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An Unconventional Way to Validate Your Product Idea

Justin Jackson

Founder, Transistor.fm

Internet stuntman ⚡️I run @megamaker and I'm building @transistorfm

Vernon, BC
Justin Jackson

You'll learn:

  • How to validate that a business idea will make money, and that you'll love working on it.
  • How to choose the perfect market and figure out what they want.
  • How Justin started the worst imaginable business and got in $85,000 of debt at 25.

Justin Jackson @mijustin

Here's a brief history of Justin Jackson's career:

Justin also runs:

The Story of realdeal

Opening flyer for Justin Jackson's snowboard shop, realdeal

Justin started a snowboard shop with two friends in 2003. The shop, realdeal, turned out to be a huge mistake.

Why? Starting a retail shop is incredibly expensive: unused inventory, suppliers, employee salaries, and lease costs add up quickly.

Two years later, at 25 years old, he closed the shop $85,000 in debt.

He learned several important lessons from this painful experience:

1. Choosing the right customer is more important than what you sell.

A typical snowboard shop customer named "Fauckler." Does it look like he has any money? Snowboarders are bad customers.

Snowboarders may be fun to hang out with, but they make shitty customers. Don't make a product for people who don't have enough money to pay you for it.

2. Starting small is almost always better than going big.

It's tempting to aim big for your business right away, but it's much easier to learn when your business is smaller. If Justin had started realdeal from a van, he could've learned what it's like keeping inventory, and that he doesn't like serving snowboarders as customers. Starting small from a van would've been a much less expensive way for Justin to realize he didn't like the snowboard shop business.

For more on the idea of starting small, read Derek Sivers on Version Infinity and watch his YouTube video Start Now. No funding needed.

3. The way we start businesses is wrong.

The conventional wisdom behind building businesses is that you:

  1. Get a good idea
  2. Validate your idea to prove product/market fit
  3. Build and launch your idea
  4. Start making money

Here's Justin Jackson's unconventional product validation idea: it's not enough to just get product/market fit.

In addition to product/market fit (does your product satisfy the need of a healthy market?), you should also be validating:

  • market/founder fit: Are your customers easy to reach? Do you like them? Do you want to help them every day for the rest of your life?
  • product/founder fit: Is this product a good fit for what you want? Does it match with your values? Does it get you where you want to go?

Product Validation Roadmap 🗺

Here's Justin's step-by-step approach for:

  • Identifying who you are, and what you want
  • Choosing a market
  • Discovering what your market wants
  • Shipping a (small) initial solution

This approach can help no matter where you are in the product cycle, from ideation to growing a profitable business.

Section 1: Know thyself

There's no sense going through the work of building something if you don't know what you're aiming for.

Define your desires precisely and you'll:

  • be much more likely to achieve them
  • be able to much more easily rule out ideas that don't further your goals

Question 1: What's your motivation for wanting to build a product?

Try finishing this sentence: "I want to build a product so that I can..."

Do you want to be able to quit your job? Spend more time with your kids? Have more wealth? Snowboard more? Write it down!

Question 2: What do you value?

What are your guiding principles you pursue above all other goals?

Check out James Clear's large list of core values for inspiration.

Question 3: How rich do you want to be?

Precisely how much money would you like to have?

  • Basic needs ($50k-$100k / year)
  • Financially secure ($150k / year)
  • Higher than average ($300k / year)
  • Very wealthy ($1 million+)

Section 2: Choose your market

Ian Landsman's first customers for HelpSpot were the people at the college he was working at.

Björn Forsberg's audience is people with shopify apps - a 500,000 person market that already spend $29-299/month on their shopify account. That's a great market: it's big, and they spend money.

Who do you want to help? A great business isn't about you and your dream. It's about helping your customers achieve their dreams.

To choose your market, ask who you want to help. When deciding, consider:

  1. How do they spend money?
  2. How big is the market?
  3. How easy are they to reach? Adam Wathan's audience (PHP developers) is super easy to reach - they all hang out on twitter.

A few ideas for finding your market:

  • How do you currently make a living?
  • What kind of customers do you serve at work? These are people already paying for your expertise.
  • What communities do you belong to?
  • What do you do better than anyone else?

Section 3: Customer research

What are the big pain points in your market that already exist? What problems are simmering in your target market?

Björn Forsberg was doing customer research in the Shopify discussion forums day after day and noticed that people regularly complained about how difficult it was to print shipping labels, so he made an app to make that easier.

ProductValidator.com helps you see your audience's pain points

Finding out what questions your audience is trying to answer is a great way to notice what pain they're experiencing. What does your audience search on Google? What kinds of questions are they asking consistently? Try researching on:

Customer interviews via. phone, skype, or in-person are hard, but are incomparably information-dense and surprisingly easy to get. Try asking:

  1. What's your focus right now at work? What are you looking to improve?
  2. What's something you'd like to accomplish, but can't? What's holding you back?
  3. What was the last product, service, or tool you bought for work? (if they can't think of something, they might be in a bad market)
  4. What's your least favorite tool you have to use right now?
  5. What kinds of tasks are you currently doing in Excel?
  6. What product do you wish existed (but doesn't yet)?
  7. What trends are you seeing in the community? (ex: GDPR is hot in the Microconf community)

GDPR hate is trendy in Microconf

Summarize your research

  • What patterns emerged?
  • What would say are the #1 and #2 things your market is struggling with?
  • What would it mean for them if you solved that struggle?

Remember that you're not just putting apps into the world, you're helping actual people in a meaningful way.

Section 4: Your hypothesis

Take your research about your audience and their pain to daydream potential solutions by filling out this simple template:

${market} wants ${outcome}, but struggle with ${struggle}. I can help them by removing these obstacles. Now, their life looks like this: ${better_life}.

Here's an example for an audience Justin Jackson is personally targeting:

Many tech businesses want a branded podcast, but struggle with getting listeners. I can help them by:

  • improving their show art + description
  • getting them more ratings + reviews
  • making their episodes easier to share

Now, their podcast has more downloads, and their business has more brand awareness.

Section 5: Start helping now

What's the smallest possible thing you could do that would validate your hypothesis?

For Justin Jackson's tech business audience, potential small projects that could validate his hypothesis include:

  • A podcast consulting service for getting more listeners?
  • Video tutorials on podcasting?
  • A WordPress plugin that makes it easier to publish podcasts?
  • A simple podcasting utility?

Section 6: Evaluate results

What does initial validation look like? How do you know if you're successful? Good indicators are getting email addresses or preorders, and the best form of validation is getting real money from your audience.

Before Jason Cohen built WPEngine, he pitched it to people in person and asked if they would pay for it, then asked if they'd write him a check for their first month.

Noticing trends in the industry that match your hypothesis will also help you know you're on the right track:

  • What is your target market investing in? (ex: ReWork podcast is a $200k/year investment from basecamp, which is a sign that Justin's hypothesis that tech businesses want a branded podcast is more likely)
  • What's getting a lot of publicity right now?
  • What are people struggling with?

Summary of the Product Building Process

Start with a small free offering. If that works, move to a small paid offering. If that works. build a simple product. If that works, put more features in and charge more.

Rob Walling's Stair Step Approach to building a business.

Transistor.fm case study

Here's how this process has worked so far for Transistor.fm.

Justin started with some small free offerings of podcasts:

In the process, he noticed some trends. 75% of people who bought Marketing for Devs were podcast listeners and made a huge effort to come talk to him because they felt like they'd known him for years ("If you make it to Vernon, BC, I'll buy you coffee").

Transistor.fm stair stepper case study

Justin also noticed a trend of tech businesses launching podcasts: StartUp by Gimlet, CodePen Radio, and others.

John works for Cards Against Humanity, so Cards Against Humanity was Transistor.fm's first client in starting The Good News Podcast.

Google is now transcribing and scraping Audio content - that's a huge positive sign in the trend of podcasting.

Questions

Who's your favorite American podcaster?

Adam Clark, for sure.

If you're already two months in with 6-10 customers, is it worth going back and going through this process?

I think it is - there's so much pain if you don't figure out the personal questions of what you want, value, and how much money you want to make. If it keeps growing and doesn't match your values you'll end up in a lot of pain.

Don't get stuck doing something you hate. I had an opportunity to help found a company that regulates gambling machines in India, but even though the money would've been fantastic it wouldn't have aligned with my values.

Is B2C SaaS always a bad idea?

Ugh. Yes, but there are definitely people that make it work.

SaaS B2C businesses are things people desire: Netflix, Spotify, Apple Music, etc. It's hard to deliver that if you're a bootstrapper.

Prosumers are different - that sometimes works.

Do you consider parameters for failures when forming your hypothesis?

I've launched so many times that I have much better parameters for success now. If I can't get 500 people on a mailing list, I have a sense the idea probably isn't going to work.

I know the market needs to be big enough to make enough money for me to support my family.

Download Justin Jackson's slides for this talk at megamaker.co/microconf2018, and more from him on this topic at productvalidationchecklist.com.

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