Startup Idea Validation: How to Validate Your Idea – Episode 3

PAUL: It’s Paul.

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FLORIN: It’s Florin. What are we grinding today?

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PAUL: Hello there. We are back. This week with a small delay.

FLORIN: What delay?

PAUL: Well, in a startup one day, plus or minus.

FLORIN: Yeah, I know, right? It’s the same quarter that we initially had planned, so it’s still quarter one. I think we’re on track with this episode.

PAUL: Yeah, it’s the same week and the bug in production on our farm app is fixed.

FLORIN: I mean, it’s the same week, so it means that we are spot on, right?

PAUL: Yeah.

FLORIN: It’s the same sprint.

PAUL: Hopefully, we’ll be live in the same week.

FLORIN: Yeah, hopefully.

PAUL: You need to do the description of the episode.

FLORIN: Yep.

PAUL: No.

FLORIN: Pressure. I will describe it perfectly in a couple of seconds while I’m uploading the audio to the platform.

PAUL: It’s.

FLORIN: Not going to work out for us.

PAUL: Actually, you made quite a good coffee today. What do you plan to grind today? What do you want us to talk about?

FLORIN: Thank you. We should talk about techniques for startup idea validation.

PAUL: Techniques like by the book?

FLORIN: Yeah, but it’s not going to be the most comprehensive ultimate guide in the universe. This is just what techniques, what types of tactics or what would be your general strategy when going to validate a startup idea?

PAUL: Basically, we plan to brainstorm a little bit how we plan to validate or how we would validate in this moment some ideas. A couple of ideas. Generally. And maybe later in the episode, taking some particular ideas.

FLORIN: Yeah, definitely. In this episode, we’re going to have six startup ideas chosen randomly. We’ve never thought of them before during this episode. And we’re going to start thinking on how we would validate those ideas to actually build a startup around them.

PAUL: Keep listening because we will talk about AI, smart assistants, and personal cars.

Exploring Techniques for Startup Idea Validation

FLORIN: Good keywords, yeah. Fintech and blockchain. We’re going to say something about blockchain and food delivery and personal car sharing and sharing apps and the stuff where everybody uses the same things in common and they don’t create a lot of waste.

PAUL: The first question for you, what are, let’s say, top three ideas that come now in your head to validate the next billion unicorn idea?

FLORIN: Customer development. Always Steve Blank’s idea of customer development. That’s always my number one thing. Then I don’t use forums. People don’t use forums anymore.

PAUL: Customer development, forums. Yeah.

FLORIN: Maybe even keyword research to see if there is a particular need that people already know how to express and they’re actively looking for solutions on search engines.

PAUL: You said about forums. So, finding real-world problems discussed in forums can lead to startup idea validation?

FLORIN: Yeah. A lot of internet marketers that I knew back in the day, they had the capability to create products, internet based products. Even though they weren’t very advanced from a technological standpoint, they used forums to identify where people have certain problems. So a lot of people go to forums and they start describing pains that they have, like really big problems with different software or different jobs or different activities that they have to perform. And they go around, they complain that, Hey, this is so stupid. Whenever I do that, this thing occurs and this thing occurs and it’s so frustrating and I have to do this on and on. And it really pains me. And oh, my God, why does it have to be so hard?

PAUL: Basically, are you saying that, for example, if I’m quite a good developer and I’m looking to build some app and instead of having, I don’t know what idea, to actually look on these forums for an actual problem that the people have? 

FLORIN: Definitely. Definitely. Especially if you see a lot of people who express that problem, it means that you already have a lot of people whom you could contact to get on your calls so that you can interview them more about the problems and the ways that they currently try to solve the problem.

PAUL: So the first step in this situation with the forums would be that I see the problem that the people have identified those people, and you said that you call them, so you contact them.

FLORIN: Yeah. And you either contact them via the private messaging on forums, or you try to spy for their email address, or you stalk them on Facebook or LinkedIn. You do something like that. And a lot of people, they are afraid to talk to other people, but if they complained so much, either on social media, because sometimes people complain on Twitter, if they complain that much on Twitter, on forums, on Facebook groups, on LinkedIn groups about something, they will definitely want to hear that you’ve also experienced the same problem and that you think that you might have a solution and you want to discuss it with them to see if you’re on the right track or if you’re not basically doing anything right. Because if you solve a problem like this, people will not immediately get on the defensive because they don’t feel like you are trying to sell them something. They feel like you want to get them involved in creating this magnificent thing that would actually change their lives. Because remember, they are complaining about it and they need a solution for it.

PAUL: Basically, the take out from here would be like in the first call, at least try to understand them and the extent of their problem without trying to push your solution immediately, as this understanding is vital for effective startup idea validation.

FLORIN: Don’t even show them screenshots or anything. Just try to better understand the idea, how they relate to the idea, how much of their life is involved in that idea. If this is a problem that they present to other people, if they talk to other people about this problem, or if it’s something that’s super personal and only for them, you try to get a feel of how much that problem impacts their lives. And of course, the best thing to validate this would be, does this problem manage to get their attention so much that when they think on an active basis like, what’s my biggest problem in my life right now? This problem would be in their top three problems that they think they have. So of course, if you can do that, then that’s like the best startup that you could build for these people.

PAUL: Do you think you could apply this in the B2B scene, for example? Because there it might be strange for some people that you go to a business and ask them what’s your biggest struggle right now? Instead of going to sell them something.

FLORIN: No, not really, because you don’t ask them what’s the biggest struggle. You already tell them that you know about that struggle and that you want to learn more about it. So in my case, for example, Mailchimp completely sucks at list management. So I complain a lot about list management and Mailchimp. I do that on a very constant basis. And of course, the other email apps are even worse than Mailchimp. So it’s not like Mailchimp isn’t the leader. It’s the leader, but it’s still doing things wrong. And I’m like, list management is the biggest pain point for me. And I would like to see somebody who studied the problem of list management come and try to talk to me. And I would definitely talk to them about how I see list management, why I think this is a problem, what solutions there are to this, and how you could do it more efficiently. And then, of course, they could pitch me on a product, but they shouldn’t do that because first we should really discuss list management. And this is a bit of a product because I don’t need list management in my personal life. I need it to better communicate stuff with the audience that we have at Squirrly, right? I don’t need a list with my grandmother, with my grandparents, with my father, with my child, because I know them.

PAUL: Hopefully, you don’t want to be in that situation in which to use a list for this.

FLORIN: Even though I’ve got pitched at one moment on an app that reminded you to call your friends and your parents.

PAUL: Not calling them for you, so just reminding you. So you need to put in some effort there.

FLORIN: Yeah. Hey, you haven’t called your parents in a while, you should call them.

PAUL: Regarding this part with the calls, how do you see, for example, calling businesses or users just to say to them, Look, I have this product. I will give it to you for 10 bucks and solve you this issue.

FLORIN: Oh, my God. It’s so bad.

PAUL: Why?

FLORIN: Well, first of all, because if you’re calling a company and you haven’t done your customer development or any pre-validation prior to this.

PAUL: Yeah. So I’m talking about cold calling, so no contact before.

FLORIN: Yeah, that’s horrible because I would call somebody at a company and maybe they’re the person at the reception desk who never had the problem with managing the annual evaluations of the employees. So what could the person at the reception desk tell me about evaluating employees? Then maybe I would actually call the VP of sales at that company who doesn’t give a damn about managing the evaluation of the performance of the employees, or I could speak to the person doing their logos and their graphic design and they still wouldn’t care. I would talk to their developers, I would talk to maybe their logistics experts, and they would not care about the evaluation of the employees because that’s not what they do. That’s not the job that they would perform. So if I call, they will obviously tell me that they are not interested, and of course, they wouldn’t be interested. That’s just sound logic.

PAUL: So find the right person and talk with the right person, like not with your family, friends, and the receptionist on a cold call.

FLORIN: Yeah. And I mean, if you’re doing cold calls, you need to really find the right people. Otherwise, you’re just wasting a lot of time and you’re getting a lot of negative feedback that you shouldn’t be getting. But you’re getting it because you’ve been asking for negative feedback deliberately. You just didn’t know it.

PAUL: I know at least for the young founders to say like that, it’s a struggle this first contact because I know that, or I assume that this person has a certain problem, but I find them on LinkedIn. I don’t know how to contact them. Utilizing platforms like LinkedIn effectively can increase response rates significantly when the outreach is well-targeted and personalized, enhancing your startup idea validation efforts.

FLORIN: Yeah, and that’s mostly because you just assume that they have a problem, you don’t know if they would have that problem.

PAUL: In order to find out, should we just pass over this fear of not getting the answer or something like that? I should just say, Hi, I’m working on this. What’s your opinion?

FLORIN: In my experience, it doesn’t really work that way. So you still have to really target the people that you try to call contact for the first time. So honestly, the safest thing is to do, try to actually network with the people for whom you’re trying to build the solution. You should really network with them beforehand so that you get five people that really get to describe that problem for you. You understand them better. And then when you will talk to other people from the same industry who have the same problem, you will be better prepared to compose a really intelligent message that would grab their attention. So in my case, I’ve identified a couple of, let’s say, buyer personas that would be interested in Squirrly SEO, the first iteration that we’ve done. And when I’ve conducted them on LinkedIn, most of the messages that I sent got replies, which is really weird. Actually, I couldn’t even replicate that same effect with other products that we’ve tried because on the other products, I haven’t done the pre-validation that I’ve just talked about. So that’s why it didn’t work because I didn’t know how to address them. The way you address them makes all the difference. The way you place different words in the text might make them want to talk to you or go on the defensive. And if people go on the defensive or label you as a spammer, they will never get to talk to you. So you really need to know how to do this thing. Of course, in the book Talking to Humans, which I definitely recommend that you read Talking to Humans, that’s the name of the book, there is a method for how you could approach almost anybody and they would want to reply to you because you use some like, Look, I am doing this study. It’s for the university. It’s purely theoretical. Nobody’s getting any cut out of this. We’re just trying to better understand, blah, blah, blah, blah. And I saw that you may have relevant experience, so your feedback would definitely be valuable. If you have just like 10 minutes of your time, I promise I won’t take more. This is what we could discuss about and that’s it. And the thing is, relevant, you consider them relevant and their opinion would be valuable. So if you use these words, they have a much higher chance of actually talking to you. And now if you really want to be a hacker, you could go to crystal ose. Com and you could place the name or the LinkedIn profile of the person that you want to target. And then Crystal will show you exactly how to address that person to get a reply and believe it. You won’t believe it until you try it, but try it and then you will believe that it actually works. Crystal knows is amazing at these sorts of things.

PAUL: They say you always learn something, so I’m really happy that we are doing this podcast because I didn’t know about this. I will give it a try.

FLORIN: Nice. I didn’t even know that I would talk about this. I guess it just naturally led to Crystal knowing.

PAUL: It doesn’t count as consultancy because we’re doing the podcast. It doesn’t count as consultancy, right? Because we’re doing the podcast. We’re excited to explore more startup idea validation techniques in future episodes.

FLORIN: So it’s public advice. We’re not your lawyers.

PAUL: We’re not your consultants. Don’t forget, so we’re just brainstorming some ideas. On this part, for example, since you said about the phrasing, it came to my mind now that in order to validate some demand, an idea that I think right now would be, for example, to make one or two ads, place them on Google, on Facebook, on Instagram, and see the results there.

FLORIN: Yeah, I agree with that.

PAUL: Should I use soul on this part with the ads, I think, again, it’s quite important to do the research and who you target, right?

FLORIN: Yes. And you need to be extremely methodical about the way that you make these ads and very methodical about the way that you make the landing page to which you bring people through the ads that you’re building. Because if you don’t pay attention to the exact methods that you’re using, you might end up getting false negatives. No, I guess false negatives. I don’t know the word. But you might be getting the false answers and you think that, yeah, people don’t like it because of this, but they actually don’t like it because of another thing that you couldn’t find out because the whole way that you planned the ads and the landing page was wrong. Okay. I’m not sure if this is really clear, but if people hate the idea because the image in the ad is bad and they don’t click because they don’t like the image or they don’t like the colors, or you’ve placed A B testing and A is completely different than B and you have too many variables between the two, you will never get a clear result on why people would prefer this variant or this variant. And you need to know what you’re trying to test and what you’re trying to validate. Are you trying to validate, let’s say, the way you present the business or the business itself?

PAUL: Actually, we had this issue at startup week and we tried to validate with the Google form and it was quite shitty because we didn’t have time to make a proper landing page and everything. We tried to market it with Facebook ads.

FLORIN: What.

PAUL: Happened? To get results. The issue there was the conversion was very low. But one of the facts was because we actually saw people looking at it, but not actually clicking on it. And it was like a question, why? Because in the previous discussion, there was interest, the message was clear. But actually to promote on Facebook via an ad, a Google form like a questionnaire, I think it raised some question marks on this part. Because of another example, from this startup weekend, for example, was the fact that we post the same Google form on some Facebook groups and it felt more natural. We just wrote a message there and the number of answers that we got were way higher. Really? Exactly. Basically, we target them.

FLORIN: Same same people. Exactly.

PAUL: All right. On that part.

FLORIN: Yeah, well, it takes a while. Even if you try to do a validation, there are a lot of things to consider and a lot of experiments that you should run until you can actually say that the validation itself was a success because sometimes your process of validating the idea might be completely wrong, not the idea itself. And that’s what you have to plan for. That’s what you have to examinate the first time. Is my method that I thought about good enough to validate the idea? Because otherwise, I will think that the idea is bad. The idea is great. Just the validation process was horrible.

PAUL: I think we can talk about this for an entire day.

FLORIN: Yeah, I think so.

PAUL: What do you think about taking some examples?

FLORIN: Yeah, maybe then we do another episode in the future that’s also about validations because I guess there are many more ideas now that we’ve actually started doing the episode.

PAUL: Yeah. Actually, I think we just barely scratched the surface. It would be interesting to see what would you like to listen to more on this. Just drop us a message on Facebook or on Twitter, and we can talk more in the next episode. Would you start with the food or with the AI tool?

FLORIN: Let’s start with the food delivery service, so that’s something easier.

PAUL: Let’s pitch an idea. A food delivery service at your desk and the MVP will target the developers. Now, if you don’t know who the developers are, just think of the lazy people that are standing at the desk and they have a lot of money.

FLORIN: A lot of money to spend on any food from any city. How would you validate this idea? Would you just walk into an office, maybe the office next to you and just ask, Hey, developer guys, I have this new cool app. Would you want to order food from it?

PAUL: I would start with the other part here with the restaurant. The first thing that I would do, I would take some contracts, I would go to them telling them that I would deliver your food for a 10 percent fee and this is the contract we launch next month. So if you want to be on it, you need to sign this.

FLORIN: So this is how you would validate this idea?

PAUL: The part in which there are restaurants…

FLORIN: Interested in taking part in this?

PAUL: Exactly, on this.

FLORIN:

Now, actually, I know that some people listening to this might disagree. I actually agree because I’ve had a guy in my web design agency days. We’ve built a site for him, but we didn’t actually build the site because in the process of building the site, he said, You know what? I really need to validate this first. So that’s what he did. So he stopped the web design stuff and he just went to restaurants asking them, Hey, I’m creating this very cool portal. There’s going to be a lot of people ordering food from this. Do you want to sign up? And he signed up in his prerelease. So he didn’t even have a release. He didn’t even have a pre-release. But he signed them up for the prerelease on about $200 each when he didn’t have anything. So by doing that, he validated the idea and he had money to pay us for the website, for the web portal. And he did this with a lot of restaurants in different cities. So he had restaurants in Cluj, he had restaurants in Brasov, he had restaurants in Sinaia. And he actually took places from Transylvania and he actually managed to convince them to join his pre-release. Now that was all the validation he needed that the restaurants would be interested. And a lot of people are afraid to do this, by the way.

PAUL: On the other hand, on the developer side, on the consumer part, I think I would try to validate it with some fake ads for installing the app.

FLORIN: Okay, this is unorthodox, but go on. But it’s not so unorthodox that I have never.

PAUL: I Did this myself. So you know that people that are working at the desk, they have some regular breaks in which usually during the lunch, they’re entering Facebook or something like that. So I would just target them by installing this app that brings you food at your desk and you can stay and watch even more Netflix by scrolling on Facebook. I would target them specifically on the segment and see how much of them would click to install the app. That would be the first validation.

FLORIN: But this validation depends on how big is the competition in the town that you’re targeting those developers. Because if they already have three other apps, they won’t be interested in your ad because they already know the other apps. So your idea is very good for a town where there are developers and there are other big competitors that they would know about.

PAUL: But wait for it, I will put in the ad my secret sauce.

FLORIN: What’s the secret sauce?

PAUL: Well, I don’t know. We need to think more of this idea, but the plan would be that I have a secret sauce. Otherwise, I would just make another food delivery service.

FLORIN: Yeah, well, the idea is that you could actually do this. If you don’t have competition, you could just place the ad and even if you don’t have a secret sauce, people could potentially sign up for it. Otherwise, people already use such an app and they wouldn’t use yours because yours doesn’t tell the story of why their bellies would be happier with the food that you provide.

PAUL: But doesn’t that mean that it invalidated my idea?

FLORIN: It invalidated it for a certain market. It didn’t invalidate it for all the markets.

PAUL: What would you do here differently? How would you go for it?

FLORIN: Well, of course, it all depends on what I’ve said. So are there competitors or not? And if there are competitors, I would just try and get a bunch of developers, which is pretty easy to do. You just have to go to an office building and join the smoke breaks and stuff like that. And then you start talking to people and you’re like, Hey, guys. So food delivery, right? Yeah, that’s not really what it should be because how do you pay for all the food? Because those guys come in, you try to pay. And if you want to order, do you group order? How do you split the money? And then you could get into some really interesting problems that they would say they have because it’s like, Yeah, man, I don’t really like it because I only have cash or I only have my credit card with me. And then the other guys can’t pay and we have a lot of problems with getting the money back and we don’t really know how to do this group ordering stuff. And maybe then by doing this pre-validation, you figure out that the really interesting thing to validate is if people would like to group order for the food delivery service, which might bring you a whole new market that you didn’t think about before.

PAUL: It’s quite interesting because you’re looking at it from the customer development part, like for finding more the problem, the struggle there. I just tested on the hypothesis that they will install this app if I promise them this. I think these are two different approaches that each of them could have interesting results.

FLORIN: I think that you should actually try them both so that you have more data because with more data, you’ll make a much better choice in engaging in the startup or just quitting the idea altogether.

PAUL: Taking the findings from the discussion that you had with them, placing them in the ad and see how it goes and iterate on that.

FLORIN: Or you could get the people who subscribed to your landing page because they came from the ad. They subscribe to the landing page and then you contact them and talk more with them about the problem, about how painful that is for them and how you would potentially solve it and other stuff like that.

PAUL: I think these were some interesting and maybe valuable ideas. Since we quite talked a little bit about this Facebook ad, I would propose to go to the next idea and basically try to see how we would validate an AI smart assistant that would create Facebook ads which are tailored to your audience.

FLORIN: Yeah, tailored to your audience. So how would you validate this? Well, the thing is that you could easily identify people who would need to do Facebook ads. You just need a tool that shows you where people spend their money. If they do Facebook ads, you can just see if they do Facebook ads and then see that they would definitely have some problem related to Facebook ads and delivering them. And you could think about targeting people. Now, the idea is that here you should really do an ad to see if your message gets understood by that particular audience because your messaging might be wrong and you could miss out on validating the idea behind your startup because you don’t present it in a proper way that’s easily understood by people in that market. So this is definitely one of those moments where you would want to do the ad to see if people could potentially understand the value proposition or the high concept pitch that you’re offering with your startup. Because you can present anything in any possible way. I really don’t have an idea right now. Let’s say, for example, let’s think of a brand that has some really cool… Did they say… Yeah, I can’t think of any.

PAUL: Example right now.

FLORIN: On Facebook? Let’s move on.

PAUL: Let’s move on. Rooster tweet?

FLORIN: Yeah, but I don’t know their value proposition and how they.

PAUL: Present themselves.

FLORIN: On that? Yeah. Anyway, let’s move on.

PAUL: I would challenge you here with how I would validate it. I would first validate that I’m able to do that AI part.

FLORIN: I wouldn’t do that. I would try to find if there are customers for this because AI doesn’t really exist now. We can have a whole episode about why AI doesn’t actually exist. Machine learning, you can find people doing machine learning. You can find people who don’t do machine learning. You can even lie, a lot of companies lie about doing machine learning, even though they don’t really have the structure and back end to process and to do machine learning. They just say that they do it so they sound hotter for their audience. The idea is that since machine learning is so hard to do and you don’t really find a lot of engineers capable of actually pulling it off, you should definitely go ahead and validate because otherwise the technical side is way too hard to do.

PAUL: I’m really happy that you disagreed here. What I wanted to say, and I hope some young developers will listen to us, if I’m really good at AI, at machine learning, the first thing that I shouldn’t do is to not spend a lot of time building that technology, but instead validating that there is the need for it.

FLORIN: Exactly. I’ve talked to people doing machine learning, and they were working with some really big customers from the United States, and they basically started contracting them for machine learning because AI sounded fun and sounded like something that they should do. But when they really got to building processes and stuff based on machine learning, those companies figured out that they don’t really need AI or machine learning for anything. And then the developers obviously lost the contracts and the developers weren’t actually pleased with building something that doesn’t make sense. So both parties just figured out that this thing wasn’t working and there was no need for machine learning nor for the so called AI and neural networks and stuff like that. There was no need to do that. They didn’t have an end result in mind for doing that. They just did it because of the hype and then they quit because it did not make sense.

PAUL: Regarding this part with the hype and if there is, let’s say, some, I don’t know, need or not, do you think that it’s an indicator if there is someone who already did or tried to do that? Or if there is nobody, I just have the next big idea? What would help me to decide on this part?

FLORIN: I don’t know because there have been industries like Beacon Technology, because there were a few players, it seemed like everything would work out fine for everybody who got into that industry at that particular moment. And it’s really not that easy. And sometimes there are just hypes in the market and everybody wants to get into that. But then most of the companies involved, they just failed. All of them failed at the same time because there was just hype. There wasn’t any real substance.

PAUL: To it. What I think on this part is that whether there are competitors or not, if somebody did it or not, you still need to do your validation. The only difference is that if you have competitors there, you need to look at what they did good, what they.

FLORIN: Did wrong. Exactly. And to know a bit about their approach in case your customers ask about that so that you don’t look like a fool, because most of the time people when they ask you about competitors, they don’t want you to copy the competitors. They just want to make sure that you’re not ignorant enough to think that you’re the only one in.

PAUL: The market. Validating ideas. I feel like we can discuss more at some point. That’s how you refine your approach to startup idea validation.

FLORIN: This, but.

PAUL: What would be great is if you can let us know what idea you would like to hear from us.

FLORIN: Ideas? Yeah, definitely. You can pitch us an idea, write to us what startup you would want to build, and me and Paul are going to discuss how we would validate that idea.

PAUL: Yeah. So if you just need some fresh eyes in a podcast, can we say fresh eyes on an idea? Yeah, you can say eyes. If you want to hear some of our thoughts regarding how good, how bad, or how interesting your idea is, just drop us a message on Facebook. We would really like to discuss some real ideas, but not some invented by us.

FLORIN: Yeah, that would be really nice. Especially because when we would say how we would validate the ideas, we could give clear pointers on what to do and what not.

PAUL: To do. Maybe from this you’ll get some really valuable insights. So drop your ideas on the Facebook.

FLORIN: On Twitter. And we’ll try to be serious about it. But remember, we are not your consultants.

PAUL: Not your lawyers.

FLORIN: And we’re definitely not your startup mentors.

PAUL: And buy us a coffee.

FLORIN: Definitely do that.

PAUL: And see you next time.

FLORIN: See.