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How many customers to validate your idea?

whiz

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Not sure what you mean by this "you've been writing in hieroglyphics for about 1.5 month now."
You've been talking about your biz ideas without any specifics at all - I still have no idea what you're trying to build.

It makes it difficult to come up with relevant, meaningful responses.
 

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I'm not ignoring market research. I suggesting that the market research happens when you go out there and engage the market.

Here's two ways I do "real-time" market research:
  1. How to get profitable or fail fast with AdWords
  2. How to use forums (and Facebook groups)

I'm also not suggesting getting people to signup to anything where they don't get any value. The only signups I get are to the free trial of a paid course.


Anyway...

Maybe these podcasts might help you:
I see what you are trying to say. That the real market research happens when you got paying customers?
 

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I think what you're missing is the connection between "research" and, to use Andy's words, "helping people." In my estimation anyway. Since I don't know what your product is, I'll use some examples.

First off, when we do medical "research," we have to find people who need help with something right? So just by knowing this, we know that research and helping someone (solving their problem) can be part of the same process.

Now a business example.

Let's say you identified a type of business that uses a software management system. That is to say, software that keeps track of their orders, accounting, compliance, customers, inventory, etc. Most businesses use some variation of the management system.

Ok, so they're all grocery stores. Doesn't matter. They are mostly using either ZYX Soft's product or VUT Soft's product. They're the market leaders in grocery store management software in your region.

So what do you do. From reading the thread so far, one might guess you will go to the grocery store owners or managers and say "hey, if I made a faster, better store management system, would you switch to mine?" And when the store owner says "faster and better? Sure! I'll buy it!" You take that as a yes.

You want to know how many of those store owners you need to say "Sure! I'll buy it!" Right?

The answer from my experience is, it doesn't matter how many people say "yes" given the scenario above. It isn't valid "market research." You don't have a reasonable estimate of what someone will actually pay to solve a specific set of problems. You haven't caused a test subject to perform actions that indicate a relation between problem and solution -- utility! -- and cost.

Something like that. I'm actually not an expert on "market research." But I know enough about research to know it requires results that mean what you think they mean.

That's why people say stuff like "get someone to buy it" and "find a paying customer" and "help someone." You can trust those kinds of action a lot more.

The thing they pay for doesn't have to be identical to your final solution though. Getting them to pay, or closely approximate paying (attempt to pay and be told "sorry coming soon" or something), tells you the problem is what you think it is . Sometimes it tells you that the problem is slightly different than what you thought, which might save years of your life instead of developing almost-fit products.

Now, let's say you go deeper with the example management system. Why do you want to build a "better" management system? Does the one people are using look stupid and Web 1.0? Is it slow? Are the buttons hard to find? Do employees, who you've observed, make mistakes when using it? Do managers have a difficult time predicting how much inventory to order using the system's tools?

The above questions are a move in the right direction. For any question like the above, you can start fishing for a "cost."

It may turn out that it is worth nothing to a grocery store owner/manager to have a management system that looks "Web 2.0." Lack of aesthetic beauty on the screen costs them a perceived $1 over the 10 year life of a system.

But it may also turn out that employee mistakes cost them $1,000 per month, and that optimizing the ordering system could save them $2,000 a month in spoiled products.

Are those real problems? Yes. We quantified them, so they must be (heh). If you can reduce mistakes by 50% and optimize ordering by 50% of the losses, you have a solution to $1,500 per month worth of problems.

Not all problems have to be quantified in money. Time, especially the time of owners or rare and talented employees, or the time of customers, could be opportunities.

That said...

If you discovered the above quantifiable problems, it would still be suspect in a way to just go out and build a management system. That is, unless it was incredibly cheap and non-time-consuming to do so. But then I wouldn't be typing all this.

10 years ago, I would have just built the management system and tried to sell it. In fact, I've done that. My theory was "build 10 products and one will work." Pretty inefficient. I know I'm not the only one though, so I'm not too embarrassed to admit it ;)

More recently, I realize this is not optimal, like a lot of the people here will say. Today, the only way I would "build the management system" would be if (1) I owned a grocery store and needed a better management system or (2) a grocery store owner was so gung-ho that they either paid me something right now to plug a hole in the problem, or offered to put me on retainer to develop a solution, or introduced me to their industry association and started lining up financing so that all the grocers could benefit.

That kind of response. Otherwise, you can waste months or even years building stuff nobody wants. That's what people are talking about. I've actually built products nobody will ever use... believe me, it's not for you. I've also built things that lots of people use, by the way... in case anyone's judging :wideyed:

Using the grocer example, what if you asked them if you could come in one day a month and look over inventory and train employees; and if you could save them the $1,500 per month on inventory and mistakes, they pay you $550? Or a similar test that doesn't require a huge investment up front before you find out if the buyer is "real" or imagined?

@Andy Black @whiz what do you guys think? If a few grocers said "yes" to that offer, and you could build a software solution that solves the same problem without an auditor/trainer visiting the locations, would you be willing to build a product?

I would if they said "yes" emphatically enough and went for their checkbook (assuming I could build the solution economically for all parties). Conservatively, get a store to hand me a check for the $500, then hand it back and tell them I'll return with software that does the same thing. If I was ultra conservative, I would either get the stores to actually pay me for a month or two (I laugh thinking about this, because it's not glamorous but it's pretty practical in some ways), or get an equity backer. Then my equity backer could force me to get a store to pay me first ;)

Ok so there's an example. Let me know if it helps.
 
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I think what you're missing is the connection between "research" and, to use Andy's words, "helping people." In my estimation anyway. Since I don't know what your product is, I'll use some examples.

First off, when we do medical "research," we have to find people who need help with something right? So just by knowing this, we know that research and helping someone (solving their problem) can be part of the same process.

Now a business example.

Let's say you identified a type of business that uses a software management system. That is to say, software that keeps track of their orders, accounting, compliance, customers, inventory, etc. Most businesses use some variation of the management system.

Ok, so they're all grocery stores. Doesn't matter. They are mostly using either ZYX Soft's product or VUT Soft's product. They're the market leaders in grocery store management software in your region.

So what do you do. From reading the thread so far, one might guess you will go to the grocery store owners or managers and say "hey, if I made a faster, better store management system, would you switch to mine?" And when the store owner says "faster and better? Sure! I'll buy it!" You take that as a yes.

You want to know how many of those store owners you need to say "Sure! I'll buy it!" Right?

The answer from my experience is, it doesn't matter how many people say "yes" given the scenario above. It isn't valid "market research." You don't have a reasonable estimate of what someone will actually pay to solve a specific set of problems. You haven't caused a test subject to perform actions that indicate a relation between problem and solution -- utility! -- and cost.

Something like that. I'm actually not an expert on "market research." But I know enough about research to know it requires results that mean what you think they mean.

That's why people say stuff like "get someone to buy it" and "find a paying customer" and "help someone." You can trust those kinds of action a lot more.

The thing they pay for doesn't have to be identical to your final solution though. Getting them to pay, or closely approximate paying (attempt to pay and be told "sorry coming soon" or something), tells you the problem is what you think it is . Sometimes it tells you that the problem is slightly different than what you thought, which might save years of your life instead of developing almost-fit products.

Now, let's say you go deeper with the example management system. Why do you want to build a "better" management system? Does the one people are using look stupid and Web 1.0? Is it slow? Are the buttons hard to find? Do employees, who you've observed, make mistakes when using it? Do managers have a difficult time predicting how much inventory to order using the system's tools?

The above questions are a move in the right direction. For any question like the above, you can start fishing for a "cost."

It may turn out that it is worth nothing to a grocery store owner/manager to have a management system that looks "Web 2.0." Lack of aesthetic beauty on the screen costs them a perceived $1 over the 10 year life of a system.

But it may also turn out that employee mistakes cost them $1,000 per month, and that optimizing the ordering system could save them $2,000 a month in spoiled products.

Are those real problems? Yes. We quantified them, so they must be (heh). If you can reduce mistakes by 50% and optimize ordering by 50% of the losses, you have a solution to $1,500 per month worth of problems.

Not all problems have to be quantified in money. Time, especially the time of owners or rare and talented employees, or the time of customers, could be opportunities.

That said...

If you discovered the above quantifiable problems, it would still be suspect in a way to just go out and build a management system. That is, unless it was incredibly cheap and non-time-consuming to do so. But then I wouldn't be typing all this.

10 years ago, I would have just built the management system and tried to sell it. In fact, I've done that. My theory was "build 10 products and one will work." Pretty inefficient. I know I'm not the only one though, so I'm not too embarrassed to admit it ;)

More recently, I realize this is not optimal, like a lot of the people here will say. Today, the only way I would "build the management system" would be if (1) I owned a grocery store and needed a better management system or (2) a grocery store owner was so gung-ho that they either paid me something right now to plug a hole in the problem, or offered to put me on retainer to develop a solution, or introduced me to their industry association and started lining up financing so that all the grocers could benefit.

That kind of response. Otherwise, you can waste months or even years building stuff nobody wants. That's what people are talking about. I've actually built products nobody will ever use... believe me, it's not for you. I've also built things that lots of people use, by the way... in case anyone's judging :wideyed:

Using the grocer example, what if you asked them if you could come in one day a month and look over inventory and train employees; and if you could save them the $1,500 per month on inventory and mistakes, they pay you $550? Or a similar test that doesn't require a huge investment up front before you find out if the buyer is "real" or imagined?

@Andy Black @whiz what do you guys think? If a few grocers said "yes" to that offer, and you could build a software solution that solves the same problem without an auditor/trainer visiting the locations, would you be willing to build a product?

I would if they said "yes" emphatically enough and went for their checkbook (assuming I could build the solution economically for all parties). Conservatively, get a store to hand me a check for the $500, then hand it back and tell them I'll return with software that does the same thing. If I was ultra conservative, I would either get the stores to actually pay me for a month or two (I laugh thinking about this, because it's not glamorous but it's pretty practical in some ways), or get an equity backer. Then my equity backer could force me to get a store to pay me first ;)

Ok so there's an example. Let me know if it helps.
Yeah it does help, thanks.

This here
"Otherwise, you can waste months or even years building stuff nobody wants. That's what people are talking about. I've actually built products nobody will ever use... believe me, it's not for you. I've also built things that lots of people use, by the way... in case anyone's judging"

Is what my concern was. But from what I am understanding, we want them to pay us to ultimately validate the idea. I'm guessing this also validates the price because we might say "would you buy xyz, it costs 20 dollars?", is this correct?
 

Rabby

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But from what I am understanding, we want them to pay us to ultimately validate the idea. I'm guessing this also validates the price because we might say "would you buy xyz, it costs 20 dollars?", is this correct?
Yes. Or closely approximate paying us -- be demonstrably willing to spend a similar amount of money to mitigate the same problems you will solve with your product. In my opinion that is good enough. Like, if they would retain you as a consultant to stop inventory losses. That means inventory losses are a real problem right? You have a problem and a solution that you can get someone to pay for. Now I think you can build the substitute solution with a lot more confidence.

Personally, I would accept certain proxies for actually getting paid. In my case there are a few things I've gotten really good at, maybe well known for in some circles, and people try to hire me to solve certain problems. The knowledge that someone is trying to pay me $500 or $50,000 to solve one of those problems gives me some validation that I can build a product to solve the same problem, and my risk is not as great as taking a shot in the dark. Others might disagree, I'm not sure.

I was thinking about this while typing my response here. I think the greatest risks are not about money. They're about people wasting their time and energy; ultimately finite resources in a life.

So thinking about that, I wanted to make sure of two things:
  1. I'm not giving bad advice right? I'm not going to send a human life in the direction of waste? The idea is terrible to think about.
  2. Do I follow my own advice? If I do, it implies I think it is correct. If I don't, either I am a hypocrite, or a fool who knows what to do but doesn't do it. I don't want to be those things, clearly.
So as a result, I wrote the latest meditation in my progress thread. You might be interested, because you can see the things I used to validate that "solution," even though I am not directly charging money for it right now. I'm actually glad I thought it through. I was right, in my opinion, that I have a valid solution that will solve problems and ultimately be easy to monetize. And to gain adoption, now that I think on it. But I also caught myself thrashing earlier in the same thread. I think the relative security I've gained from business can also result in wasteful actions if I'm not careful. Maybe that applies to everyone. In fact, it sounds a lot like morale hazard. At any rate, I am not fully immune myself.

Takeaway. If we don't discipline ourselves, we fall into disorder. The discipline is matching our words and actions to the concepts we know to be true.

One of those concepts is that "economic rewards come from serving real needs."

So we have to know if we're serving real needs. How do we know, if we haven't served any? We get someone to trade value for value with us, or we find very close approximations for those transactions. The faster we get to the point of someone putting a dollar in our hands, proving the need, the less likely we are to waste our time and energy.
 
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Yes. Or closely approximate paying us -- be demonstrably willing to spend a similar amount of money to mitigate the same problems you will solve with your product. In my opinion that is good enough. Like, if they would retain you as a consultant to stop inventory losses. That means inventory losses are a real problem right? You have a problem and a solution that you can get someone to pay for. Now I think you can build the substitute solution with a lot more confidence.

Personally, I would accept certain proxies for actually getting paid. In my case there are a few things I've gotten really good at, maybe well known for in some circles, and people try to hire me to solve certain problems. The knowledge that someone is trying to pay me $500 or $50,000 to solve one of those problems gives me some validation that I can build a product to solve the same problem, and my risk is not as great as taking a shot in the dark. Others might disagree, I'm not sure.

I was thinking about this while typing my response here. I think the greatest risks are not about money. They're about people wasting their time and energy; ultimately finite resources in a life.

So thinking about that, I wanted to make sure of two things:
  1. I'm not giving bad advice right? I'm not going to send a human life in the direction of waste? The idea is terrible to think about.
  2. Do I follow my own advice? If I do, it implies I think it is correct. If I don't, either I am a hypocrite, or a fool who knows what to do but doesn't do it. I don't want to be those things, clearly.
So as a result, I wrote the latest meditation in my progress thread. You might be interested, because you can see the things I used to validate that "solution," even though I am not directly charging money for it right now. I'm actually glad I thought it through. I was right, in my opinion, that I have a valid solution that will solve problems and ultimately be easy to monetize. And to gain adoption, now that I think on it. But I also caught myself thrashing earlier in the same thread. I think the relative security I've gained from business can also result in wasteful actions if I'm not careful. Maybe that applies to everyone. In fact, it sounds a lot like morale hazard. At any rate, I am not fully immune myself.

Takeaway. If we don't discipline ourselves, we fall into disorder. The discipline is matching our words and actions to the concepts we know to be true.

One of those concepts is that "economic rewards come from serving real needs."

So we have to know if we're serving real needs. How do we know, if we haven't served any? We get someone to trade value for value with us, or we find very close approximations for those transactions. The faster we get to the point of someone putting a dollar in our hands, proving the need, the less likely we are to waste our time and energy.
Your advice is great, imo. I'll check out that thread. I always appreciate anyone's help on this forum.
 

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How much Minimum viable product initial time/money cost are you willing to take on? ....to me seems like the question to answer correct me if im wrong.
 
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How much Minimum viable product initial time/money cost are you willing to take on? ....to me seems like the question to answer correct me if im wrong.
I do have a mvp landing page but eventually going to have to get a real platform going which could be quite a few thousand just to get the core features. And eventually scale to multiple features.
 

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I still think you’re in danger of “building stuff” when it’s much easier to get paid to provide a service to businesses, and also effectively get paid to develop your people, processes, and technology.


The internet is just one big lead gen machine. Pretty much all of those sites you mentioned (Facebook, Amazon, Netflix, Upwork, etc) are all big lead gen sites. People find them, stick, and either buy from those sites or advertisers on those sites.


Say I used Upwork a lot and something about it frustrates me. I don’t use Upwork so I can’t pinpoint anything but bear with me.

Many would be tempted to build a version of Upwork that resolves the particular frustration they see.

I’d prefer to help people overcome their frustration by helping people such that they don’t use Upwork anymore.


Go back to first principles and answer this for yourself:

Who am I helping?

What am I helping them with?

How will I help them?
 
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I still think you’re in danger of “building stuff” when it’s much easier to get paid to provide a service to businesses, and also effectively get paid to develop your people, processes, and technology.


The internet is just one big lead gen machine. Pretty much all of those sites you mentioned (Facebook, Amazon, Netflix, Upwork, etc) are all big lead gen sites. People find them, stick, and either buy from those sites or advertisers on those sites.


Say I used Upwork a lot and something about it frustrates me. I don’t use Upwork so I can’t pinpoint anything but bear with me.

Many would be tempted to build a version of Upwork that resolves the particular frustration they see.

I’d prefer to help people overcome their frustration by helping people such that they don’t use Upwork anymore.


Go back to first principles and answer this for yourself:

Who am I helping?

What am I helping them with?

How will I help them?
Ok thanks.
 

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My thoughts, in no particular order:

Just because the end game is a platform doesn't mean you have to start out as one.

Is the platform you intend to build some kind of two-sided marketplace? If so, that's even more reason not to start out as a platform, because you have the chicken and egg scenario to deal with. A million times easier to create a platform for an audience you already have.

Research isn't some passive thing where you sit there wearing Homer Simpson's intelligent half-glasses and pore over paperwork and read stuff. It's about interacting with the thing you're researching (in this case, your market) and seeing how it responds to various stimuli.

Don't take advice from the "startup world" on building a business. They have millions of dollars to throw at something that's never made a cent yet - and in many cases, never will. You don't. The game you're playing is entirely different.

Any significant project will always take four times as long and cost multiple times more money than you think it will. Can you afford that if you don't make any money for the next few years? What if you get it wrong and have to start all over again?

Which of the following scenarios sounds more likely to be successful to you?

A) Guy with no background in the logistics or staffing industries sends out some surveys, gets some positive responses and decides to build "Uber for truckers"

B) Guy with no background in the logistics or staffing industries sets up shop as a freelance recruiter for truckers.

He becomes successful at it, then turns into a "real" staffing agency and hires people.

Builds a national database and a network of trusted clients and contacts.

With the money, network and industry knowledge behind him, builds "Uber for truckers" and launches it to his eager market.

Food for thought, I hope.
 

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Hi,

I guess first you need to do your market research and ask for their painpoints. You should ask the right questions and measure responses based on your criteria and make comparisons to the entire market but you need a larger sample here. I guess investing some money here is not the worst investment you can make. Or you hit or you loose but better loose a grand or two then 2-3 years of your valuable time.

After you got confirmation that your idea is viable you need to make a small test version to see if the fish bite. Once they bite you can improve the product/system/website and increase marketing it. Another advantage from this is that you can let you customer guide you how you need to improve your product.

I hope this helps.

All the best,
Amro
 
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My thoughts, in no particular order:

Just because the end game is a platform doesn't mean you have to start out as one.

Is the platform you intend to build some kind of two-sided marketplace? If so, that's even more reason not to start out as a platform, because you have the chicken and egg scenario to deal with. A million times easier to create a platform for an audience you already have.

Research isn't some passive thing where you sit there wearing Homer Simpson's intelligent half-glasses and pore over paperwork and read stuff. It's about interacting with the thing you're researching (in this case, your market) and seeing how it responds to various stimuli.

Don't take advice from the "startup world" on building a business. They have millions of dollars to throw at something that's never made a cent yet - and in many cases, never will. You don't. The game you're playing is entirely different.

Any significant project will always take four times as long and cost multiple times more money than you think it will. Can you afford that if you don't make any money for the next few years? What if you get it wrong and have to start all over again?

Which of the following scenarios sounds more likely to be successful to you?

A) Guy with no background in the logistics or staffing industries sends out some surveys, gets some positive responses and decides to build "Uber for truckers"

B) Guy with no background in the logistics or staffing industries sets up shop as a freelance recruiter for truckers.

He becomes successful at it, then turns into a "real" staffing agency and hires people.

Builds a national database and a network of trusted clients and contacts.

With the money, network and industry knowledge behind him, builds "Uber for truckers" and launches it to his eager market.

Food for thought, I hope.
I sound alot like the first one. I feel like you won't get experience until you start something. Though the second one would probably be more successful.
 

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