In his first article for us, Paul Towers from Startup Engine reveals his validation framework, HIIT, and how you can use it to help validate your startup idea.
The first stage of a startup always begins with an idea. Some spark of creativity that comes to the founder(s). Moving beyond the idea stage is however a path of resistance. And despite what we would all like to see most startups fail.
If we all then agree that starting a startup is hard. And that most fail. We must also acknowledge the time cost associated with chasing every idea. That is why one of the most crucial stages of a startup is to validate your idea.
You need to give this process the attention it deserves. To spend time with your users. And understand how they currently interact with the problem you are trying to solve. That is why I find it unusual that so many entrepreneurs default to using a landing page to validate their idea.
Landing pages have their place. But collecting an email, with no insight from users does almost nothing to validate your idea. In fact they can provide a false sense of validation as its 10x easier to get an email than a credit card.
Therefore, to move beyond the landing page model of validation I use a process that I summarise as HIIT. Hypothesis, Interview, Iterate and Test.
Hypothesis is the easiest and most straightforward stage because you should already be there. This is simply the idea you have for your startup.
The second stage, the Interview stage, is where the action happens. To start this process you need to define a target audience and find people to interview. You can use Linkedin, meetups and cold outreach to find people. But you want to avoid family and friends as they may be bias in their response.
Onto the interview itself, you don’t dive straight in and ask if they would buy your product or service. This is completely the wrong approach. Not only do you risk people just being polite and saying yes. But you pre-condition their answers by informing them of your end goal in advance.
Instead you want to understand your customer and their behaviour. For example, if your idea was a new social media management tool you would want a deep understanding of how your target market uses social media.
Questions could include how do you currently post to social media, why do you post to social media that way and do you post the same way across each channel. You want to ask lots of what, why and how questions and have the person you are interviewing do 90% of the talking.
After the interview stage comes Iteration. This is where you take your initial hypothesis and refine it based on the feedback from stage two. Perhaps our example shows that there is no need for a general social media tool. But, what our users actually want is an effective way to manage video on social media.
You now have a much more refined idea that has been validated by real potential users. But one final step is still missing. And it goes back to the point I raised earlier where it is much easier to get an email address than a credit card number.
This final Test is to get people to actually pay for your solution. In this stage you go back to the people you interviewed earlier and pre-sell your solution to them. Yes, this is hard, but if no one is willing to pay how great a problem are you actually solving for them?
You can pre-sell discounted annual licences or secure deposits. At the end of the day the amount of revenue generated is immaterial compared to the feedback this process gives you. Deciding what percentage of users you need to convert to customers is a judgement call you need to make. At a minimum though you should aim for 20%.
As we can see from this process we have taken a much more in-depth look at the problem we set out to solve. We have solid evidence from potential users and have validated that people will pay for our solution. Not only should this give you greater confidence as a founder, but it also helps convey a stronger story to investors and early stage employees.