8 Data-Driven Ways To Validate Your Startup Idea

Aaron Dinin, PhD
May 28, 2020 · 9 min read
Photo by Isaac Smith on Unsplash

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

Method #2: Smoke tests

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

Strategy #4: Google Ads

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.

Cost estimates for terms related to “rock climbing” in Google Ads

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.

Historical search volume for terms related to “rock climbing” in Google Ads

Strategy #5: Facebook Ads

Below you’ll see a comparison of audiences for people interested in rock climbing in Denver, Colorado versus Miami, Florida.

Audience size for “rock climbing” on Facebook in Denver, CO
Audience size for “rock climbing” on Facebook in Miami, FL

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

For example, out of curiosity, I poked around reviews for rock climbing shoes on Amazon, and here’s a sample of what I saw:

Poor reviews for rock climbing shoes on Amazon

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

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.

Google trends results for “rock climbing”

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

Auto-populated search queries for “rock climbing” on Google

Note that this technique isn’t limited to Google. You can do the same thing on YouTube…

Auto-populated search queries for “rock climbing” on YouTube

… and Amazon…

Auto-populated search queries for “rock cli” on 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.

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Aaron Dinin, PhD

Written by

I teach entrepreneurship at Duke. Software Engineer. PhD in English. I write about the mistakes entrepreneurs make since I’ve made plenty. More @ aarondinin.com

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +793K followers.

Aaron Dinin, PhD

Written by

I teach entrepreneurship at Duke. Software Engineer. PhD in English. I write about the mistakes entrepreneurs make since I’ve made plenty. More @ aarondinin.com

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +793K followers.

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