Mike Taber – Idea Validation and Customer Development – MicroConf 2017

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    • Why is validation important?
      • How to launch a product, v1.0
        • 1. Find an idea
          • Talk to people
          • Go out on the internet
          • Or you can’t find a tool to do something
        • 2. Build the product
        • 3. ???
        • 4. Profit
      • THIS DOESN’T WORK
      • Why?

 

  • The biggest risk / difficulty isn’t building the product, it’s finding the customers

 

      • Those 4 steps: you’re deferring the risk
        • Deferred risk is like technical debt
      • You build, you put it out there, and then things turn against you
      • Your response to why?
        • “Because it’s the beta”
        • That’s not right at all
        • It’s because you’ve deferred the risk
        • Deferred risk only gets worse as time goes on
    • How to launch a product, v2.0
      • 1. Find an idea
      • 2. Talk to customers
        • 😮 CUSTOMERS?
          • I want to sit behind my keyboard. It doesn’t yell at me
      • 3. Ask them questions
        • Find out what’s important to them, and why
      • 4. Get commitments
      • 5. Build the product
      • 6. Profit
    • Instant Cashflow by Bradley J. Sugars
      • You find out what people want, you go get it, you give it to them. In that order
      • The problems your product solves are not necessarily the ones customers are interested in solving
    • Pizza
      • Fulfills a need (hunger)
      • Would you buy a pizza, then bring it in to everyone, and then charge people $10 for a slice?
      • Every told your kids what’s for dinner and then asked if they want it?
        • They might even tell you what they want, and then not want it when you put it in front of them
          • They’ve asked for a solution that doesn’t really solve their problem
  • Built a tool to solve a problem a client had with Excel spreadsheets
    • Put a landing page online to see if I could sell it
      • Was very difficult to find customers / get people to talk to me
      • The customer development being difficult meant that growing the business would be difficult, too
  • Had a problem doing event sponsor follow-up
    • Could turn into a product
      • Ran ads. Didn’t work
      • Went to my network
        • Only one person even said “I think I would pay for it”
      • Knew that wasn’t going to fly
  • Bluetick.io
    • Presale results
      • Pre-code
        • Nov-Dec
        • 11 prepayments
        • $600+ MRR
        • $1,480 in revenue
        • Before a single line of code
      • Within 5 months
        • 20 prepayments
        • $1k+ MRR
        • $2,645 in revenue
        • No marketing at this point. Organic word of mouth
          • Good indicator
      • The length of time here is important. It’s not an overnight process
  • Identify people to speak with
    • Where?
      • LinkedIn
      • Twitter
      • Facebook
      • Forums (vBulletin, phpbb, Discourse)
      • Paid ads — not ideal, but can be used
    • Start with warm leads. People already in your network
      • People who will give you the time of day
      • If you can’t find people in your network, it’ll be exponentially harder when you try to find them cold
    • Having a huge audience doesn’t matter
      • Seen people with 10k subscribers where 5 of them say they’re interested
    • People who…
      • 1. You know
      • Then people who 2. Know you
      • Then people who 3. Will introduce you to people they know
      • Then people who 4. Have no idea who you are
      • Can hone your messaging as you talk to each group
    • Most people don’t even talk to people
      • Or they talk to 3 or 4. They don’t go to friends of friends
  • Validating the idea
    • Not the same as validating the customer
      • Are you actually solving a real problem?
      • If your main competitor is Excel, you probably don’t have a great business model
        • Because everyone you talk to already has that
        • Hard to compete with
      • Initial contact to pitch the concept
        • “I have a question for you. I’m in the process of validating a new business idea and thought it might be applicable to you. No worries if it’s not, but if it’s a problem you’re having, I’d love to get on a Skype call to discuss in the near future.”
        • “As of right now, I’m simply trying to validate this idea and have conversations and get verbal commitments. If I reach a critical mass of people interested, I’m going to go back to those people with mockups & an implementation plan, get financial commitments from people and start building.”
        • “Does this problem resonate with you? If so, let me know and we’ll set up a time to chat. If it doesn’t resonate, do you know of anyone who might be having this problem that you’d be willing to introduce me to?”
      • First call
        • Important to get on a call / Skype
          • You hear their voice
          • Intonation
          • Pauses
          • You hear them say something and then say “let me take that back–”
          • People are more meticulous when sending email. Less authentic
        • 15-20 mins
        • Recording it is useful
          • You can tell them, or not. Whatever you’re comfortable with
        • “How are you solving this problem today?”
          • Gives you an idea what they’re doing
          • What other tools are out there
          • If they don’t have any solution, it presumably isn’t that painful
          • If they’re paying for something to solve it, that’s some validation
        • “What have you tried?”
        • “What worked? What didn’t and why?”
          • Tells you what’s lacking elsewhere
        • “Would you pay for a tool that solved this problem?”
        • “Can we have a follow up call to discuss this further?”
          • Helpful disqualifier; data point; if they don’t want to talk more about solving it
        • “Do you know of anyone in your network who might have a similar problem?”
          • Ask for 3
          • I got 5 from somebody, complete with introductions
          • Can give them a template to pass on
            • Summary of who introduced you, what the problem is you’re looking to solve, ask if it resonates
  • Find out what they want. Go get it. Give it to them. In that order. MAYBE…
    • AuditShark
      • Sometimes things do not go as planned
        • I spent 2 years and $50k on building AuditShark
        • I had better domain knowledge than anyone
        • Had prior connections
        • Long story short… did not work out
      • “An MVP is not a minimal product. It is a strategy and process directed toward making and selling a product to customers.”
    • Bluetick
      • Demoed it with…
        • Built Balsamiq mockups of every screen
        • Google docs, and spreadsheets
        • A lot going on
        • Wanted to demonstrate all of that
      • Because didn’t want to make the same mistake again. Wanted people to know what they were getting
      • Didn’t want to waste time — it’s the most valuable resource we have
  • During the demo
    • Look for disqualifiers. Reasons why you shouldn’t waste your time building it
    • Record the audio
    • Write down every question
    • If someone asks for something. Don’t say “I can do that”. Ask “Is that important to you?”
      • Amazing how often someone will say “Nah, I was just asking”. “Not particularly important”
    • Actively overcome objections. Remember this is a sales demo
    • You don’t have to build a 90 page deck like I did for Bluetick
    • Ask for the sale!!!
      • Ask them to pay for it
      • Huge difference between “would you pay for this?” and “will you?”
        • I had a bunch of people (about half) fall out at this point. A little concerning
      • Payment form
        • I chose to leave the price box of the form blank. Asked what they wanted to pay, and how many months they wanted to prepay for (between 1-6, defaulted to 3)
          • Everyone but 2 payed for 3 months
          • One person: $100/mo
          • Two people: ~$40/mo
          • Everyone else $47-50/mo
          • Eventually fixed it to $50/mo as a result
        • Charge them immediately, with a liberal refund policy
      • Prepayment disclaimers
        • Not all demos will convert to sales, even if they said yes before
        • Some prepaid customers will ask for refunds
          • Sucks, but it’s ok
        • Not all prepayments will convert to paying customers
        • The money is a proxy for a vote of confidence
          • It’s not a guarantee
          • But it’s way better than nothing
  • “Good customers”
    • Are currently solving (or attempting to solve) the problem
      • If they’re not, you now have an education problem as well as a product problem
    • Experience the problem on a recurring basis
    • Use the product regularly
    • Will achieve far more value than the time and money it costs
    • Will pay you to solve their problem
  • Validation mistakes
    • Targeting the wrong people
      • If you’re not talking to the decisionmaker, it’s going to be difficult
        • Low purchase amount to someone lower down with a credit card, may be OK
        • But needs to be someone with authority to make the decision
      • People who aren’t actively making an effort to solve their problem
        • You don’t want to be educating an entire audience
    • Prepaid customer myths
      • “It means you’re doing the right thing”
      • “They’re paying for a solution”
      • “It’s the same as if they’re paid customers”
      • “Being your guinea pig is a priority for them”
    • Thinking you’ve promised them you’ll build it. If you don’t end up building, you refund, everyone will be cool with it
    • Offering an indefinite beta period until it provides them value. Put a timeframe on it
  • The lies we tell ourselves
    • “It’s not done until it ships”
      • You can totally charge before you launch
    • “Can’t launch until certain features aren’t done”
      • The password reset doesn’t work? They’ll tell you. It’s not the end of the world.
      • You can do things manually
      • You can put the button there. Measure if anyone clicks it. If they do, tell them it’s not ready yet — ask if they’d like it
    • “Can’t launch, I don’t have enough traffic”
    • “I don’t have time”
      • Nobody is too busy, it’s all about priorities
  • Most of the things in your life that are worth doing are scary
  • Things are trending upward with Bluetick, but it’s not definitive yet
    • Cautiously optimistic
    • It can be a very slow path
      • “The long slow SaaS ramp of death”
      • There are exceptions
    • No silver bullets
    • But aim to win
  • @SingleFounder
  • https://www.bluetick.io
  • [email protected]
  • Resources
    • Balsamiq — 4 months free of Balsamiq Cloud for everyone in the room
    • WP Simple Pay Pro — 50% off a 3-site business license for everyone in the room
    • Email scripts from Bluetick — http://bit.ly/mc17se-emailscripts
    • Single Founder Handbook — free for everyone in the room
    • Start Small Stay Small — free for everyone in the room
  • Q&A
    • “Asking for pre-sales. Would you do it differently if the monthly price were higher? Say, $800/mo”
      • You can absolutely do it with that approach. I’d lean more towards invoicing at that point. People have absolutely used this methodology to take prepayment for high ticket items
    • “Did you send those initial pre-customers your first attempt at a prototype?”
      • I ask them whether I can add them to the email list at the time
      • You can email them and ask if you can add them
        • A no is actually a good data point to have
    • “Balsamiq. How much are you iterating from call to call?”
      • Depends how many minutes I have between each call!
        • A couple of calls even went 2 hours long
          • One was actually a competitor. But we figured we’re not really in competition, we’re in it together against the bigger guys. If you’re in a situation like that with someone in this room, I’d recommend treating it similarly
      • If it comes up several times, you can talk around it

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