The content below is taken from the Validation Program, a free program where Hsu Ken Ooi and the Iterative team helped 100+ founders to validate their startup ideas across a span of four weeks.
Question: Is there any way I can validate my startup idea without spending a lot of money? I don't have funding yet to build an app or an MVP.
The short answer is yes.
We often hear founders say they need 3-6 months to create some kind of MVP to start validating, but it isn't true. In most cases, it can be done with very little money and doesn't involve building an app. Case in point: One of our portfolio founders, Logan Ye, validated his idea with less than <$100 and within just a few days.
Before we share the different methods to validate your idea, we need to first understand what validation is, what it is not, and why it's important.
What Validation Is*
Validation is figuring out if your startup idea is promising, and whether it's worth pursuing - or not. A startup idea is a hypothesis on how the world works, composed of three things:
- Problem – Is the problem you’re solving a real problem that people have?
- Insight – Do you have some unique insight into how to solve the problem that others don’t?
- Solution – Based on the insight, do you solve the problem in a way that’s an order of magnitude better than how it’s solved now.
For a startup idea to be promising, (1) the problem needs to be sufficiently large, and (2) the hypothesis needs to be true. Validation will give you evidence for (1) and (2), which helps determine if the idea is worth investing more of your time and resources in.
*Worth mentioning: this is how Hsu Ken Ooi defines Validation - the term is ubiquitous and there really isn't a single definition everyone agrees on.
What Validation Is Not
Validation will not tell you whether the idea is going to be the next billion-dollar company, whether investors will want to invest in it or even if a sufficiently large number of people want what you’re making. It’s about gathering enough evidence to convince yourself that it’s worth more of your time and money.
Why Validation Is Important
If you skip validation, this is likely what's going to happen:
- You spend weeks or months building an app or software.
- You launch the product.
- You realise the product didn't perform as well as expected.
- You continue working on the product for far longer than you should since you've already spent so much time on it (sunk-cost fallacy).
- You're stuck working on a bad startup idea.
Validation is way before step one - you're at a lower risk of spending weeks or months building something that no one wants. It increases the chances of killing the bad ideas so you can move on to better ones.
How to Validate
We've compiled a list of five different methods: what they are, how they compare to one another, and how you can use them. To illustrate the five validation methods, we'll be using Grab as an example.
Some of the validation methods here are easier to do than others, but that doesn't mean they carry the same value.
If you prefer to learn through videos, here's a video of Hsu Ken explaining the 5 different validation methods - and how to use them.
We don't need to explain what this is, as it's relatively common. Surveys are especially helpful when you need to collect a lot of data from a larger set of users. Since you aren't meeting the users in person or online, the questions you ask will have a significant impact on the quality of the answers.
If we were validating the idea that became Grab, it'd be sending people a survey that asks…
- How often do you use taxis?
- What would you change about taxis?
- Would you use an e-hailing service?
Once you have the data, you can then analyse it to identify patterns and areas of concern.
Very Low Cost, Low Value
While surveys are generally quick to set up, the caveat is that what people say and what people do are separate things. Someone saying they'll use your product or service is not a strong indication that people will actually do so when it's launched.
When to use: When you want to know more about your users. Surveys are a good initial step to having a broader understanding of who your users are, what they like, don't like, etc.
Similarly, user interviews are also relatively common, but they're a stronger version of the survey. With interviews, you can ask deeper questions and clarify responses, which gives you insights that aren't able to be captured in a survey.
For example, when Hsu Ken was interviewing potential users for his idea of a blue-collar staffing platform, he was able to find out which value proposition mattered to them because each of them repeatedly asked the same question about the product. They all asked “So I can choose when to work, right?”, which Hsu Ken then used as a main selling point for the platform.
Using the Grab example, it'd be inviting users to an interview, and asking them questions like…
- Describe your last experience in a taxi.
- What makes you not want to take a taxi?
- How do you feel about an e-hailing service?
Low Cost, Medium Value
The value of interviews is higher than surveys because by talking to your users, you get to know them better, and you get a higher resolution of information back. However, there are two caveats with interviews: (1) you can't get that many data points (2) your users might not be 100% truthful with you. For (2), it's because people generally don't want to say something that upsets you, so they'd often just tell you what you want to hear.
Like surveys, it isn't to say you can't use these validation methods at all, but unless they have become your users and are actively using your product, take everything with a pinch of salt.
When to use: Best if you have a specific area you'd like to figure out, as you can extract key information from your users’ answers and draw a pattern.
Instead of asking users about their experiences, showing mockups is asking them to imagine an experience. You get users to look at a design or wireframe and depending on your goal, you'll ask them questions to clarify. Do people get excited about the product? Would they use it? How would they use it?
Medium Cost, Very Low Value
Showing mockups is more of a research tool than it is a validation one. If you show somebody a mockup, they'd tell you things like ‘I would click this button’ or ‘the flow doesn't make sense’, but you won't get to the heart of validation, which is: would you use this product consistently? Hypothetical questions give you hypothetical answers.
During the validation phase, you want to find out if your product should exist or not, and showing mockups won't give you a good answer.
When to use: Use mockups if you want to figure out how people would use your product, not if they'd use your product.
Unlike the validation methods above, the fake door method is uncommon, especially in Southeast Asia. This method is where you present users with a ‘door’ and see if they'll walk through it. Users think there's a product, and think they're acting on a product - which gives you an indication that this is something people want.
Let's use the Grab example. If we were to validate Grab with the fake door method, it'd be creating a website that lists the product offerings, adding a signup button as the CTA (call-to-action), and sending it to potential users. There's no ‘coming soon’ or ‘beta version’ sign - it looks like an actual product that people could use at any second.
Rather than asking people what they'd do, fake doors actually get users to do something (ie sign up).
Now, the first reaction we often get is: “Won't people get mad?” Truthfully, no. The fake door validation method is common in Silicon Valley, and it's still being used today. In fact, users’ reaction to the fake door is a strong sign itself. If they were pretty upset that the product doesn't actually exist, it likely means that's a painful problem they're facing.
Medium Cost, High Value
The cost of fake doors is higher as it involves creating a website, but they bring you higher value. Unlike the rest of the validation methods above, where you're asking someone to imagine a situation, fake doors get the user to actually do something about it because they think the product exists.
When to use: We highly recommend this, so create a fake door for any startup idea to see if there is genuine demand for it.
Boost Capital, one of our portfolio companies in batch W23, also did this: they built a chatbot, ran Facebook ads worth $10, and got 500 sign-ups in a single weekend.
Huge disclaimer here: actual usage is not creating the actual product. Your product is not the software, it's the solution to the problem you're solving. And more often than not, you can deliver the solution of your product with no code, and with very little money.
Grab's solution, for example, isn't really the app. It's that somebody needs a ride, somebody goes to pick them up, and then somebody drops them off. The app just makes it easy for this to happen. Similarly, when Uber first started, it didn't start with an app - it started with a phone number. A user would sign up with a phone number, and somebody from Uber manually found a driver, and then reached out to the user to tell them somebody was coming to pick them up. The app only came after when they needed to scale.
Here’s another example of how BeautyBuddy, one of our portfolio companies, validated their idea without building anything.
Instead of forcing our users [BeautyBuddy's users: salons] to go digital, we created a free Calendly to start accepting online booking requests and fed these bookings to these salons as per usual. This allowed us to prove that online bookings would generate more revenue, as well as for us to learn how both salons and their customers interact with the platform. After a month, we were able to convert these salons to use and pay for our actual product.
- Victoria Riingen, co-founder and CEO of BeautyBuddy
By doing everything manually ourselves at the start, we were able to 1) secure customers and use their brand as a proof of concept to others and 2) learn from a free solution before building anything.
High Cost, Very High Value
The idea behind actual usage is similar to the fake door method - somebody doing something will be worth more than somebody saying they'll do something. Again, actual usage here doesn't mean you need to build anything - there are many no-code ways you can do to get a user to use your solution before investing more resources.
When to use: Use this after you've set up a fake door and have seen some kind of demand. For Hsu Ken's blue-collar staffing idea, he manually connected part-timers to the companies looking for part-timers and would call each of them to get feedback.
The list isn't meant to be comprehensive as there are many ways you can validate your startup idea, but it's enough to get you started. Again, we want to make it extra clear because we strongly believe in this: you don't need to spend thousands of dollars, or use up months of your time, to validate your idea. With these methods, you can start today, and get validation within a few days.
We need more good founders working on good ideas - and you can only do that by validation. Good luck!