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How we prefer businesses to be validated.
One of the questions we’ve gotten a few times is “What’s your ideal early stage of founder?”
The answer we usually give is “someone who has built a landing page and has validated their idea with either email/phone number sign ups or pre-orders.” In other words, somewhere around VIRAL Level 2.
In other words, this is one form of pretotyping.
Pretotyping is a movement our founder got involved in during some exploratory months of my past. During this period of time, our founder helped aspiring entrepreneurs find ways to validate their business ideas with experiments in exchange for £20. Pretotyping is known as “pretend” prototyping for short, the mechanism by which one validates/invalidates a business idea using the least amount of effort, time, and cost available. This is an extremely useful framework because several studies have shown the failure rate among startup ideas to be north of 90%. In summary: the more aspiring founders who practiced pretotyping, the higher success rate we’ll see for startups.
According to the book, The Right It by Alberto Savoia, there are several types:
The Mechanical Turk — Replace complex algorithms with human beings. Example: to pretotype a hypothetical automated laundry folding service, one would replace a drum in an old dryer and manually fold clothes for customers for $2. Then, he/she would make it seem like he/she’s doing it automatically by making fake noises.
The Fake Door — Create a fake “entry” for a product that doesn’t yet exist. An example is a basic landing page. Check out Burnerpage for a great, easy to use platform for validating startup ideas using landing pages.
The Fascade — Similar to a fake door, but the customer gets something after giving up an email/phone number/pre-order money.
The Youtube — Make a video about the hypothetical product and see how many would commit over the long term. Example: Dropbox explainer video (before it was built).
The Re-label — Put a different label on an existing product that looks like the product you want to create. Example: If one had an idea for a new specialty beehive beverage, one would buy some kombucha, relabel it as a “specialty beehive beverage” with some health benefits, put some in a Whole Foods and hide in another row to see how many people end up buying.
The Pinocchio — Build a non-functional version of the product. Example: Fake Palm Pilot
The Provincial — Test on a small sample before scaling bigger. Example: Airbnb pilot on Craigslist
The Infiltrator — Sneak a fake version into someone else’s store to see how many are interested. Example: Walhub
The Pretend-to-Own — Rent or borrow your competitors.
The way you validate whether or not an idea is worth pursuing is through a few methods. For instance, if you are building a landing page, then how many people register for updates using email or phone number is a good start. When you build a manual “paper-type” version of an app (hand sketches of your idea on paper), you can validate it yourself by finding out whether you’d actually use it every day or not. Taking the next step up, another important validation method comes from a concept curated by John Seacrest (PNW Entrepreneurial Ecosystem Builder) otherwise known as the “100 paying customers rule.” The idea is that at the price point you set, 100 people should be willing to put an initial down payment on your product/service just by looking at the pretotype. If you can achieve that, do everything you can to build your idea and satisfy those first 100 customers!
Essentially, here’s how you pretotype:
Write an XYZ Hypothesis. Essentially, this is a statement of what will happen if your startup idea experiment is successful. You write it in the format of “At least X% of Y will Z” where X is the percentage of the target customer, Y is the target customer, and Z is the desired action. At least 20% of aspiring entrepreneurs in the UK will pay £5 for my online marketing course.
Hypozoom. This is where you take your XYZ hypothesis more focused (either target customer or physical location) so you can test it now. At least 20% of aspiring entrepreneurs in London between the age of 18-24 will pay £5 for my online marketing course.
Choose a type of pretotype. See above.
Measure skin in the game. There are different values attached to the type of skin in the game that you accrue in your experiment.
Views, likes, poll results, opinions = 0 points
Validated email = 1 point per email
Validated phone number = 10 points per phone number
Time commitment = 1 point per minute
Cash deposit for waiting list = 1 point per pound
Placed order = 1 point per pound
Run the experiment 3-5 times, each time recording your result.
90%= significantly exceeded hypothesis
70% = met hypothesis
50% = slightly missed hypothesis
30% or lower = significantly missed hypothesis
In summary, pretotyping really isn’t a difficult task; it just requires people to think differently and use all sorts of scrappy, manual methods to determine whether or not they are building the “right it.” If more people can learn how to successfully master the art of pretotyping, then more people will be able to build successful businesses curating products that customers actually need.
For more information on this framework, visit:
The Right It (paid)