4 Methods to Gauge Your Business Idea ーNo Upfront Investments or Coding Required
Test it, and Move On!
Test it, and Move On!
People have a lot of ideas, but not everyone can bring them to life.
I am sure you are guilty of this situation. You are at the bar, and you think of a brilliant idea. Let's build an Uber for XX or an Airbnb for XX.
You get very excited. Your head is filled with visions of millions in sales and all the money you’ll make. But then you realize that it’s not going to be straightforward to get there. You couldn’t build a prototype, so you let the idea sleep, and it is forgotten.
But, for every app, product, idea, or service that you want to try, there’s a shortcut to cutting to the core and building a testable prototype of what you want to do.
And, the best part is that you can even test your product with users, all without having to write code or paying a huge upfront investment.
In this article, I want to introduce to you four methods to test out your idea quickly.
Before going into the four methods, let me explain a startup jargon thrown around a lot. If you know the term, you can skip this section: minimum viable product (MVP).
MVP is a development technique in which a new product is introduced in the market with basic features, but enough to get the consumers' attention.
Or in simple terms:
Launch something bad quickly — Michael Seibel, Y Combinator CEO
When building your minimum viable product, you must keep in mind that it needs to have a little functionality, reliability, usability, and beauty. The main goal is to determine whether there will be customers engaging with your product.
In this stage, you can’t try to perfect each feature, and you can’t fall in love with the MVP. Instead, the key is to hone down the problem you are solving by interacting with potential users.
Actually, the billion-dollar value companies (Airbnb, DropBox, Twitch, Stripe, etc. )we have grown to know today started with a very raw prototype.
1. Wizard of Oz (Example: Zappos, Sansan)
Wizard of Oz is the method to use human labor to automate complex tasks promised by your service. From the user’s perspective, it seems as though your product is working fine.
One example is Zappos, in which Nick Swinmurn (CEO) listed a bunch of shoes on his website without actually holding inventory. He went to local stores, photographed the shoes, and advertised them online. When a customer ordered a shoe from his website, he would go to the store, buy them and send it. When the strong demand convinced him, he invested in the system to enable it.
Another example is Sansan, a Japanese business card reading company. When a user took a photo of the business card, there would be a swarm of manual labor reading the card and digitizing them manually.
The merit of Wizard of Oz is the flexibility of the system. You can easily adjust your solution if the customer wants a different feature because human beings are running the product at the end of the day.
2. Smoke test (Example: DropBox, Checkmaid)
Smoke test gauges customer demand from simply making a demo video or landing page rather than the actual product.
A famous example of this method is DropBox, in which Drew Houston initially gauged customer demand through a simple demo video. This is because DropBox has a complex product to explain simply through presentations and without a prototype.
Therefore Drew made a 3-minute video that explained how it worked. If you watch the video, it seems to be bland, but it was targeted towards early adopters, and the beta waiting list went from 5,000 people to 75,000 people overnight. They were blown away, and they knew they had a hit product.
He mentions that you have to “put something in users' hands (doesn’t have to be code) and get real feedback ASAP.”
Checkmaid.com, a marketplace for cleaning maids, initially just had a spoof landing page with a booking form and a phone number. Next, they gauged customer demand running ads, all without having a single cleaner.
3. Concierge (Example: Stripe, Rent the Runway)
Concierge is similar to Wizard of Oz, but instead of faking a system running as manual work, you are transparent about it. At this point, it isn’t a tech product.
Stripe started with a Concierge during its initial days. The co-founders would come to integrate the payment solution by themselves if you were interested in the product.
Another example is Rent the Runway, which is an online dress rental service. Initially, somebody would come to lend a dress. After confirming that people would pay money to rent dresses, they started building out the system.
By conducting everything by hand, users will get close to perfect treatment, and you can learn about the customer demand in real-time.
4. Prototype (Example: Airbnb, Twitter, Instagram)
Prototype is the easiest to understand, which is a working product with the minimum functionality. When Airbnb started, it was a listing website with no payments, no map function, and a CTO working part-time.
Users had to manage the payments by themselves manually. How dangerous is that? But we all know where Airbnb has landed.
Twitter was initially used by employees in a podcasting company called Odeo.
Prototyping requires some coding knowledge, but now with the advent of no-code platforms, it is easy to build a prototype with drag and drop functionality.
When testing out my ideas, I build a landing page and a simple prototype. It usually takes a day to build out.
Recently, I thought a matching platform for startups and university students would be helpful for ad hoc tasks. For example, when running a startup (especially during the early stages), there are many menial tasks that university students can easily do.
However, hiring an intern takes time, and onboarding is complicated. So why not build a platform in which you can outsource affordable tasks to university students?
I thought of the idea on a Saturday night, and I built a prototype within hours.
Purchased a domain name on Google domains
Built a landing page with Unicorn Platform (software to create a landing page within minutes).
Built a marketplace prototype on Sharetribe (no-code platform for matching platforms with payment integration and booking functionality).
So far, I have about 10 university students signed up, and I am starting to talk to startups to gauge demand. And if there doesn’t seem to be strong demand, I can easily pivot.
If you are going through the process, I recommend these 3 things:
Give yourself a time limit to build the MVP (~3 weeks)
Set a KPI to decide whether go through with the project or not
Don’t be too attached to the MVP. Scope the problem and the user while keeping your solution flexible
Good luck testing out your business idea!
You can find other methods for validating your ideas on Learning Loop.
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