How to Validate Your Startup Ideas for Less than $100
I'm scared of someone stealing my idea
I’ve seen so many startup founders shy away from sharing their startup idea and guard it as if they’re Gollum from Lord of the Rings.
Let’s be honest, your idea isn’t as unique or special as you think it is.
If it is, you just need to patent it and it’s protected.
Every startup will eventually need to go public, the sooner you do the better because the sooner (and less capital invested) you’ll find out all the flaws of the first iteration of your product.
This will also give you a chance to figure out if people actually want to pay for your product (you know the basic foundations of building a business).
So, whatever your idea is, you don’t need to be “in stealth”, you need to validate RIGHT NOW.
Also, if your idea is that easy to steal/copy, what makes it so special?
Why not start early and build a moat around yourself?
Goals of the validation phase
Let’s chat quickly about what is not idea validation:
- Your mom saying it’s a great business idea
- Your loved ones, friends, colleagues, etc – basically anyone who is afraid to hurt your feelings agreeing with your startup idea and optimistically encouraging you to keep going.
- The converse is true as well: people shutting you down who don’t know the industry/sector.
- Average monthly users
- Twitter followers
- A waitlist is a soft indication of validation
- Signups
While these are all good lead indicators…
"The one true idea validation is paying customers."
Brian Leung, Founder, SwiftAds
So, the goal now is to figure out two things:
- What is the idea
- Who is willing to pay for it
What is the idea?
SwiftAds started as a low-cost solution for people who can’t afford to hire a freelancer or agency to manage their Google Ads.
We used to do it all: Account creation, creating the ads, tweaking the settings, etc. SwiftAds was basically an ad agency in their pockets.
Spoiler alert: it wasn’t feasible and sustainable.
I started stripping down the features and tweaked the pricing but this was done over the course of a year and many virtual meetings.
You need to start with one idea, one benefit, one feature and see if people need this in their lives.
As a startup, not many people have a year of time to spare. So, you need to rapidly test these ideas. Google Ads (and advertising in general) is a shortcut, a cheat code; it gets you to the destination much quicker.
But you’re not supposed to use shortcuts all the time. There’s something to be said about building a solid foundation and focusing on the fundamentals of building a lasting business: vision, mission, branding, content, ops, etc.
In any case, here’s the cheat code:
The Strategy
Use a custom audience to build your target audience. This can be targeting their search and purchase intent or targeting websites they frequent. Or heck, you can even target your competitor’s websites.
Then run a responsive display ad (RDA) campaign using that custom audience.
As time goes by, you’ll collect data on affinity and in-market segments. You can add these audience targeting criteria to your campaigns and increase the reach of your ads.
RDA campaigns are really low cost and can be very effective if you geo-fence the campaign properly (and obviously, set the correct audience targeting criteria).
Almost everyone using SwiftAds set budgets of $1/day for these types of campaigns.
Signals
At this point, you will be able to test in different ways:
- Test one idea across multiple audiences
- Test multiple ideas across one audience
- Test multiple ideas across multiple audiences (not recommended unless you know your way around multivariate testing)
The amount of money involved scales with how many tests you want to put into the market.
We must circle back to my point earlier about validation.
Yes, ultimately, you want paying customers but it’s going to be an iterative process to get there. You’re going to have to process the leading indicators, other signals, to get to the final answer of which idea, benefit, or feature is the one to work on.
At the early phases, a good signal to use is clickthrough rate (CTR). This is the ratio of people clicking on an ad after seeing it.
Assuming your audience targeting is done correctly, the higher the CTR, the most it means the ad resonates with your audience.
From zero to one
If everything works out, you’ll eventually get your first sale
Now, you have to work with this one customer and ask questions and investigate what pain points your product solves for them.
Repeating this process from the beginning will continually give you a more focused and narrower view on what your product should be.
The “end” here is that you’re able to get customers consistently without having to change what idea/benefit/feature is being advertised to them and the customers are consistently telling you that the product is solving the same pain point for them.
Side note: tracking and analytics
Bad data is almost worse than no data.
It’s super important that you’ve got your analytics set up properly and you’re capturing and measuring (all) the right things.
Happy to help get you situated on this front as well (see Analytics Setup).
