“No one ever got rich checking their email more often.” – Noah Kagan
Product validation is one of the key lessons that I learned from the one and only, Noah Kagan. The dude just knows how to validate. The idea behind product validation is pre-selling your product or selling your service BEFORE you create all the business infrastructure. If you can’t make 3 sales of the idea, you won’t make 1,000 sales later. It’s a way of preventing wasted time on a idea that won’t sell – or maybe that you just don’t know how to sell.
Before product validation began, we needed to set up some guidelines. Here are the specific guidelines that we used:
- Set a short time frame. We chose a window of about 24 hours. Our hard deadline was 3:00pm on July 14th.
- Spend $0.00. We’ve heard “you have to spend money to make money” so often that we believe it. Maybe it’s true in large scale, but getting started doesn’t require a dime. At least that’s the theory we are going to test.
- It doesn’t count as a sale until money changes hands. When someone says they’ll buy, assume they won’t. Until they give you cash or deposit money in your PayPal account, it doesn’t count. We often use our words to make people feel good. We use our wallets when we believe that we are getting value. If someone believes in your product, they will buy it.
- Set pass/fail criteria. So many times I’ve thought of an idea and it was love at first sight. It didn’t matter if people paid. They would one day when they realized the genius of my creation. I can tell you first hand, that’s a bad approach. You must create pass/fail criteria mostly to prevent chasing an idea that you love, but the world couldn’t care less about. Our pass/fail was this:
- Make 3 sales at $22/month and a three month minimum commitment.
- Must be completed (money in hand) before 3:00pm on Thursday, July 14th, 2016.
The gauntlet was laid down. Product validation has begun.
Making a Product Validation Plan
We made it simple. We wrote down a bunch of people and companies that we know and we contacted them. We walked into their store, we called friends, we sent text messages and Facebook Messenger. The means were important and so was the message.
Our message was simple. We are selling a coffee subscription for $22 a month and we are looking for a few people to commit to a 3 month minimum to get us started.
Here’s a look at our spreadsheet (I’ll put up a download version soon).
I hid the names and you may notice that the first column is missing. That column had the person or company’s name that we contacted. Tracking the closure rate is critical.
Validation Plan Results
So you’ll see that we have more than 3 paying customers. Here’s the fun part. Our deadline was 3pm on July 14th. The payment of our third paying customer was received at… 2:58PM. You can’t make that stuff up. We were 2 minutes away from changing the product and starting the validation process over again. But as fate had it, we’re moving on to the next step. Stay tuned!