Speakers: Sam Parr (host), Shaan Puri (host), Bernard (listener, Berlin)
Listener Question: How Do You Actually Test a Business Idea? [00:00:00]
Bernard: Hey everyone, this is Bernard from Berlin, Germany. My question is about testing your business ideas. I’ve heard a bunch of people on your podcast talk about this already and how it’s part of what made them successful. I don’t really understand what this means — testing your business ideas. The only thing I can think of is maybe running multiple ads and comparing the performance, but beyond that I really don’t know what to do. So could you first of all tell me how you have seen this done successfully in the past, and second of all, how I can become better at it? Thank you.
Breaking Down Idea Validation [00:00:35]
Sam: All right, the guy asked Shaan — he said, “I hear you talk about testing ideas, what does that mean? Does that mean just running ads to a page and getting sales?” And the answer is yes, that is one way. But he wants to know about testing ideas and how do you do that.
Shaan: All right, so we can share a couple of things. I think you talked about this in the last Question Friday, but the first is customer conversations and the Mom Test.
There’s a book called The Mom Test — worth reading if you want to get better at this stuff. Here’s the premise: talk to customers. The rule is, don’t make the mistake everybody does. Don’t pitch your product and just wait for them to politely be like, “Yeah, sounds really interesting, let me know,” because that’s a false positive.
You’re only allowed to talk to them about their problem. You do what’s called a problem interview — you just talk to them about their life, their business, whatever area your product is in. You ask them questions. You try to see: a) is this a real problem for them? b) how big of a problem is it? Is it “dude, this is the biggest issue in my life right now” or is it more of a nice-to-have?
You can suss that out by trying to figure out: what have you done to try to solve this? If they don’t really say anything, it’s probably not actually that big of a problem — they haven’t been trying to solve it. If they’ve tried eight solutions and none of it’s working and they’re just banging their head against the wall, you know it’s a real problem.
So you try to figure out the problem, how big of a problem it is, and the words they use to describe it — because that’s what you’re going to use to create your solution. Then separately you could say, “Well, I’m working on a way to solve that. It’ll be X, Y, Z. Are you interested in trying it?” And if they say yes, you say great — and then you make them pay some price, whether that’s literally paid money, or give their information, or connect their account so you can have their data, or whatever. Make them do something with some friction so you can gauge if they’re really interested.
Sam: That’s one way you can test an idea, and that’s exactly what Shaan did this weekend. I just talked about the basketball camp thing — he told me what the idea was and said, “If this interests you, Venmo me $1,800 right now.” And people did. There was no website, there was nothing — it was just a phone call, a text, a Twitter thing.
That’s the way I typically do things. It’ll often take maybe 20 or 30 calls to get one person to show interest, but that’s where a lot of people fail — they don’t talk to enough people.
For my latest thing I’ve actually talked to like 300 people. You have to talk to a lot of people. I invested in this one company and they’re trying to get customers, and I’m like, “How many people have you talked to?” And they said, “We talked to one person last week and one the week before.” I’m like, “Dude — it’s got to be 8 a.m. to 7 p.m. and you’re on calls all day.”
That way works, but most people don’t have enough intensity around it.
Shortcut #1: Pre-Validated Ideas [00:03:45]
Shaan: There’s another way, which is you take a pre-validated idea. You take an idea that’s already working and you change it in some way. So — it’s working in the US, but there’s no version of it in Europe. There’s a pretty good bet that the behaviors in the US are going to translate to Europe or wherever. So you can skip the validation step that way.
I actually think validating an idea is really, really hard. I don’t think you’re ever going to get this clear signal that says, “Yep, check — I know people want this.” It’s more of a spectrum. You’re just increasing your confidence level that there’s something real there, but you’re never at 100% — and definitely not until you’re many months in.
Shortcut #2: Be Your Own Customer [00:04:45]
Shaan: The second way to skip the line is to work on something where you know you’re the customer. Because if you’re the customer, I guarantee you on an internet scale that there are at least another hundred thousand people who are just like you — who have the same problem, feel the same way. You may not be able to find them yet, you may not be able to market to them yet, but they definitely exist. So one way to validate your idea is to just build something that solves a problem for you.
Very rarely will that be too small — it’s only you, or you and ten other people. Almost always there’s a huge group.
When You Can’t Be the Customer: Deep Immersion [00:05:25]
Shaan: Sometimes — like with a software product for electricians or field service workers — it’s a little bit challenging to get customers before the thing is actually built. There’s this company I talked to called Zuper — Z-U-P-E-R dot co. Their headline is “power your field service and deliver better customer service.” Basically it’s an app where if you’re an electrician, all your workers go out and it handles timesheets, scheduling, all that stuff.
I asked the founder how he validated it. He said he spent all his nights and weekends talking to these business owners. He basically interned for them. He got to know them really well, honed in on the problem very specifically, and got pre-commitments. They didn’t pay him, but they told him: if you can do X, Y, and Z, we’ll be your customer. So he didn’t validate it in the sense that he collected money, but he knew with a high degree of certainty what the problem was because he spent a year working with these people and talking to them. Then when he built it, it took about six months to get his first customer.
Shaan: I know another guy who did the same thing — Al from Next Health, which is like a billion-dollar company now. He built software for doctors. He said, “I quit my job and became a secretary at a doctor’s office for six months to learn exactly how they do things.” So he knew very specifically how the software he was building was going to solve a real problem. He didn’t validate it by collecting money, but he validated it in his mind — he had a high degree of certainty.
Summary: Three Levels of Validation [00:07:00]
Shaan: So to summarize — three ways you can validate your ideas.
The least-fidelity way: go talk to as many customers as you can. Go nine to five, go shadow them. Talk to them about their problems, figure out how big the problem is, and what they do to solve it today.
The higher-fidelity way: you actually have an offer — a landing page, an ad, a flyer, an email — and you try to get people to pre-commit to a solution. That also validates that there’s demand.
And then the best way of all: you know there’s demand because you have the problem yourself. If you have the problem, you know it well. You know what solution would work. You have a place to test it — you can be patient zero. And if you do all that, you’re not guessing whether the problem is real, because you know it’s real.
Sam: And all of these take a lot of courage. A lot of people don’t do them because they’re afraid. Everyone’s afraid. You just have to do it. You can get a lot done by having some courage and actually following these steps.
Shaan: That’s one Question Friday.