A startup doesn’t need thousands of users to be considered a business with a validated business model. There are thousands of startup cases that had tens of thousands of users but failed to find and validate a business model.
Idea validation is the first stage in the process of determining whether there is a problem worth solving with a solution inspired and agreed by future users. This stage occurs before making a significant investment in product development since all there is to do is interview people to validate or invalidate business hypotheses. But interviews have limitations.
The strongest validation signal in a startup is revenue. The simplest way to validate a startup app idea before product development is to create and sell a mafia offer. It is an offer that your early adopters cannot turn down because it perfectly addresses their needs. This goes under the hypothesis that if the problem is big enough and if the proposed solution, based customers’ insights through the interviews, is valid, your ideal buyers should not hesitate to commit to a mafia offer.
Follow these three steps to define and sell the offer.
1. Start With The Problem
It is tempting to assume a good understanding of the problem and the best solution for the customer. Validating an app idea with a mafia offer in as little as 30 days is a good excuse to interview a group of potential users because the purpose of those meetings isn’t just customer discovery and understanding, but also sales. Something all founders will have to do eventually anyways.
The first step is to understand the problem through interviews. It involves asking open ended questions that aim to find consistency and a pattern in respondents’ answers about the challenge they face in a given space.
Nail the problem by quantifying its negative consequences on the buyer. It could be an increase in costs or time, decrease in productivity, inability to accomplish a goal because of an increase or decrease in an important metric or absence of a solution which is causing the rise or fall of an important measure.
To find those numbers, you need data and only when you speak with a large sample of people will you have the data to make wise conclusions. You may have a clear direction with 5 meetings, I suggest 50 not because fewer won’t be enough to gather the needed insights, but mainly because you need a larger audience to sell the mafia offer to. Especially if you’re raising funds for product development and other investments.
2. Create A Solution Demo
Many startups fail because they fall in love with an app idea they believe will solve problems uniquely well. Instead, solutions, aka ideas, must be defined following the same problem definition process, by meeting with enough people. Starting with an idea for potential solutions is still important because it serves as a benchmark for what customers would consider worthy of their money and time even at an early stage.
With interview-backed qualitatively validated solutions, it is time to design a visually compelling offer. This is not the MVP stage yet. The goal is to validate the fit between the identified problem and the proposed solution. This can be accomplished by graphically designing the product and turning it into clickable prototypes.
It may take a few months and a big check to build a mobile or web app, however, designs can be created in as little as two weeks for a fraction of the cost. If early adopters find the value proposition compelling, they won’t mind committing early to help you build it faster. This is where the mafia offer comes into play.
3. Sell The Offer
The mafia offer is too good to pass. This doesn’t necessarily mean a cheap product, in fact, depending on your target customer, you may even have to consider increasing the price as compared to competing products. The offer should be too good to refuse because it solves the problem exceptionally well. If no one buys, carry on with the interviews to learn why and repeat.
As noted earlier, the goal from the interviews is also to build a pool of leads. Reach out to the same group for another interview to demo and sell the mafia offer. To reduce acquisition friction, consider including in your offer a concierge solution delivery process while the MVP is being created.
A concierge MVP entails the founder taking the role of the product. For example, before building a social media management tool, you can implement internal systems that mimic the product to help mafia offer buyers manage social media with your guidance. With customer feedback on the designs and revenue generated, build an MVP with core features that can quantitatively test the riskiest assumptions and answer important questions like:
- Will mafia offer buyers use the product on their own and benefit from the solution?
- Will they refer people to it?
- Will they stick with it?
Source: Forbes – Entrepreneurs