The Market Testing Rule of 30

How can you be a little bit sure you have a good idea? Ask 30 people.

Why 30, or at least that many? An 18th-century French math tutor, ex-jailbird, and buddy of Isaac Newton is why. Abraham de Moivre had a side job helping gamblers make smart bets by determining the probability of the most frequent occurrence. Launching a business? Pay attention; you’re the ultimate gambler.

Moivre planted the intellectual seeds for what became the Central Limit Theorem — as elemental to statistics as oxygen to air. If you want a formal lesson, get it from Khan here, but here’s the gist: once you collect 30 or more samples (statisticians speak for replies/answers/observations), you start to have meaningful data. With 30 samples, the gambler has a little confidence he’s betting on the right horse. With 30 samples, the entrepreneur has a little confidence she’s launching the right company.

Probabilities articulate the chances of something happening or not happening, of a success or failure. Whether your idea is good or bad is a probability.

Probabilities therefore belong in the startup strategy. They save time, $, and everything related. So grab a notepad and hit the street. Launch a survey on Mechanical Turk. Pick up the phone and make some calls. Ask potential users, “Yes or no, would this product/service be valuable to you?” Get 30 replies (or better, even more). Then you’re collecting probabilities and can devote your resources to the right horse.

Action Items:

(1) Write a Survey (here’s some best practices)

(2) Deploy Survey. If you an armchair entrepreneur and don’t want to hit the street/pick up the phone to test the market, Set up a Mechanical Turk Register Account. Pretty easy, though you have to send in a state ID. There you can affordably access real feedback from real people.

(3) Collect Survey results. Let results inform your decisions.