Entrepreneurs can spend years working on the wrong thing because they failed to test their assumptions along the way. We look for positive indicators when entering a new relationship, or evaluating a new job opportunity, so why do many of us skip this step when starting a new business? Because starting a business is a lot like having a baby, and when you’re so attached to something it can be difficult to admit when it isn’t working.
Lean startup, design thinking, and agile development are just a few principles that have been developed to address this very issue, and to underscore the importance of validating a business concept before investing resources into developing it.
In this episode we walk you through how we were able to test completely different types of business ideas before spending any time developing the actual product. We also highlight stories from the early days of Airbnb and Uber, proving how any smart entrepreneur can use very little resources to validate or invalidate an idea, even if that idea requires a lot of capital to be fully developed.
We also tell stories from the founders of Netflix and Kayak, and how they were focused on constant communication with their customers, even after gaining success, to continue to iterate on their business model, building sustainable innovative enterprises along the way.
- 2:00 How the motivation for this episode came from a mentorship session with a company out of NYU
- 3:37 Challenging the idea that you have to build something to test if it works
- 3:50 What someone says and how they act are often entirely different
- 3:55 Engagement and payment are the only things that prove demand
- 4:08 The first example of how to test something manually
- 4:50 This episode is about testing demand in a very cheap or free way as quickly as possible
- 5:57 It's good to have a big picture idea, but you need to test your assumptions
- 6:20 Most businesses change drastically in the first 6-12 months
- 6:30 Guessing, Confirming, then Developing
- 7:30 Why often times what we think will work doesn't, and what we think will fall flat grabs people's attention
- 8:35 Why you should start with defining the customer before defining the solution
- 9:55 How Sergei tested his Uber for Advice idea for free
- 12:00 The quickest path to proving if people will interact with a particular system
- 12:37 Testing with hundreds of people at once
- 13:00 Using free tools, like Slack and Proto.io
- 14:48 Validating behavior and use-cases with your target demographic
- 16:20 How to test your assumptions by talking to someone that's done it before and failed
- 18:30 How Airbnb validated their business early on
- 19:20 Using Craigslist to test your business idea
- 21:23 How Travis Kalanick tested his idea for Uber before hiring a single person
- 23:00 The way you grow will be defined by the problem you're solving, and who you're solving it for
- 23:28 Focus on the people that are desperate for what you're building - they will be your early adopters
- 23:40 How we validated a 7 hour course before creating it
- 24:30 Using cold emails to figure out your target customer
- 27:06 Is there a need for what I want to do, and how can I be as resourceful as possible in proving that the need exists?
- 27:31 As an entrepreneur you’re constantly running micro tests, as quickly and cheaply as possible.
- 28:50 The importance of testing your assumptions even when you're successful, and how Netflix and Paul English of Kayak did this