Too many entrepreneurs think the best way to determine the quality of an idea — be it a company, a product, a feature, whatever — is by asking people their opinions. WRONG! Asking people their opinions is the worst way to validate (or invalidate) an idea for three important reasons.
Reason #1: People usually don’t know what they want, particularly in an entrepreneurial context. To expect them to hear your idea and instantly recognize it as something they’d want is, at best, naive, and at worst, unbelievably narcissistic. For example, if the founders of AirBnB had asked you whether or not you thought renting an air mattress in someone’s living room was a good idea in 2008 when it first launched, what would you have said?
Reason #2: People Lie. I don’t mean they lie maliciously (though, of course, they do that, too). In this case, I mean people don’t like hurting other people’s feelings, particularly when they already know you or you’re talking with them in-person. As a result, an online poll you share on Facebook that only reaches people in your network is useless, and any face-to-face interviews you conduct — even with strangers on the street — aren’t going to give you a valid dataset.
Reason #3: Entrepreneurs can’t avoid asking leading questions. When entrepreneurs ask whether an idea is good or not, they do so in a way that contextualizes the idea in a perfect scenario. They ask questions like: “What if, the next time you’re at the mall food court, you could skip the 10 minute line for chinese food and have your favorite orange chicken delivered to your table in under 60 seconds simply by pressing a button on your phone?” Of course that sounds amazing. Who wouldn’t say yes to that? But it ignores all sorts of other factors: the friction of having to download yet-another-app and register for an account; the rarity of 10 minute lines at food courts; the relative infrequency they eat at mall food courts; and so on.
For those three reasons — and probably a few more I’m overlooking — asking people if they like your idea isn’t just useless, it’s a waste of time. And I mean that literally. Every minute you spend asking people their opinions is a minute you could have spent doing something more valuable.
Instead of asking people whether an idea is good or bad, the best entrepreneurs look for ways to validate or invalidate their beliefs using data. So before you create yet-another Google Form to survey people and post it to Facebook, consider the following eight data-driven methods of proving or disproving an entrepreneurial hypothesis.
Method #1: Ask people to buy
The most accurate way of collecting data is to skip the hypotheticals entirely. Even your best friends will hesitate to give you money for an idea they don’t think is good, so if you truly want to know whether or not you’re working on something valuable, ask people to buy it. As Tim Ferris writes in his book The 4 Hour Work Week: “To get an accurate indicator of commercial viability, don’t ask people if they would buy — ask them to buy.”
Method #2: Smoke tests
If you don’t have anything to sell yet and can’t ask someone to buy, that’s actually a good thing. It means you didn’t waste time building a product before making sure people would buy it. Instead, use a technique called a “smoke test.”
In a smoke test, you create the appearance of a purchasable product including all the infrastructure people would need in order to actually purchase. That means you’ll want things like a website, product mockups, and even a checkout process (this is simple with platforms like Shopify, BigCommerce, and Squarespace all offering multi-month free trials). Your goal is to get people to the end of the checkout process, entering their credit cards, and clicking the submit button. Once they make the purchase, you inform them the product is “out of stock” or otherwise unavailable.
Sure, you won’t make any money this way, and you might annoy a few potential customers, but you’ll know exactly what it takes to convince people to buy and whether enough demand exists without ever having spent a penny building a product. Plus, you’ll build a valuable list of people to market to when you’re finally ready to launch.
Method #3: Crowdfunding
If “asking people to buy” and “smoke tests” could have a baby, it would be crowdfunding. The concept behind crowdfunding is simple enough. You tell the story of what you want to build, and, if enough people are interested, they’ll pay to help you build it. Not a bad deal, right? It certainly helps validate your idea. Just remember that successful crowdfunding pitches take a long time to build, so you shouldn’t look at this as an easy option. But, depending on your idea, it might be a good fit.
Strategy #4: Google Ads
Google Ads is one of the most powerful sources of market data in the world. It used to be called AdWords and completely free just by opening an account. These days you have to provide a credit card and pre-pay $50 that Google returns after a few days. So it’s still free, but you have to be willing to go through the (slight) hassle of providing a credit card. It’s 100% worth it.
Once you have a Google Ads account, you insert search phrases related to your idea into the keyword planning tool and it’ll reveal powerful data. For example, in the chart below, I’ve entered a small constellation of search terms related to rock climbing. The keyword planning tool shows me the number of impressions (i.e. searches) on those terms each day and the estimated number of paid clicks I could get with a given budget.
You can also view historical trends to get a sense of overall volume for the search terms and how many other companies are competing for the same traffic.
Strategy #5: Facebook Ads
Almost as powerful as Google Ads, the Facebook Ads platform is also free to use if you have a Facebook account and amazing for estimating market size and demand. The service lets you build what’s called an “audience” around demographics data. So if, for example, you’re considering expanding your store that sells rock climbing gear to other cities, you could figure out which other cities have large populations of people who like rock climbing and open your new stores according to data rather than hunches or hearsay.
Below you’ll see a comparison of audiences for people interested in rock climbing in Denver, Colorado versus Miami, Florida.
There’s a bigger audience in Miami, which isn’t surprising considering the metro area is more than twice as large as Denver’s. But you would expect to get more clicks in Denver. Granted, you probably didn’t need Facebook to tell you that, but surely you can imagine a scenario where that kind of information would be useful.
Strategy #6: Consumer Reviews
The millions of restaurant reviews populating sites like Yelp aren’t just good for figuring out where to get the best slice of pizza. If you read them from an entrepreneurial perspective, consumer reviews are a wealth of high quality data revealing insights into market demand. And the same is true for any kind of industry with online reviews, from doctor reviews to Amazon product reviews, if you want to see where the holes in the market are, you don’t have to construct elaborate survey strategies that have no chance of reaching enough people anway. Thousands of people are already telling you exactly what you want to know. You just have to read their reviews with a critical eye.
For example, out of curiosity, I poked around reviews for rock climbing shoes on Amazon, and here’s a sample of what I saw:
The vast majority of poor reviews on Amazon for rock climbing shoes relate to sizing issues. I’m guessing I’d see a similar problem if I researched most types of shoes. I don’t know how to solve that issue, but there’s clearly a provable demand for a better solution to shoe sizing and online shoe purchasing.
Strategy #7: Google Trends
Rising trends usually point toward entrepreneurial opportunity. That makes Google Trends — a platform that visualizes search volume for keywords and phrases — an entrepreneur’s not-so-secret weapon.
Next time you have a brilliant idea, search relevant keywords and phrases on Google trends to see if terms are increasing in popularity. If they are, you might have found yourself a great opportunity. If not, that’s a good indicator your idea isn’t as brilliant as you might have thought.
Note the regional data in the lower part of the page. If you guessed Vermont would be the most popular place in the United States on a per-capita basis for rock climbing, then you’re better prepared to start a rock climbing business than me.
Strategy #8: Pre-Populated Search Queries
Have you ever begun typing a search query on Google only to be creeped out as it auto-fills the rest of your search for you? While it might feel a bit like Google is reading your mind, that’s not really what’s happening. Instead, Google is using a combination of your browsing history and its massive horde of consumer data to guess what you’re interested in based on what you’ve been looking at and what other people have searched for. Even if it feels a bit creepy from a user perspective, as an entrepreneur, you can use this to your advantage because Google is basically telling you what other people are interested in. Open a private browser (so Google can’t access your browsing history) and start typing search terms to see what Google thinks you’re going to be searching for based on what everyone else wants.
Note that this technique isn’t limited to Google. You can do the same thing on YouTube…
… and Amazon…
… and dozens of other websites. And these are only some of the potential ways to validate a startup idea using existing data. The eight examples I’ve offered here aren’t meant to be the entirety of your strategies. Instead, I hope they give you ideas about how to identify pre-existing, organic data sources.
The data you’re looking for to help you validate your ideas is already out there in the world. You don’t need to rely on “gut feelings” or asking other people for their opinions. None of those things are reliable. Instead, find the data, and let the data tell you whether or not your ideas are worth pursuing.