Validating Your Startup's Audience
How talking to your users and validating the market is one of the most important things you can be doing.
By Bradford Toney
Published 2023-02-11
4 min read
Before investing time, money, and resources into building a (real) product, it is important to determine whether there is a demand for it. If there is no demand for your product, then the project is unlikely to be worth the investment.
Validating an idea involves gaining a deeper understanding of the problem you are trying to solve, the target market for your product, and the competition you may face.
Talk to your users
Talking to your users is one of the most effective ways to validate your idea. By speaking with potential customers, you can gain insights into their needs, pain points, and behaviors.
- Does this solve a problem they have?
- Will they come back and use this again?
It’s important to think about what the user really wants. The most famous example of this is Henry Ford and his version of a faster horse (which he probably didn’t say anyways) but I digress.
One of my favorite exercises in talking to users was to physically go to their offices with a stack of printed out mocks of the app. We would have them press buttons on the paper and shuffle it to the next screen. If we got to a place where they wanted something different, we would just draw it out on the paper and keep going.
Audience building
It is often useful to build an audience for your product, some people may have an existing personal brand that they can leverage to drive users to some early call to action or demo.
Establishing a mailing list or pre-selling the product may be very useful in certain cases. In 2013 there was an app called “Mailbox” that had an 800,000 person waiting list that allowed for a significant amount of hype to build up and ultimately helped in the sale to Dropbox.
This is a great way to test demand before you build a product. If your audience is engaged with the product even before it releases it will be easier to market your product to them later.
Unit Economics
When I was building Medigram we went in to visit Paul Graham to talk about the traction we were seeing with our product, we had signed a major medical school for a “small” sum of money. Paul did the math in his head, it takes you 8 months for you to sell to one institution and you got this amount of money for it.
“Come back to me in a week with a new idea”
We got the unit economics completely wrong. We were spending many many months selling to a single organization for a price that would have never worked in the long run. Unit economics are not the most fun thing to think about but they are vitally important to your success.
Ultimately you want to be spending less money acquiring the customer (unit) than you are making on the customer.
So when you’re thinking is this a good idea or not you’ll want to ask people what they are willing to spend on this and the answer may surprise you.
Willingness-to-pay
I’ve always been a big proponent of asking users how much they would be will to pay for a product and recently I read Monetizing Innovation which recommends understanding the customers willingness to pay very early on in the product lifecycle.
One of may favorite methodologies for asking customers (typically B2B but can be used for other structures) is the Van Westendorp price sensitivity meter. You will ask your customers or planned customers:
- At what price would you consider the product to be so expensive that you would not consider buying it? (Too expensive)
- At what price would you consider the product to be priced so low that you would feel the quality couldn’t be very good? (Too cheap)
- At what price would you consider the product starting to get expensive, so that it is not out of the question, but you would have to give some thought to buying it? (Expensive/High Side)
- At what price would you consider the product to be a bargain—a great buy for the money? (Cheap/Good Value)
This is a good guide for analyzing the collected data: A complete guide to Van Westendorp + How to graph it in Excel
Your Target Customer
All of this hopefully gives you some sense of what your target customer is. This is a simple exercise meant to provoke thought about how you will find those users. There are more complicated ways to answer this question such as the “Ideal Customer Profile” where you build a whole profile of a user and try to market to them.
This is a very important step to think through as the #1 company-killer is lack of market