Product Validation 101

A Tutorial for Product Managers and Aspiring Entrepreneurs

Or Azulay
Or Azulay
May 6 · 8 min read

It’s been over a year since I left my cozy full-time PM position and embarked on a journey to start my own company.

It has not been easy. Many exciting ideas were born and eventually killed by our hands, getting us back to square one after each and every attempt.

One thing that did happen throughout this quest is that we got really good at the process of validating (and mostly invalidating) product ideas.

I figured I’d share a few of the lessons we’ve learned so you won’t have to repeat our mistakes.

Sell to ONE person

You have an idea for an amazing new product. Excitement is in the air and you can’t wait to make tons of money from it. But, alas to make money you actually need customers to want to pay you for your service.

Let’s assume that you want to build a new type of wearable device that goes into your nostrils and monitors your breathing patterns for stress reduction and physical exercise optimization.

How do you prove this idea has any merit without actually building the product?

Well, the short version is — Sell it to one person. The long version is:

  • Figure out what pain/s you are solving — Your initial hypothesis is usually wrong. When you actually reach out to people and try to sell them a product, their immediate objections/resistance will let you know if the pain you assumed to exist, really does exist and is painful enough for them to want to spend money on solving it (hint — most ideas die here). In our example, you might find out that people have issues with stress but not enough to make them pay your listed price.
  • Figure out how exactly you plan to solve this pain — there are 1001 different solutions to each problem, even if the pain you are solving for is real, the solution you offer might not be optimal for people for a plethora of reasons. You need to understand if your suggested solution actually solves people’s pain in the best possible way, in other words, is it 10x better than the existing solutions out there for this problem? In our case, for example, is a wearable device 10x better than a regular non-intrusive meditation app?
  • Figure out your exact target audience and how to reach them — this is a biggy. Just like your probable misjudgment on people’s pain, you would most likely make mistakes when defining your target audience for your product. The key to segmenting the right population of potential customers is by being as granular as possible. For example — I assume that I should target athletes that are into self hacking their health AND/OR people who suffer from anxiety disorders AND/OR high achieving executives who work in high-stress situations.
  • Figure out where to best sell this product —In our case, since it’s a physical product (combined with a digital offering), it’s probably best to try and pre-sell it on Indiegogo OR Kickstarter and target people with Google ads (e.g. people who searched for ‘anxiety disorder’)
  • Figure out how much it is going to cost — This is hardly easy. Since this is just an idea, you don’t know your real fixed/variable costs yet. So what do you do? Well, looking at similar products that more or less offer the same product — In our case a sensor-based device + app with insights like Muse.

When you’ve done all of the above correctly, they should end up getting you a few sales (financial backing). If not, you either need to optimize your approach or the idea is a bust.

Don’t rush to create a landing page

Trust me, in the heat of the moment your first urge will be to start building, you will rationalize it by saying stuff like: “I’m not building the product, I just need to gain credibility and what better way to do this than by building a professional-looking landing page selling this product?”

Well, you’d be wrong, in order to build your landing page you would need answers to a lot of questions you can’t possibly get right now. It’s too early to gain credibility and it’s completely fine!

That’s why God created Facebook groups. You can get a lot of questions answered if you only join the right groups and ask the right questions.

How do you do that? Let’s use our example to illustrate this.

From doing a quick Facebook search on the term ‘anxiety’ I came across the following groups with over 200k people in them!

Now that you joined, since people don't like to be sold to, it’s very important to be sensitive on how you frame your questions / initial message:

“Hi wonderful group!

My team and I are currently working on a new type of product for stress/anxiety relief. Any of you out there willing to answer a few questions?

Thanks! And have a wonderful day!”

Notice that I:

  • Started with a compliment (something I picked up from being married)
  • Didn’t include any actual questions yet — in order not to overwhelm/make it look like I’m doing a survey on their behalf (people don’t like feeling exploited/taken advantage of)
  • Didn’t assume they would like to answer my questions, I was humble and respectful of their time

The second step is to contact each person that comments and speak to them via chat/phone, asking all the questions you have to see if there is an actual opportunity here. For our case, I would ask questions like:

  1. How do you treat your anxiety today? Does it work?
  2. Do you own any wearable devices? (smartwatch, Fitbit, etc)
  3. Do you feel that tracking your anxiety moments would help you deal with it better?
  4. Are you interested in trying our solution? It costs $X

Answers to these questions, especially the last one, will get you all the insights you need around this opportunity and might even get you your first customers (without a single dollar spent).

Avoid your biases

When interpreting results you would have the tendency to fit people’s answers to your pre-conceived notions/hypotheses (Confirmation Bias).

Here are some ways to avoid this bias:

  • Write down all the answers in their original form (easier when the conversation is done via text chat) and show it to someone else other than yourself (your partner, a colleague) asking their opinion
  • Always remember, your only real metric is traction — did you actually sell this product? Did money exchange hands? If not, it’s a real sign that there is nothing there. Money doesn’t lie.

On the other side of the spectrum, you might have the tendency to kill ideas too fast. Someone told you that your idea is dumb or that you should just kill it and focus on other stuff and you got all discouraged. Well, that will happen, and not necessarily by haters, even by people who just don’t see your vision because they’re too busy to see beyond their own shit.

To avoid killing your ideas too fast, ask yourself the following questions:

  • Have I spoken with enough potential customers to reach a mindful decision? (there is no right number, but it’s definitely more than 1)
  • Did I base my decision on real facts on my own feelings/subjective interpretation of the facts? (for example, “this product just doesn’t excite me anymore”, doesn’t equal, “there is no validation for this product”)
  • If I see this product on the shelves next year — how would I feel? If the answer is ‘like shit’, then you haven’t done enough to make sure there is no room for it

Demand is great, but can this scale?

Let’s say you actually sold your product to customers. Now the real trouble begins.

Can you actually deliver it? (most successful Kickstarter campaigns didn’t even deliver products to people, I’m still waiting for my glow in the dark plants!).

Can you deliver it AND make a profit? Does the unit economics make sense?

This is by far the worst stage to kill an idea, it’s like getting a heart attack right before the finish line. But it does happen and you should be prepared for it.

For instance, if you offered your anti-anxiety nostril device for $100 only to discover later that it costs you $104 to make that would suck.

How do you avoid that? You need to validate your business model at the same time you validate the demand for the product.

Here are possible ways to make sure you actually turn a profit:

  • Think about ways to collect recurring revenue (i.e. subscription). In our case — a monthly payment for getting additional insights from the app (premium offering)
  • Think about upselling related products like offering an anxiety coach/therapist for those who are dealing with acute anxiety and don’t want to resort to drugs.
  • Think about how to lower costs like sourcing bulk sensors from China, or use cost-efficient growth tactics (to avoid paying for ads)

All this is within the scope of the validation, without it, you can get stuck in a business that doesn’t grow and keeps you frustrated (we want a hockey stick!)

Conclusion

I’m not an expert on validation. I’m learning as I go.

I hope I read this a year from now looking back on how stupid I was. All I know is that you just have to keep trying and don’t quit. The ones that make it are those who try again and again. It’s like we tell our 3-year-old son — “if you try, you will succeed.”

Bonus

Here are some ideas that we invalidated (for various reasons):

If you like how I write — share & clap. You can always reach me here.


This post has been published on www.productschool.com communities.

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