That Smoke Test I Heard About
I wrote a challenge to @JKTFI yesterday. In it, I surfaced a problem I saw during startups’ presentation: not enough validation.
All startups have obviously done some market research which clearly showed to the audience and I that there’s a good potential for whatever it is they’re trying to build. But that does not justify that they should make the product or service they’ve been spending 4 months of their life for.
The market is there and they’re all staring at their own respective market. But is the market staring back at them? If they think so, how so and how confident are they?
Thanks for the love. Glad to hv opportunity to contribute via
#jktfi. Look forward for the blogpost #2 before commenting ;)
And today is the maturity date. So what to do?
Set up a smoke test
I heard that one of the 2 special assignments given to the startups was a landing page smoke test in which the page receives traffic from Facebook ads and collects emails as a call to action.
That is fantastic! Whichever mentor suggested that assignment to the founders, s/he knew how important it is to have real world validation.
To those unfamiliar with the concept, the idea is this:
- If your startup were to turn into a sustainable business, it must deliver value
- Therefore, it follows that your startup has a value hypothesis to test such that if the hypothesis is true, you’re on your way to having your own private jet ;)
- Present the hypothesis on a page, measure the response rate of the visitors.
- Assuming you presented your startup’s values appropriately, good response rate correlates with good uptake in value hypothesis. With that said, “good uptake” does not guarantee startups’ success, but it definitely validates their value hypothesis. That is, some people are biting that bait you just threw.
And I am suggesting a similar thing to do but with a tweak: if you want real validation, in most cases I would use adwords instead of facebook ads. I won’t go into details in this post (I’ll do it sometime in the future), but the reason is because: facebook ads is largely a push mechanism (people are presented with ads regardless of need) while adwords is a pull (people are presented with ads only when they look for it).
Adwords is the fastest way to test whether that first critical bites exist online. If there’s no one looking for the bait (those who will become your early adopters), you can throw as many baits as you want and no one is going to bite.
Another approach is to reach out to communities that have high likelihood in needing the solution provided by the startups and present the value in front of them. But identifying need ain’t so easy… without adwords.
I want to emphasize that what is important is not the advertising channel, but rather, reaching people who need what you offer. If your solution appeal to general audience, you can simply sample some random people and get away without adwords. I’m just particularly biased towards online channels :)
Example: for Stilomo, I would set up a campaign looking for search queries containing “diskon”, “deal”, “promo”, “dealkeren”/”livingsocial” (yes I am sober), “disdus”/”groupon”. Point them towards the landing page and off you go towards learning the real market!
Additional nice thing to note: unless your startup tries to disrupt a saturated market (such as e-commerce) and assuming you know what you’re doing, keywords for adwords in Indonesia is still very cheap, while CPC for Facebook Ads has drastically gone up compared to last year.
With all that said, what is really remarkable (and I’m happy to know about) was that Jakarta Founder Institute suggested it and the graduates have done it. I just think it’s a shame that the result of that test was not presented. Because IMHO, that is the last piece that any savvy investors are looking for.
If you can show investors that:
- you the guts to keep going (check),
- you have a solid management team (check),
- there’s a clear potential (check), and
- there’s a solid proof, a good reason to believe that market will love the solution (no check during presentation),
they’ll be begging you to take their money.
In my eyes, all that VC meetings mumbo jumbo with entrepreneur is boiled down to 1 point: “can you convince me to believe in what you offer to the world?” What else convinces better than a real world validation?
And of course,
this post ain’t complete with some shameless self-promotion (oh come on, you knew this was coming): need help with adwords and other online marketing efforts? I’m here for you baby.
P.S. I’m not saying all startups must build a landing page first. A smoke test does not necessarily mean a landing page. Landing page just happens to be one of the quickest subset of a Minimum Viable Product (MVP)
…, The best way to validate your market is to launch your startup so you can get real feedback directly from your users. As entrepreneurs, you have to take the risk that your product will fail but sometimes you don’t know if that would happen until you launch your product…
Thank you very much for the kind reply, Novis.
I would rather say it’s the typical way, instead of the best way. My concern for waiting until the launch is: what if startup’s value hypothesis is wrong? And no one ends up wanting what they offer?
When we identify a problem and offer a value, we assume it’s a real world problem and we offer something of real value. But that’s us; the market may not feel there’s a problem and hence, what we offer is not of real value to them.
Can we help them to validate whether what they think aligns with what the market thinks during incubation?
The graduates spent several months of blood, sweat and tears for something that, after a short period of time, may go straight to the dust bin. To me, that is a huge waste and it would be a very demoralizing experience for them. It’s the incubator’s responsibility to mitigate that risk as much as possible.
So can we test the value hypothesis faster, before the launch? Yes we can and my proposal is to set up the smoke test described above, which JKTFI graduates have done (which is great!). The test result should have been included in the presentation, because in my eyes, it’s the missing piece to convince the audience and I (or maybe it’s just me) that the startup is in a steady progress towards sustainable success.