from freaking out. But there's something about signing an official-looking document that a) makes people take it seriously, and b) makes people more likely to really sign up when you come back to them.

Depending on context, you can also ask for a credit card number and then not charge it. People are very careful about giving out credit card info, so them giving it to you is a great sign that they're really serious.

[1] http://en.wikipedia.org/wiki/Letter_of_intent

[RogerL]

Please, no.

As soon as someone starts trying to maneuver me to take money out of my wallet, I'm gone. It's not my problem that you don't know if your product is good or not. There is no way on earth I'm signing anything, giving you a credit card number, or what have you. I'm utterly shocked that this is considered a good way to gauge interest in a product.

Even if I really am interested, so what? I have a budget, my appetite exceeds my grasp, just because your product might solve a pain point doesn't mean I will buy it. I need to consider the needs of my entire business, weigh pros and cons, and so on. If you are pulling out papers to sign after a conversation, I'm so gone.

I'm reminded of some 3rd party home alarm installers that came around to my house a few months ago. We were thinking of re-activating the alarm in the house, so we talked to them. Didn't take long for the papers to come out, etc., and it didn't take much longer for us to tell them to pound sand.

I don't give emails out (because on average the spamming becomes relentless) to landing pages, now I'm supposed to give you a CC number just so you can do marketing research?

No.

[wpietri]

Your reaction is normal for a late-majority adopter [1]. But early-stage startups are looking for the innovators and the earliest of the early adopters. When those people get to the point of saying, "OMG, I want it!" they will indeed sign contracts or pull out a credit card.

The point of asking people for money is exactly to separate the people who really are early adopters from those who are just enthusiastic.

A great example is Kickstarter. You may be unwilling to buy a product based on little more than a dream, but plenty of people are willing to take a gamble on something risky when they care enough about it. The rest of us wait until the product has come out, has been reviewed, and have friends using it.

[1] http://en.wikipedia.org/wiki/Diffusions_of_innovations

[philbarr]

So in which situations would you buy something?

Not trying to be snarky or anything, I know yours is a common opinion so I'm just wondering what would be a less offensive way to test the waters?

Perhaps - do the conversation, leave some contact details, give them the papers but just say, "look, no pressure, I'll leave this with you and let you think about it." Then see how many people get back to you?

[silverbax88]

Coin. (onlycoin.com)

They showed a video of what the card would do and how it would work. I actually have no idea if it will work, or does work, but it looks like it works in the video. It looks like they have something awesome. And it won't be $2000 to buy one.

They said, it should be ready within a year and you can reserve one now for 50% of the sale price (regular price $100).

So I bought one, even though I am aware that the product might never come to fruition and that my $50 might disappear. A lot of other people bought, too. I have gotten updates and I have no reason to believe I won't get my product and I'm excited that I got in on it.

But...

What did I buy, really?

I saw a guy on a video using Coin, showing how it would work, selecting different options on his card, answering all my potential questions. Man, it sure looks sweet and I can't wait to have one...

except...

did Coin really exist or did they just do a video to show how it could exist? Does it matter? I have pretty good video equipment and coding skills...and I've even hired actors for videos and done pretty well...what would stop me from hiring an actor, shooting a commercial for something like Coin, and then collecting thousands of dollars to fund the actual creation of the product?

Nothing. I just didn't think of it and didn't act on it, and they did. I'm not saying that's what they did at all, I'm just saying that could be done.

That's market validation. They sold thousands of Coin based on their idea. I have no idea if they even had working code or product, or if they were just validating whether it would sell.

[Estragon]

Maybe not such a good suggestion for a consumer-oriented product, but I've heard that this approach works well for B2B.

[pitt1980]

that's fine,

but that's evidence that you're probably not a profitable customer to chase (which again, is fine)

if you're not taking out your wallet, you're a waste of the salesmans time, the earlier they can figure this out the better

[j45]

LOI's are generally more interesting to investors. As someone who is bootstrapping or working with limited time or money, there's no better validator than money.

[wpietri]

Sure. Money's definitely best. But if you don't actually have a product, asking for money can be tricky. The LOI's not as good as cash, but my point is that it's way better than, "Sure, I'd pay for that!"

[gchokov]

It's one thing to say how much you will pay, and different to pull out your wallet and actually pay.

[enraged_camel]

Yes, but asking someone how much they would pay for it takes them almost all the way, mentally, to actually paying for it. You're basically asking them to make a verbal and very informal commitment, but that's enough to make most people think about it seriously (as opposed to saying "omg I love it!!!" just to be nice).

[wpietri]

That's not my experience; I now avoid asking hypotheticals because the results for me have been very unreliable.

I'm certainly unreliable that way. There are a number of Kickstarters where I've said, "OMG I'd pay for that!" But if I come back to it a couple of days later, I'll never actually click on the signup button. I'm even worse with things like this in person. I don't like disappointing people, so I'll try hard to find the most positive thing to say about their product.

When interviewing, I might ask people a question like, "What's a fair price for X?" But that for me would be more about the follow-up question: "How did you pick that number?" An insight into what they see as equivalent products, related value propositions, or personal value metrics would definitely help me think about pricing.

[tchock23]

Very good points here. The prevailing advice for entrepreneurs from folks like Steve Blank is that you must "get out of the building" and be physically in front of customers to interview them, but in my experience 95% of customers would never tell an entrepreneur their product/idea sucks right to their face.

As for pricing, I've found that asking people "What do you think a fair and reasonable price for X would be?," followed by the follow-up as to why, is the best way to ask about pricing (in a qualitative setting, at least).

[wpietri]

Thanks!

I think Blank is entirely right. But you have to be tricky.

At my last company we did user test every Tuesday afternoon. When seeking subjects, we looked like a research firm, not a product company. When they arrived, there was no company name on the door. The interviewer would start out asking about a variety of products to get a baseline; ours would just be one of several discussed. Eventually, because we spent more time on our stuff, maybe half the people figured out that one product was ours, but by then we generally had enough honest opinion.

[enraged_camel]

>>That's not my experience; I now avoid asking hypotheticals because the results for me have been very unreliable.

The point in this context is that, while it may still be unreliable, it would be more reliable than simply asking if they like your product. And it is the best you can do, since no one is going to actually pay for a product that doesn't exist yet.

[wpietri]

People pay for products that don't exist all the time. That's what contract software development is all about, for example. Ditto vaporware, Kickstarter, and "coming soon" features of existing products.

And, as mentioned elsewhere, people can think they are about to pay for a nonexistent product. Once you have proven willingness, there are a variety of ways you can finesse the issue of not actually having a product.

[mason55]

That's why you ask the second question. "Ok, great, so then let's draw up a contract with that pricing and you'll sign it?"

Make them put their money where their mouth is.

[exelius]

Sounds like two things here:

With #1 you found a problem, but failed to find a market. It's hard to say without knowing the product and/or situation, but it sounds like your product was in the unfortunate position of being an enterprise B2B product that was not solving a problem in the SMB space. The typical strategy for a B2B product is to sell it to SMBs early on, then use that revenue to fund the massive feature set that large enterprises usually need. This is one of the things that happens in startups -- sometimes you don't know your market is a dud until after you have a product. It's not a sure thing.

With #2, you just didn't have a large enough sample set. Response rates for e-mails collected via landing pages like this are around 1-2% in my experience. It's a bit of a chicken and egg problem to be honest, and it's hard enough that many startups will throw a marketing budget into it.

[smegmalife]

>Lesson learned: Newsletter- or Beta-signups from your landing page is NOT the same as validation for you idea.

Sure, Beta and Newsletter signups are not full validation for your ideas. But the reality is that you'll never get full validation.

For those who are looking to take the plunge and quit their job, or are deciding which project to work on, a simple test like this can be used as a proxy for demand.

Just because people click sign up on your landing page doesn't mean your product will succeed. But it is infinitely more indicative than just guessing.

If you're going to do a startup, you're going to shoot and miss several times before you succeed. I've been there before. But having Beta signups at least shows you're aiming in the right direction.

[ryanSrich]

> Lesson learned: Newsletter- or Beta-signups from your landing page is NOT the same as validation for your idea.

The importance of this comment lies with the false reality of believing at face value that someone loves your product and says they'd use it. Until their money makes it into your bank account, take everything they say with a grain of salt.

It's also worth noting that changing the habits of individuals is a massive feat of social engineering. I've seen products that save time and money and yet the market will stick with what they've always done.

[w1ntermute]

Note that these sorts of problems are not specific to startups. They apply to any sort of polling situation. For example, political campaigns face similar challenges.