How to use the Wizard of Oz to test your start up idea.

naveenraja
May 28, 2019 · 8 min read

We live in a world where ideas are a dime a dozen. Go to a coffee shop in any metropolitan city in the world and I will bet you one US dollar that someone there is working on an idea. The term “idea” is broad. It feels all-encompassing. This word represents something that is in your brain that might materialize in the real world. While creating ideas can sometimes feel like an easy task, the execution is the hardest part.

Do you work with a “idea man”?

During my journey as an entrepreneur, I read a lot of content on how to scale an idea once it’s alive. While this information is great, there is a lack of actionable guidance around small experiments to test your idea until now. Recently, I had an idea for a potential venture that I wanted to explore. Using the Lean Start-Up concept of a Wizard of Oz test, I tracked the inception, pain points, tests, results and next steps of my work all through the lens of design thinking.

Inception

As an Indian-American who loves food, I often get asked, “where can I get good Indian food in [insert city]?” The answer I give is not encouraging. Often the best Indian cuisine is not cooked in restaurants but rather in home kitchens. It’s made by mothers and fathers who have relied on these foods for comfort and connection over the course of a lifetime. This insight identified an unmet need for people who are enthusiastic about Indian food but do not have the means or know how to create it.

Using design thinking, I challenged my perspective and viewed this as an opportunity. How might we give a non-Indian audience the chance to experience an authentic home cooked Indian meal?

The Pain Point

This problem statement led to a conversation around cooking Indian food at home. Specifically, it surfaced how difficult it is for non-Indians to source the essential spices needed to cook. From this process, we ideated around potential solutions. My first spice kit was given to me by my mother. It was a sentimental gesture that pointed to the fact that I was moving away from home and needed to preserve our family’s cooking traditions. Not everyone has an Indian mother so this led to three questions.

  1. What if every person who was interested in cooking Indian food had this type of emotional experience?
  2. What if we took the hard part of sourcing ingredients away and focused on the fun of learning a new cuisine?
  3. Could we sell a basic Indian spice starter kit that fostered a connection to Indian food and culture?

The test

An unsaid struggle of being a founder is taking ambition and making it actionable. With this idea, I immediately let my imagination spin out of control. I saw my little spice startup idea on the shelf sharing space with giants like McCormick. Before I could allow myself to worry about being big, I needed to put the brakes on. I needed to think small and take an experiment based approach.

For this test, I needed an expert who knew the as-is spice buying experience, so I called my mom. I worked with my mom to establish the essential spices of Indian cooking. We then looked at a handful of popular recipes and realized that on average, you rarely need more than a few teaspoons of spices to cook. This insight allowed us to scope our idea further.

With knowledge in hand, I had my mom go to the local Indian grocery store and buy one package of each of our seven essential spices — a total cost $20 dollars. We took these spices and sat down at the dinner table, grabbed some Ziploc bags and some tape (~$3) to start bagging and tagging. Initially, we were able to make twenty-two kits for a grand total of ~23$. The goal was to bring the idea to life — to get the kit good enough so that people could use it and we could receive feedback.

The User

Choosing a target user can be hard especially when you are trying to solve a seemingly large problem. By using the design thinking tool of persona sketch we were able to add some clarity to our near term user. We wanted to connect with someone who was either non-Indian or first generation American-Indian. This is someone who loves eating Indian food but does not know how to cook it. We thought, in general, we were targeting the early stage home-cook. Does this sound like someone you might know? Perfect.

Once you have a user dialed in, it’s important to find a test market. For us, it was using my audience of social media. Instagram has a great little feature in their stories section that allows you to post a poll.

I had about ~800 followers who aligned with our persona sketch. This audience allowed for a good base of folks to see if this idea could materialize any further.

The Initial Poll

I started with a simple question “Do you want to learn to cook Indian food.” Of my 800 followers, this post reached 300 people. Of those viewers, 92% voted yes! This quick poll not only allowed me to gauge interest but encouraged me to take it a step further. I needed to see what was my product market fit given my customer base. So I asked a follow-up question to my audience.

The Follow Up Poll

Again, the results were overwhelming! So many potential people wanted to 1. Learn about Indian cooking and 2. Were interested in the product idea that I had. So how do I capitalize on this base?

Pricing

Product interest is a misleading thing. When you see a large volume of potential customers, the excitement is overwhelming. In the early stages of idea validation, this can create a false positive. One of the biggest misconceptions that new entrepreneurs have is that in order to test, you must give away your products for free. When creating products it seems logical to say, “Well I want to learn, so I’ll just give it away.” I fundamentally think this is wrong because when giving items away for free, information about price points and the threshold of interest is lost. By associating a value with your product, even if it’s the break-even amount, it forces consumers to make a decision. “Is X product worth $Y?” This is a great way to understand the realistic runway of your idea. It helps you answer the question of, “will people actually buy this?”

From the lesson above, we knew that we wanted to sell our spice kits but had no idea for how much. I did some competitive research and looked online at potential competitor spice kits on sites like Etsy and Amazon. From this research, I found that the price point of $5–6 dollars before shipping seemed to be common.

So we had a product idea, we had the interest, we had a price point, now we needed to look legitimate. In the essence of time, I could not invest a lot of mental capital into physical packaging. Instead, I created a mockup in Photoshop. Doing this was fast and cheap. If the packaging didn’t attract customers then it gave me an option to iterate. One .PNG export later, I took to my Instagram story again to try and convert sales.

The packaging and Instagram post

The Results

Almost immediately, I started getting direct messages asking how to buy. To be honest, I did not think that far ahead. Sometimes the most effective way to solve a problem is not the most advanced. In this instance, I ended up telling people that if they sent me 10 dollars via Venmo, I would mail them a package. I recognize that this is not scalable but in the near term, but we needed simple.

This process of trying to convert sales turned out to be a reality check. Of my ~800 followers, 315 people showed interest through the poll. 36 people messaged me saying they would like to buy but once given an option to actually pay, only 22 converted to sales.

a breakdown of our conversion rate.

This means of a potential customers base of 800, I was able to convert sales at a rate of 3%. Good, not great. This resulted in about $220 in sales and lead to enough profit which would allow us to keep iterating on the idea.

So why is this important?

The goal as stated in the beginning was not to get rich but to test an idea that was floating around in my head.

From this experience came a handful of important lessons…

  1. Often times, the market feels bigger than it is. Through our design thinking work, we identified a target customer and a pain point to build a test around. On paper, there are tens of thousands of potential customers. In reality,, less than 3% of our test audience converted to sales. In the startup world, that fallacy of potential market size is real. My recommendation from this process is to crush your niche. Deliver exceptional value to a small group of people then expand.
  2. People’s willingness to buy reduces when asked for payment. When you’re excited about a new idea, it is easy to get caught up in confirmation bias. People early on might say “this is a great idea!” but when asked if they wanted to buy, their opinion changes. Experimenting with the price point, volume, and marketing are all good avenues when faced with this problem. Finding customers who identify with your product or idea is good. Finding customers who are willing to pay is even better
  3. This is step 1 of infinity. From this process, I learned so much about my idea. I followed up with my customers and created a list of new areas of research. Doing small tests allow you to learn from mistakes quickly when costs are low. I can’t imagine sinking thousands of dollars into a venture without running a ~$23 dollar test first.

Please heart & share this guide and please voice your questions, comments or concerns below!

Paper Mentorship is a collection of stories, advice, and guides which focus on entrepreneurship through the lens of design thinking. All views, opinions and, guidance expressed are that of the author and not a representation of any companies or other interests.

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