9 Entrepreneurs Reveal How They Validated Their Business Idea The author of a new book tells how several inventive types tested their product's premise. A catchy concept won't score profits for a startup if no one wants the device.
By Anand Srinivasan Edited by Dan Bova
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Paul Graham wrote a pretty comprehensive essay on business idea generation two years ago. He emphasized the dangers of coming up with an idea for a business that nobody wants.
"Why do so many founders build things no one wants?" he asked. "Because they begin by trying to think of startup ideas. That m.o. is doubly dangerous: it doesn't merely yield few good ideas; it yields bad ideas that sound plausible enough to fool you into working on them."
For my book How We Did It: 100 entrepreneurs share the story of their struggles and life experiences, published earlier this month, I interviewed several entrepreneurs about their process for generating ideas and how they validated them. Here are some interesting insights and advice from nine of them.
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1. Rob Walling, founder of the Numa Group and creator of Drip, an email-marketing tool. "I wanted to find 10 people who would be willing to pay a specific amount for the product once it was complete. This forced me to not think about features, but to distill the idea down into its core value[: a] single reason someone would be willing to pay me for the product. I took that, and emailed 17 people I know, or had at least heard of, who may have shared the same pain. This way, I not only had my initial customers who could provide me feedback on the details of how Drip should work, I had the start of an early base of revenue I could use to start growing the product."
2. Mike Matousek, CEO and founder of Flashnotes.com, which offers a marketplace for study guides and class notes. "The idea for Flashnotes.com was sparked when I was junior at Kent State University. I started creating these detailed study guides for our exams, and sold my final exam guides for $10 a piece. Not only did they sell, I was literally hunted down on campus by more and more of my classmates -- easily making over $1,000. After this initial interest, I knew I was onto something, and had my friends test out the idea of selling study material in their own classes."
3. Alex Brola, co-founder and president of CheckMaid.com, which runs an online on-demand cleaning service. "We actually validated [the idea] without having any cleaners to do the cleanings. We threw up a site, a booking form, a phone number, and ran some [pay-per-click] ads through Google and Bing, and saw what the conversion rate would be had we actually had cleaners."
Related: Use Crowdfunding to Gauge Interest for Your Idea
4. Danny Maloney, CEO and co-founder of Tailwind, which offers a Pinterest analytics tool. "We 'validated' our first (failed) product by having friends and family tell us how wonderful it was. [It] felt great, but they didn't use it. When we started Tailwind, we took a different approach -- asking complete strangers who didn't care about us at all to [sign up] and pay before our product was even built. We stood up a signup page, bought some AdWords traffic and people actually started offering to pay us! We didn't actually charge them, but we learned we were onto something."
5. Rick Martinez, the owner of Senor Sangria, a manufacturer of ready-to-serve, bottled sangria. "To validate, I made some of my homemade sangria and I took it to a few retailers and asked them if they would buy a sangria in a bottle that tasted like this. Each of them said if I could bottle my homemade stuff they'd buy it. They all seemed to really enjoy my sangria but didn't think I'd be able to do it on a commercial scale.
The second level of validation was running the numbers. I created a fairly complex spreadsheet which I still use today. This spreadsheet allowed me to understand how much money I would need to commit to this business and how much product I'd have to sell. It forced me to ask a TON of questions to people about the alcohol industry. These [two] steps were all the validation I needed to have me move onto the next step."
Related: Do Pivots Matter? Yes, in Almost Every Case.
6. Rob Infantino, the CEO of OpenBay, which helps users discover local car-repair services. "I owe much of the validation process to Steve Blank," who was an advocate of leaving the office. "After formulating the idea for this online marketplace, I got out of the building and spoke to potential users of the service. The idea needed validation by real users. Since I was planning to build a two-sided marketplace, I had to speak to vehicle owners and automotive service providers, both of whom consistently offered valuable feedback about their challenges, their needs and what they'd want to see. I built a working prototype and shared it with the same groups with updates along the way. This took months of work. Before I knew it, I had validated my idea and development on a real product was to commence."
7. Andrew Gazdecki, the CEO of Bizness Apps, a provider of DIY mobile apps for small businesses. "We validated the idea by starting to go after clients as soon as we had our initial product up and running. We believed if we could sell it to the local businesses in the area we could sell to any small business. Landing our first few clients and getting them to pay for the product was extremely validating and really gave us the idea that we might be onto something big."
Related: 10 Questions to Ask Before Determining Your Target Market
8. Edward DeSalle, CEO and general manager of Net Irrigate, a manufacturer of a wireless irrigation-monitoring system. "The original product concepts for Net Irrigate were validated by selling the product before it was actually built. I simply asked prospects, "Would you pay for something like this if it works and how much would you be willing to pay?" It turned out that in the agricultural community, there were plenty of people willing to test and experiment with new technology, providing they didn't have to pay for it until it actually met their expectations. I learned that it's critical to understand their [perspective and value they're deriving from the product, not your own. In essence, it didn't matter what I thought was cool."
9. Kathy Crifasi, the owner and president of Hipzbag, a maker of a functional accessory worn over the waist. "I did not get a lot of validation on the product for quite a while. When I showed it to friends, they would just say it was not for them. My [mother], of course, loved it! So it was me and my [m]om wearing the Hipzbag for the first [six] months. After getting myself and the Hipzbag out into the world (anyone that would take us), I stumbled upon reps that "got' the concept instantly and wanted to present it to QVC. The Hipzbag was accepted immediately from the QVC buyer in 2010. They sold out on the first show! It was instant VALIDATION and our product has been a best seller and customer favorite ever since."
