Whenever I’m testing a new business model or new feature, I always think, “What’s the fastest way for me to get enough information to validate or invalidate this idea?”. This is basically the definition of a Minimum Viable Product. I did this in just 24 hours for my latest project using only a landing page, a simple email template, and by leveraging existing networks for lead generation. Here’s how I got from idea to my first $40 in revenue.
Entrepreneurs will pay to have access to a curated database that organizes companies by industry and by similar business model. This database could also include other information that founders might need, such as market size and/or a list of influencers/bloggers who are active in their industry.
Key elements of the experiment:
- Keep it simple and manual
- Leverage existing networks
- Measure everything
- Get feedback and iterate
- Don’t be afraid to ask for payment
Keep it simple and manual:
Trying to build a sophisticated algorithm to search the web for similar companies, and bloggers who’ve written about them, would take tons of time and money. In the end, customers might not even value the data enough to pay for it. So, I decided to offer the service by first gathering the basic information about a customer’s company, then conducting research manually by googling and using some existing databases. Through this manual process I could prove that a customer is willing to pay and learn exactly what kind of data they want. The only cost for me is my time.
Leverage Existing Network (R/Entrepreneur):
I hypothesized that my early adopters would be first time entrepreneurs who are looking for a way to research their ideas. The best place online for me to find plenty of first time entrepreneurs is reddit’s r/Entrepreneur. For those of you who are unfamiliar with r/Entrepreneur, it’s a forum where first time entrepreneurs go to share information and interact online. I wrote a quick post asking for feedback on the idea in order to drive traffic to a simple landing page I built.
Time Spent: 1 hour to pick a name and build the landing page, 5 minutes to create the post.
Measure Visitors, Clicks, and Conversions:
I used a website called Optimizely to A/B test headlines on my landing page. The headlines I tested either offered customers a list of competitor companies or a list of bloggers/influencers who’ve written articles about your competitors. You can visit the landing page here. For a great course on how to build a landing page checkout One Month’s Growth Hacking Course.
Time Spent: 10 minutes to set up Optimizely with a free trial, 10 minutes to setup google analytics.
Get feedback and iterate:
Luckily the post was well received and I started to get direct messages and comments. You’ll notice that I responded to each person’s feedback and made changes when necessary. I learned some critical steps in the customer’s decision making process: They really wanted to see a case study, how the data was collected, and some social proof from other customers.
Time spent: 24 hours monitoring the post, 2 hours responding to comments.
Don’t be afraid to ask for payment (even in the early stage of your product):
I immediately followed up with every single comment and personal message with a reply trying to close a sale. Paypal has a great service called Paypal.me that allows you to easily accept payment. This allows you to validate not only the idea, but the willingness to pay, and eventually the amount they are willing to pay.
Here’s one example response:
Hope you had a great new year. We’d love to help you find other startups in your industry. Just send me the name of your startup, url, a brief description, and the industry you’re in. Just send me $20 using this link and I’ll get started paypal.me/kehaya/20. I’ll refund you if you’re not satisfied.
What are your thoughts?
Time spent: Writing template 10 minutes, 0 minutes building payment feature
- Traffic: 149 visitors
- Click through rate: 8.72%
- Leads: 6
- Paying customers (so far): 2
- Total Revenue: $40
- Expenses: $0
- Total Time Spent: 24 hrs
What I learned:
I had a 50/50 split between those who wanted a list of competitors versus those who wanted a list of bloggers/influencers, so its unclear which one is more compelling. What I do know is that people are willing to pay for this service and that it’s probably worth spending more time to continue validating. I got a good amount of quantitative data and plenty of leads to conduct in person or Skype interviews to elicit more qualitative data. I’ve already done two such interviews and gained some valuable information about what data I really need to collect.
My next step will be to complete a few more sales, get more customer interviews, and test how to create repeatable business model that will scale the service.
BOTTOM LINE. When you’re testing a new idea think about the fastest way for you to prove people really want your product or service by building as little as possible and interacting with real customers.
Happy testing! Feel free to reach out to me with questions.