[59] The Dark Art of Product Validation
This is Bootstrapped Web episode number 59. This is the podcast for you, the founder who learns by doing as you bootstrap your business online. And today, we're talking about validation. How to know if the idea you have in mind is actually a business worth pursuing. I am Jordan.
Brian Casel:And I'm Brian.
Jordan Gal:Excellent. This is a topic that comes up all the time, whether it's experienced entrepreneurs looking into a new idea or first time entrepreneurs, trying to mitigate their risk into, you know, going into a bad idea. So it's a it's it's a great topic when we get asked about often.
Brian Casel:Yeah. Totally. And I I think it is on everybody's mind, you know, continuously. And it's one of those things that, like, you you hear a lot of different, you know, teachings on this and different methods and and popular frameworks and whatnot. And then still, even even when you consume all these different books, like the lean startup and all and all these other, you know, other things, when it comes down to it and comes into practice, it's it's still like a a hazy mess of like, is this really valid?
Brian Casel:Or am I do am I taking the right next step here? I'm not really sure. Is this really worth my time, or am I wasting money or time here? So it's it's just a big question mark, and hopefully, we'll we'll try to unpack it a little bit here today.
Jordan Gal:That's right. And before we get into it and talking about those different frameworks and kinda running through our own framework, an amalgamation of all those things and our personal experiences, why don't we get a little bit of an update? Brian, last week, you were you were lost in the snow. Yes. Tell us tell us about that.
Brian Casel:Oh, man. Last week was awesome. I got back from from Big Snow Tiny Camp up at Sugarbush, Vermont. This was the second year that we've done it. And this year, still not everyone was able to make it.
Brian Casel:Unfortunately, we we had 12 people registered. 10 people actually made it. But it was a really, really great group. You know, bunch of fellow online entrepreneurs just talking business. We each kinda gave our own talks.
Brian Casel:We, you know, call them attendee talks. Everybody kinda prepares a little discussion with the group and just, you know, three three nights, you know, half spend half the day out on the mountains snowboarding and skiing and the other half hanging out and doing these talks and oh, man. It it you know, the you know, it's a really great group when everybody's participating and everyone's really helping each other out. And, like, I came away from it with actual changes and and, like, actionable things that I was starting to do something. And and thanks to the feedback that I got from the group, I actually made a few tweaks in in my plans.
Brian Casel:And I think I think a lot of the other people at the at the trip had the same takeaway from it. So that was really cool. And there was, like, a massive blizzard while we were there. So it was probably the best snowboarding conditions I've ever had on the East Coast Of The US, which is which is saying a lot because the East Coast usually sucks. But it was amazing.
Brian Casel:Just pure powder the the whole way, and it was it was awesome.
Jordan Gal:Nice. You guys got lucky. And there's definitely some there's definitely a big difference between reading something online and processing it as, oh, maybe I should change my approach to something. And then being in person with people that you know and like and trust and and they give you the advice, you you're much more likely to take action on it.
Brian Casel:Yeah. Absolutely. You know?
Jordan Gal:That and and Sugarbush just sounds so inviting. Yeah. You know? That's that's
Brennan Dunn:the name. Yeah.
Jordan Gal:Just take me to Sugarbush.
Brian Casel:That's right.
Jordan Gal:That's great, man.
Brian Casel:And and, you know, the other thing about this trip is that it was kind of like a retreat. Although I was with, you know, other other people basically the whole time, I did have some time to kinda reflect and and have some, like like, a personal retreat and think about the larger goals for the year. And that actually got my wheels turning a bit, a bit of a scary direction, I guess you could say, but it's something that's been on my mind for a while. And and that is just thinking long and hard about what is what I'm gonna be working on next, you know, after after Restaurant Engine or maybe alongside Restaurant Engine and once, you know, once Restaurant Engine is fully kind of running itself, which I think it's it's on its way there pretty close. And, you know, it in terms of like my goals for the year, I'm starting to maybe even reassess some some of the things there and and start to explore something new.
Brian Casel:I mean, sooner rather than later. So my original idea was to finish out the year starting to transition into into what's next, but now I'm thinking, you know what? If if I'm planning to go into something new anyway, why why shouldn't I start get the get the ball rolling now? And I do have a couple different ideas. One particular that I'm actually very excited about, that I'm getting the ball rolling on talking to customers and going through this validation process.
Brian Casel:I'm I'm sure I'll I'll I'll share a lot more details about about what all this is about in in the coming weeks, maybe. We'll see. But, you know, for now, I'm just making plans, figuring out the first the first steps to get it out of my head and start talking to people, and and we we will see about where this goes.
Jordan Gal:Right. So this validation discussion is very relevant, and I I love these these beginning conversations that I I think I have an idea. I might do this. And I love that it's documented in this podcast because, look, if it if it doesn't go anywhere, then we can ignore this. But if it if it does get somewhere and it, you know, has a big impact on your life, you can kinda look back at the beginning of it very very fondly.
Jordan Gal:So it's very very exciting.
Brian Casel:Yeah. It is it is exciting. It's a little it's for me, it's a little unnerving because I know that in the past, I've I've struggled with shiny object syndrome as most of us do. Oh, yes. And I've I've done I've gotten into different things that I later kind of, you know, regret because I because I lost focus.
Brian Casel:But this time, I I do feel it's a little bit different because I'm not necessarily thinking about doing things simultaneously, although there will be some of that. I'm really thinking about, like, transitioning from one thing to the thing. Just the same way that I transitioned from freelance consulting into building, you know you know, my my first kind of SaaS, and then now it's like, alright. Maybe this into the next thing. So
Jordan Gal:Very cool.
Brian Casel:Anyway, we'll we'll see how that goes. But, yeah, Jordan, what is up on your end?
Jordan Gal:Nothing too exciting, but I guess the only thing I would wanna mention, last week, I I really enjoyed the show that we did on product versus marketing and where to focus and how that time gets split up, and it's a difficult thing to manage. I I guess one thing that we didn't touch on there, you know, the the boring side of things is is working on the business. And that's not product, and it's not marketing, and it's a lot of the things that I don't know about you. I would prefer to ignore these things as much as possible, but they do have to be done. And over the past few weeks, I have spent a lot of time on logistics and lawyers and legal documents and getting things in order.
Jordan Gal:You know, I I ran Cart Hook out of my s corp for a long time. And now as things start to kinda get more interesting and more formal, let's say, I spun it out into its own corporation. So I went through the process with the lawyers and getting IP transferred over and just kinda getting all these things in order. It's not really that much fun. No.
Jordan Gal:But but it does
Brennan Dunn:I hate that stuff.
Jordan Gal:Me too. Me too. Accounting, you know, it's it's annoying, but it's unbelievably important.
Brian Casel:Oh, yeah. If if
Jordan Gal:you get things wrong, you will regret it. If you get things right, you will be very happy. So, yeah. So it's product versus marketing. That's where we like the focus.
Jordan Gal:That's the creative side of things, and it's interesting, and this other side is less so. But I did wanna bring it up. It's just kind of been on my mind, you know. I've been emailing with with lawyers as much as I have been with, with with customers over the past few.
Brian Casel:Years. Yeah. Exactly. Like, the product and the marketing are things that we constantly want to push on. We either wanna push on product or wanna push on marketing.
Brian Casel:And the business is kind of that other thing that needs to be pushed on, but kinda pushes on us. Like, alright. You gotta take a break today and and work on something that you gotta, you know, you gotta eat your veggies too.
Jordan Gal:Yeah. But but these are the things that actually make a huge difference down the line.
Brian Casel:Yep.
Jordan Gal:You know? If if Cardhook eventually gets acquired, a lot of that will have to do with the fact that the company owns this IP and that IP and this trademark and this piece of technology that was developed. And so getting those things buttoned up is hugely important. It's just it's just annoying and you don't wanna do it now.
Brian Casel:Yeah.
Jordan Gal:Yep. It's just part of the deal, wearing, you know, all all the hats when when you do this on your own or when you just do it with very few people.
Brian Casel:Yeah. I mean, like, this week and and also last month, I I spent quite a bit of time, like, days transitioning into starting to use Xero to manage my my accounting and books. And that took me a while just to set it up and get all the rules right and connect my bank accounts and all that. And now this week, I started to kinda reconcile my first month of the year and, you know, kinda doing it myself. And then it wasn't didn't take me long to to start interviewing potential bookkeepers.
Brian Casel:So, you know, that's that's always fun.
Jordan Gal:Cool. Yeah. I've been looking into that. I saved a bench.co. Yeah.
Jordan Gal:Bookkeeping service. Very, very cool.
Brian Casel:Yeah. I've I've had my eye on that. I'm pretty set up with Xero right now. So I'm kind of comparing different people in terms of, like, you know, Xero certified bookkeepers or whatever.
Jordan Gal:Oh, I see. I see. So right. So Xero, you know, gets things organized, but a bookkeeper, what, like, consolidates and make sure
Brian Casel:that's Yeah. I mean, Xero is the software, and then and then the bookkeeper would kinda handle the the monthly reconciliation and and maybe run some reports and get everything buttoned up and delivered over to my accountant, you know, for the taxes and all that.
Jordan Gal:Alright. I just need to apologize for that update. We just lost half of our view viewership. Let's Let's let's get out of the Yeah. Let's do it.
Brian Casel:Get in get into the good stuff. Alright. Cool. We don't actually have any new iTunes reviews. So if you are listening and you're enjoying this, stop your car, Take out your phone.
Brian Casel:Go to iTunes. Leave us a five star review. We'd really appreciate it.
Jordan Gal:Come on. Come on, baby. Make it happen. Alright. So let's get into the topic.
Jordan Gal:Yep. Valid validation. Right? This is the the mythical unicorn of avoiding all risk of starting a new business or a new product and knowing for sure that it's gonna work and having paying customers before you do anything and all this other stuff. But, you know, what what does it look like in in in real life?
Brian Casel:Yeah. Totally. I just wanna start this up. I, like, I I receive a lot of these emails from people, and there's nothing wrong with this. But, like, you know, kind of pitching an idea or even, you know, like from friends, you know, pitching an idea, like, would you pay for that?
Brian Casel:You know, like, here's the idea. I am it seems like you have this problem. Like, is that something you would pay for? And I know what I know what's happening there. Obviously, you're you're you're trying to validate something, but I don't think that that alone is validation.
Brian Casel:I think a lot of lot of people would say that really. It's it's like just hearing someone tell you, yes or no, I would pay for that or not pay for that is is not does not make it fully valid. And and I and the way that I look at all of this is it's it's really a progression. Like, every it's it's a multistep process, and every step, it gets a little bit more validated. It's it's not a binary thing.
Brian Casel:It's it's like it's more of like a percentage thing. Like, you you get more and more confident as you progress from step one to step two to to step three. And I guess we'll we'll kinda run through this whole progression in a minute. But first, you know, what are, like, the known frameworks for validation and and how do they differ?
Jordan Gal:Yeah. So we've got a few of them listed here. And and I agree with you that it's doubtful that you'll have absolutely everything buttoned up on the validation, that there's a market and there's a problem and people need a solution that are willing to pay and people have given you money and you've showed them the the mock ups and they like it and they've put money in your pocket. Right? That's unlikely that you'll get everything.
Jordan Gal:But there is, like, a tipping point. There is some point where you say, you know what? I I have these data points. I have enough reason to be confident in in pursuing it. Yep.
Jordan Gal:So so some known frameworks. The the big the big guy in the room, that's that's the lean startup, and that's hypothesis tested with an MVP and then iterated on quickly. Yeah. Measured and iterated, which to me sounds fantastic and scientific and all that. It just requires resources that I know myself and most of the people listening here do not do not have.
Brian Casel:Yeah. And I think every one of these known frameworks has a few holes in it that that makes it I think they're they're all really useful, and we should take a lot from all of them, really. And I think that's what we do here today. But there are also things to keep in mind, like, why you know, you can't necessarily follow every one of these to the letter and expect to have success a 100% of the time. So, yeah, lean startup, that that's the big one.
Brian Casel:Everyone kinda knows, you know, about that by now, probably. You know, start with, like, a hypothesis, an idea, and then and then develop some kind of MVP. And maybe that that also means, like, delivering some an MVP manually, which which I think is a great idea.
Brennan Dunn:Yeah.
Brian Casel:But, anyway, that's the lean startup. And then, I mean, the other big one is, 30 by 500, you know, Amy Hoy's, popular course for bootstrappers. Right. I I don't think we so we haven't gone through that at all, but, we're, you know, somewhat familiar with the the concept, and that is, like, the the idea of Sales Safari, which from what I understand is, kind of doing research, watching potential customers, quote, unquote, like, in their own habitat as they as they, act in the wild. Like, not necessarily doing the customer interviews because that can that can often be a little bit biased, or customers don't exactly say exactly what they mean.
Brian Casel:Whereas South Safari, you're when you're watching the questions that they're asking in in forums or in reviews or in different places, you know, you're you're getting a sense for where is the need here and what is the problem that needs to to be solved. And I'm sure there's obviously a lot more to it than than just that, but, that's the general concept.
Jordan Gal:Yeah. That's that's what I see as the the argument for the Sales Safari 30 by 500 approach that that it's easier to be successful in building a product if you can find people, real people out there on the Internet that are already experiencing the problem, that they're complaining about it, that they're looking for a solution as opposed to coming up with an idea and saying, who would find my idea valuable? Let me go talk to them and see if they would find my idea valuable. Right. Right?
Jordan Gal:It's going the other way. It's going, why not why not see where there already exists demand for for a solution? Yeah. So I think that's that's valid. And and there are there are tactical ways to do that from forums and message boards to email lists to, you know, all all types of stuff.
Jordan Gal:I I do that stuff regularly. I'll I'll log in to BigCommerce in the forums, and I'll go I'll do a search for abandoned cart, and I'll see what people are saying about BigCommerce's built in abandoned cart app to see if I should build an integration for BigCommerce or not bother. Are people happy about the, you know, the existing BigCommerce abandoned cart or not? So this is yeah. Think it's a great framework and I think it's an especially great framework and course for developers who are not good at sales marketing yet.
Brian Casel:Yeah. Yep. I mean, I've heard one argument against it is that it it's almost like it keeps you too too much in your comfort zone of of not getting out there and talking to people and making those face to face sales.
Jordan Gal:Okay.
Brian Casel:And Okay. And, you know, not necessarily that that you have to do face to face sales in order to be successful. But
Jordan Gal:At some point.
Brian Casel:At some point, you have to get yourself out of that comfort zone. And and I find it a little bit of a stretch to think that just identifying, you know, some what you see out there online in forums can guarantee the the right idea at the right time for the right customer. Yeah. Obviously, I'm sure there's a lot more to it than that. But
Jordan Gal:Right. I'm not sure if we're being fair to.
Brian Casel:I mean, I think there's also your own bias as you as you approach that. Right? Like, if I have an idea for something, any question that I notice related to this idea is gonna be like, I've I've I've got my eye out for that. You know? So it's like you're kinda gonna grab things that may influence you that have a heavier influence than they should.
Jordan Gal:Right. Yeah. I ignore all things that are contradictory to my worldview or approach to the product, and I emphasize the ones that that that are in line with it. But I'm not sure if we're being a 100%, fair to 3,500 because we're just not that familiar with it. I assume, and this will something that we'll get into, that talking to real people has to be part of it.
Jordan Gal:But if you can use the Sales Safari process to identify a problem, and then when you do approach people, you have a specific problem in mind, then I I think those two can marry, you know, well.
Brian Casel:Totally. I I think I think we should definitely take pieces from from all this stuff. Yep. And then the third, of course, is foundation, which, you know, you're you're more familiar with it.
Jordan Gal:Yeah. Yeah. Foundation from Dane Maxwell. It always felt a little bit to me like Dane kind of reverse engineered his luck in in some way, but we have to give him credit for being aware enough in in that situation. Right?
Jordan Gal:So Dane was doing a bunch of different things around real estate and he was very aggressive and good about talking to people on the phone. And so one person that he spoke with on the phone, a broker basically said, look, I don't need that. I don't need what you're offering, but what I do need is this. And and what he mentioned there is what became Paperless Pipeline, which is Dane's, you know, most successful software product. And then
Brian Casel:And I guess the concept is, like, idea extraction, which is, like, not even, like, really the the customer is telling you what what they want you to build.
Jordan Gal:Right. And so right. That and that's how I that's how I, you know, looked at Dean's experience. But he he was aware enough to basically look at his success and how that happened and basically say, I was wrong to go into this conversation with my own idea for a business, my own solution. The the right way to do it, the one he developed in the foundation is the idea extraction to go in maybe with a hunch, but without without your own ego saying this is the product I want to build.
Jordan Gal:Really just being open to it and exploring their difficulties, their problems, their typical day, where their pain is, and then doing that around a specific industry and letting the patterns come up. And then once you do identify something that's relatively widespread that can be solved with software, then going back to those people and pre selling, which I think is the is I think the idea extraction is really the the best part of the foundation process. But the the second piece of it is is pre selling. And that is how do you can you get people to pay you money? Can you get multiple people to give you money before you build the app?
Jordan Gal:Because that shows a sign of it's such a severe pain that they're so excited about potentially having it solved that you have you're dealing with something that has a lot of pent up demand. And so when you build it, when you go through the pain and money of building it, you are most likely to come out with a with a success.
Brian Casel:Yeah. And and I agree. I think the pre selling piece is, you know, not that it's impossible or that, you know, it's just that I I think it's a little bit of a stretch in so many cases. You know? And and I think the reason for that is, like, even if you're hitting on the right pain and the right problem, the right solution for the right person, there are a lot of people in this world who are happily willing to pay for that.
Brian Casel:They just don't wanna pay for it in a pre selling format. You know? Right. Just wanna just wanna pay for it when it's ready.
Jordan Gal:Yes. But the theory is if you can get some people to pay you ahead of time, then you'll get plenty of people to pay you when it's
Brian Casel:Okay.
Jordan Gal:It's it's really more of an indicator. Right?
Brian Casel:But you still have to find those people who happen to have that characteristic of being okay with being like a super early adopter.
Jordan Gal:Yes. The the secret to that is that in the idea extraction process, you get to know people, you build personal relationships with people, and they grow to trust you. So when you do say, hey, this is what I'm considering building. Here are screenshots of what I'm gonna build. Would you pay for this?
Jordan Gal:Are you willing to pay for this now? You're not coming out of the blue and trying to presell someone. Somebody you've spoken to over the past few weeks, and they know you. Yeah. It's the ideal.
Jordan Gal:The truth is you don't see it done often, the actual preselling and collection of money ahead of time, but it is a good ide ideal to to go for. Yep.
Brian Casel:Cool. So so why don't we go through kind of this process and, you know, the the I so okay. How how would I frame this? Basically, I I I broke down a a bunch of like steps in this validation process. And, of course, everything here is taken from different parts of these known frameworks that we've just discussed.
Brian Casel:And, you know, a lot from from my own experience and your own experience as well and and just getting a feel for it. So the way that I'm that I'm framing this up is every step gets you a certain percentage farther along this this validation spectrum. Right? And so at each one of these steps, there are a few actions that you can take. And, really, there's a there's a key question that you're trying to answer in each individual step.
Brian Casel:And that answer will give you or not give you the confidence to move on to the next step and get that scale from 10% to 20% to 30% validated.
Jordan Gal:Right.
Brian Casel:So it's it's not like a yes or no. Is this validated? It's like how how how far along are we on this scale?
Jordan Gal:Right. Is this particular stage in my favor or not? You know, how many of these stages do I want to be in my favor before I say, yes, this is a good idea? Or or, you know, how many of them are red flags that tell me, don't don't mess with this? Yep.
Jordan Gal:Yeah. So where does it where does it start?
Brian Casel:So, you know, obviously, I think it starts with an idea. And, you know, I personally, my take on this is that the idea you can call it a hunch. You can call it a fully fleshed out idea of your own, but it kinda starts internally. And and by that, I mean, really one of two things. Number a, it's it's a scratch your own itch.
Brian Casel:Like, I experienced this problem, this pain. I wanna solve it for myself. And in fact, I I want to explore the idea of solving it for myself and then making a product out of it that that possibly other people experience. That's that's one version of this. Right.
Brian Casel:The other version would be, you know, I don't necessarily experience the pain myself, but I I see a problem out there and I see a real opportunity to solve it. I mean, in my own experience, this scratch your own itch that I've I've done that plenty of times. You know, one thing comes to mind is is WP bids, a WordPress theme that I developed a couple of years back. I wanted as a freelance web designer, I wanted to create proposals, nice looking proposals using my own design through through WordPress. And I didn't wanna use Word or Google Docs, and I didn't wanna use a SaaS.
Brian Casel:I wanted to just have my own WordPress site and create a proposal for my clients. So I developed a WordPress theme to do that, which I used myself for many years, and then I packaged it up and sold it as as a product. The other but then the other piece, like, seeing a problem and trying to solve it for someone else, of course, would be Restaurant Engine. I mean, I was involved in web development. I saw the process of get of of a small business getting a a WordPress site up and running.
Brian Casel:It it was just so many steps and too complicated. I saw a way to to really streamline it. Of course, it wasn't completely, you know, groundbreaking or or original really, but it but it was just a a faster easier way to do the same thing that that has already been done before. And so, essentially, the idea started internally. And well, I mean I mean, Jordan, like, with with your businesses, Cardhook and your previous ones, like, would you say it came out of a hunch or from your own experience?
Jordan Gal:A combination. So while running the ecommerce business, we did use an abandoned cart application, and it and it was terrible. So that that's that was the beginning of the idea. I wouldn't have even known that abandoned cart applications exist if I didn't run my own ecommerce business. So in that way, it was my own niche.
Jordan Gal:The ability to you know, the other piece, the seeing a problem and the opportunity to solve it, that that I look to the market for. I I looked at, you know, competition, which is a little bit more of the research phase, which is next. But that's one of the first things I like to do. I think it's a really amateur mindset of someone's already doing it, therefore, I shouldn't do it. That is like, it's just completely 180 degrees wrong.
Brian Casel:Yeah. And I think so we'll jump into that in just a moment. But Yeah. I think the so this first idea, and I call this like 10% valid. Right?
Brian Casel:Is the question that you're trying to answer here is, is this the right idea for me to explore right now?
Jordan Gal:Right. And is is there a market for it? And am I the right person to do it? Can I do it? Do I have a clue on what I'm doing?
Brian Casel:Exactly. Because I think all of us have a thousand different ideas, and we see all these different opportunities, but a very few of them are actually in line with where we're at personally, who we have contacts with. I mean, like, just today, was I was at home watching my, 11 old daughter, and I had a problem that's been bugging me forever. She just walks right up to me and starts banging on my on my keyboard of my MacBook Pro while I'm trying to type. And sometimes she'll like accidentally like hit send on whatever I'm I'm emailing or something.
Brian Casel:And so today, I took up an old diaper box, cardboard box, and I cut it out. So now I made like a little guard for my for my MacBook Pro. Right? So now, like, I could just, like, type away and she can be, like, right, like, banging up against the side of
Jordan Gal:it. Universal problem.
Brian Casel:Yeah. So I solved the I scratched my own itch with that, but but am I gonna go out and manufacture the ultimate toddler proof MacBook Pro case and and sell these to consumers? No. I'm not gonna do that.
Jordan Gal:No. Just because there's an idea doesn't necessarily mean, right, that we're the right people to do it. Yeah. So, right, 37 signals talks about, selling your byproducts, and and that sounds to me very much like what WPID PBIDS was. Right?
Jordan Gal:You knew you wanted to get this done for your particular process, and this is how you got it done. Will other people find value other people find value in doing it the same way? One thing to mention about ideas that I have fallen prey to often is seeing other people have success in solving a problem and saying, can do that too. That that's dangerous. It's really hard to avoid that feeling.
Jordan Gal:But I remember, you know, watching Mixergy interviews and being like, holy shit. This guy's doing what and making how much? And then being all excited and driven to look into that idea for myself. It's usually not not a recipe for success.
Brian Casel:Yeah. That's
Jordan Gal:that's a bit of a dangerous one to to to follow.
Brian Casel:I think if if the idea, like you said, like, originates with, oh, that guy's successful, so I'm gonna copy exactly what they do, which we see all the time. Right. You know? Be careful. You know, I mean, there are those businesses and they do find moderate success, but they're they'll never have like the longevity or or the the integrity that that the original business has.
Brian Casel:But and and that's not to say well, like, as we get into the into the next thing here, like, doing the research and finding potential competitors, there's a difference between, alright. I I'm excited about this idea. I see a need for it. I feel like I'm the right person to solve it. Now I'm gonna research it and identify a few competitors.
Brian Casel:And and, yes, there are a few competitors, and that's, I think, a good thing. There's a difference between that and, like, I have no idea at all. Let me just go see what someone else is doing and rip off everything that they're doing. Yep.
Jordan Gal:Very, very good distinction. Yeah. Let's let's jump into that that second phase, which is research. Okay. Once you have an idea, how do you go about looking into it?
Jordan Gal:Right? And this is this is an art. Being able to dig and find things and go on AngelList and TechCrunch and go back on Hacker News and look at Reddit and search for competitor names, and there's a real art to doing research on potential competitors and potential customers.
Brian Casel:Yes. Yeah. I mean, you know, as you start to do this research, you know, you're you're past So you have the idea and and you think it's it has some kind of promise. So you start to Google around and and find, you know, potential competitors. Maybe they seem like competitors, but they're not really, or maybe they are direct competitors.
Brian Casel:You know? So I I think that's I mean, just talking about competitors for a minute, I think that's a good thing. You know? I think in the past, there there's been this thing that, like, that you hear a lot. Like, if you have an idea and then someone mentioned then then and you mentioned it to someone, then they're like, oh, oh, yeah.
Brian Casel:Like, I know three other companies who do that. There's this and this and this. Like, have you heard of them? You know? And it's like, okay.
Brian Casel:Yeah. I have heard of them. And that's great. I I hope that there are more people doing it because it's, number one, it shows that there's some kind of market for this. Number two, it it elevates the the like, the education of the problem and solution as a as a whole.
Brian Casel:It it more more players in the space brings more customers and more education into it.
Jordan Gal:Yeah. You don't have to educate your potential customers first on your solution. Yeah. The the whole concept of having being first to an idea, that was that was ten, fifteen years ago, man. That is that's gone.
Brian Casel:Yeah. I would really be a little more worried if it's a completely new novel, like, invention.
Jordan Gal:Right. That's un unlikely to succeed. Maybe you hit a home run, but it's it's unlikely. But what was it? Google was the eighteenth or twentieth search engine to launch?
Brian Casel:Was it? Right. I didn't know that.
Jordan Gal:Yeah. Facebook was like the twentieth social network to launch.
Brian Casel:Yeah. I remember I do remember, the first one that I came across was through AOL, and that was Webcrawler. Yeah. Going going back. Yes.
Jordan Gal:So nowadays, seeing a competitor doing well should be taken as a good sign.
Brian Casel:Yep.
Jordan Gal:Right? You wanna see a mix. You wanna see some some crummy competitors. You wanna see some really solid competitors. Ideally, a handful, not supersaturated, but not not sparse either.
Jordan Gal:I think that's Yeah.
Brian Casel:That's ideal. And even if there's a big big funded competitor Awesome. That that well, that too, I I wouldn't necessarily be, you know, afraid of because you can you can bring in, the the the small bootstrapped scrappy solution, which which can be attractive too. Anyway, the I mean, the other thing that you wanna do here in in this research phase as we get to, like, 20% validated is you wanna start to just get a surface level idea of, like, some early marketing and customer acquisition ideas. This is something that I kinda failed to do in the past.
Brian Casel:You know? Like, when I was launching Restaurant Engine early on, I I really did not think too much at all about how I might go about acquiring customers. That was just one of those things like, oh, once once I get customers one and two, I'll figure that out. I'll I'll learn and try a bunch of different things. You don't have to necessarily finalize your customer acquisition strategy at this early stage.
Brian Casel:But thinking about whether or not this is an idea you wanna pursue, you wanna start looking into or at least brainstorming different ways. Like, do you have access to to this group of customers? How might you go about getting your offer in front of them and and that sort of thing?
Jordan Gal:Yeah. You have to think about that. And that's very related to to the big question for for this research phase is, is this the right market for you to enter? Right? That that has a lot to do with if you have the ability to reach your potential customers.
Jordan Gal:So I was just talking to someone, a few days ago. They're in this validation phase. They're looking at an application and a competitor that sells things to schools. And the competitor's doing well, but it it doesn't matter if if do you think you have access to sell into school systems? And if you don't, if that's too hairy of a problem to tackle, then it doesn't matter these other these other pieces.
Jordan Gal:That that should deter you or at least make you hesitate on the idea. And I think this far into restaurant engine, right, the ability to reach restaurant owners and show them your offering, it's it's a huge hurdle.
Brian Casel:Yeah. I mean, it's a huge challenge for sure. You know? We we're continuously working to overcome that challenge. You know, I mean, we've been moderately successful in some areas and less successful in other areas, but it's, you know, it's it's just one of those things that, you know, I I I wouldn't regret doing anything, but it's I I do wish I had spent a little bit more time.
Brian Casel:I mean, it was just lack of experience really. But, you know, I I wish I spent more time thinking about the customer acquisition strategy a little bit more in in the very, very early days.
Jordan Gal:Yep. Yep. I hear
Brian Casel:you. So, yeah, moving into that next phase. So this this is when I I call this, like, first conversations, and this is getting towards what we call 30% valid. Right?
Jordan Gal:Right. You are not convinced at this point. You are now taking the next step to figure out who are these people. Do they have any interest in this idea at all?
Brian Casel:Yeah. So, you know, if if you already have a a list or an audience of some sort, maybe if you're coming from a previous product or or you've been building an audience doing content and and things, you know, maybe a good start. And and if that audience aligns with this idea that you're doing, which I think is a smart thing, you know, you can start by surveying your audience. That's that is what I did when I you know, before I started working on the productized course, that basically started with a with a survey and then and then more surveys and conversations. But, you know, most people don't necessarily have an audience or a list that they can immediately survey and and and get those out to.
Jordan Gal:One of the huge advantages of of having an audience.
Brian Casel:Yeah. Actually, you know, before I get into this, if you do do the survey, the survey alone is not it. You you do the survey, you get the results, you get the answers to some very targeted questions, and then based on that, you personally outreach to the people who filled out the survey and then get on the phone with them or Skype with them. So no matter what your your goal here is to get into conversations, you know, ten, twenty plus conversations. Yeah.
Jordan Gal:And this is this is hustle, man. You have to be willing to get on the phone with strangers and feel weird about it and ask questions and have them be like, who the hell are you again? Totally. If you skip this, this is this is the single biggest step when you first start talking to strangers on the phone, that will really give you an indication if you're onto something or not. Skipping skipping this is is not advisable.
Jordan Gal:Yeah. If you do nothing else, do this do this step.
Brian Casel:Do do this. So, you know, if you don't have an email list or or or an audience to to send a survey to, how do you go about getting these conversations started? Right? So you can do a cold email campaign. You can just, like, personally email, what, like, plus targeted, like, handpicked target customers who you think would would potentially be a good fit.
Brian Casel:This can also factor into, like, that 30 by 500 customer research Sales Safari stuff. You know, you see people out there asking questions on forums. Click through to their profiles and dig them up a little bit, and maybe you can, you know, shoot them an email that like like, hey. I saw this this question that you posted on this forum. I'd love to talk to you about this.
Jordan Gal:Yeah. This is easier than you expect if you are willing to ignore rejection. Because you will get rejected nine out of 10 times, but that's those are pretty good odds for getting people on the phone.
Brian Casel:Yeah. And we're not saying, you know, email five people and expect to have four conversations. We're saying email 50 people and expect to have five, ten conversations out of that.
Jordan Gal:Yep. And then when you do finally get a chance to talk to someone, ask them for recommendation who we should talk to next. And it's really the the hustle ground and pound, step here that that makes the the biggest difference. And for me, what what I have had success with is is is cold email because you you can just do it at a bigger scale. And you can you can ignore rejection very easily because people simply don't respond.
Brian Casel:Yeah. I mean, like, today, if I'm starting something new today, I I would go the cold email route, but that's actually not how I did it back then. And so with Restaurant Engine, what I actually did was I I created a very rough landing page. It wasn't even called Restaurant Engine back then. Like, a one page.
Brian Casel:I used, like, the default WordPress theme just, like, pretty much just explained the the key benefits of Restaurant Engine, a couple of kind of, like, fake screenshots in there. Sign up for the early to get early access for the beta, enter your email address. And then those people who signed up, I reached out to them, and I had about 20 conversations with with those people. So that's another way to do it is run a kind of like a low cost, you know, like AdWords campaign or or some kind of PPC campaign at a very rough landing page and and build a an early access list. You know, just a 100 people is really all you need and then, you know, outreach to them personally and get on the phone.
Jordan Gal:Yeah. That that sounds to me like a better approach. But if you are if you're gonna take three weeks to set up a landing page and two weeks to set up a Facebook PPC campaign, you you're probably better off not not going that route. If you can get that done in a weekend, hallelujah. Do do do it that way.
Jordan Gal:Yeah. Totally. Yeah. The cold cold email approach, I think it's I think it's worth just me going into for sixty sixty seconds. That I have taken is to find a way to collect email addresses whether it's you or a VA.
Jordan Gal:I've talked about this before. I did it with appraisers. I went to the appraisal institute site. I hired a VA to go and grab the first name and email address of as many, you know, from whatever states I wanted and it's just out in the open. You can get these appraisers, emails.
Jordan Gal:And then I would load it up into email software like ToutApp or Quickmail these days or SendBloom, whatever it is, and then I would blast out a bunch of emails. Very few people would get back to me, but some people would get back to me. And the email basically said, hey, I'm doing research on this industry. This is who I am. I'm curious about what you deal with on a day to day basis or something to that effect.
Jordan Gal:Yep. And then very few people
Brian Casel:Sorry. Go
Jordan Gal:on. I was just gonna finish and say, very few people respond back. But the people who do respond back, you try to get on the phone. And then what you do learn from those few three, four, five phone conversations, you then synthesize into a few bullet points and then you send out another email to the very large group. So that's what I did.
Brian Casel:Like that.
Jordan Gal:People who just get an email out of nowhere don't respond, but then when you send an email to that same person a week later and say, hey, I've spoken to a bunch of people in your industry, the most common issues they're dealing with are bullet point one and bullet point two, bullet point three. Are you experiencing these? Then you're allowing people to just respond back with a yes, that's my issue also instead of having an open ended and then you'll get a lot more responses and that's how you can kinda leverage three or four conversations into getting 20 conversations.
Brian Casel:Yeah. Very cool. One kind of, like, quick tip that I I I always really like to do when I'm doing these customer development conversations is record them. So I use use Skype Skype call recorder, and then load them up on your iPhone or on your smartphone and listen back. I can't tell you how how helpful this really is because when you're there live in the conversation, yeah, you're tuning in and you're asking follow-up questions, and that's all good.
Brian Casel:But I can't tell you how many times I listen back to my own conversation with someone, and I pick up on little nuances in the conversation. It's like, oh, they really care about that point right there. I I didn't realize that in the moment, but that is it. That's their make or break thing. You you have all these little insights that you can pick up when you go back and kind of, re digest the the conversation.
Brian Casel:So I do recommend recording it. You know, let let the person know, like, hey. I'm just gonna record this for my own notes. You know? The question that you're trying to answer in this stage as you're doing these first conversations is, do others resonate with this problem solution?
Brian Casel:And if they do, then who are they? Why does this resonate so much?
Jordan Gal:What are the characteristics, Brett, that they have that other people might might share?
Brian Casel:Yeah. And, you know, it's hard to quantify that. It's it's really more of like a gut feel, but it's you know, are are more are more of the people talking to you as as you start to talk about the solutions, like, oh, yes. I get it. That I like, I totally get it.
Brian Casel:Maybe they have some questions about it, but they get it. Or or they're just like, Like, I don't I don't know. Like, I'm not I'm not getting it.
Jordan Gal:Right. You can start to see some patterns. You can say, oh, the person who works on their own doing this was really interested. The person who has five other employees doing it, they weren't interested at all. And Yep.
Jordan Gal:And so you could start to get the beginnings of of these different hypotheses. Not that they're in concrete with these low numbers, but at least you I don't know. You can start you can start to sound like you're talking about next time next time you talk to people.
Brian Casel:Yeah. You start to build that customer avatar and and all that. So okay. So so we're moving on. We get that question answered.
Brian Casel:Like, are, to our gut instinct. They are resonating with this. We're starting to hear the same kind of trends over and over in these conversations. So now now we're feeling a little bit more confident as we go into, building a prototype. And now the prototype doesn't necessarily have to be developed or coded.
Brian Casel:It it it can be delivered manually. It that kinda depends on the nature of the product. I mean, not every product can technically be delivered manually. Like, I think in CartHook, you wouldn't be able to manually recover people's abandoned carts. But there are lots of things that you do manually for sure.
Brian Casel:Like so, you know, I I mean, I think in terms of, like, picking an idea, like, personally, I would I that that's one of the criteria that I would look for in an idea. Like, can it be delivered manually at least for a short time to get to that prototype faster?
Jordan Gal:Yeah. And if not if not manually, then at least you can focus on one thing. Right? If you if you try to build software for contractors that manages their entire business, maybe that's a good idea, maybe not, but it would definitely be a lot easier to start with one thing. Like, I'm gonna really nail proposals for contractors, right, as one part of their process and their flow, and that's where you start for version one.
Jordan Gal:Yeah. And Anything to simplify and get them value sooner instead of developing this monstrous thing.
Brian Casel:Yeah. And, like, going from the previous step into this one, those conversations that you had with the with those folks, like, maybe your original idea had had, you you have ideas for features x, y, and z to to all come together into this product. Right? But in your conversations, you kind of uncover and you learn that, like, really, it's it's why. It's it's feature why that that they actually care so much about, and that's like the make or break thing.
Brian Casel:And, like, x and z are kind of nice to have, you know, not deal breakers. So you can go with that knowledge, that intelligence into this prototype stage and say, alright. The the minimum viable product that I'm gonna build is just going to do y, just gonna do proposals, you know, whatever it is. And and what that does is it it gives you enough to to put it into the hands of your first test users, you know, because it it does the one thing that they actually needed it to do. And so at this stage, I I would probably go about doing some kind of free beta.
Brian Casel:Like, maybe the same people that I spoke to on those early conversations, I would invite them to start using the the prototype. You know, I'll I'll install it for you. I'll walk you through it, or or I'll watch you do it or something like that. Very, very closely monitoring this and getting their feedback and actually seeing if it works. You know?
Brian Casel:Because the the question that we're trying to answer here in this prototype stage is, do customers actually get value from this prototype? Wait. Like, we've talked about it. It resonates with them. They say they they want it.
Brian Casel:Now let's actually see them use it and see them get the value that they're invested for.
Jordan Gal:Yeah. I the only thing I would differ on is I would try not to make it free as as the beta. It might be so rough that you you really can't charge for it, but I would do I do whatever possible to to have it paid. And and I think the other option that's in this prototype stage, if you are not a developer and do not have the resources to go out and spend $510 on building a prototype is you could just deliver almost like a dummy app. Right?
Jordan Gal:So this this is what I've done. This is also what what Dane teaches in the foundation where those first conversations that you have give you an indication of what to build. But then before building, you basically can just build something using like Envision or using any type of like, balsamic, something to that effect that visually represents the problem being solved. And then basically just using that as your prototype and saying, is this what you mean? Is this doing what you expect it to do?
Jordan Gal:And basically just having no engineering and no code in back of it. Just if you click on this button, this other screenshot appears. If you click on this button, this other screenshot appears, which is like the the half prototype. Not a functioning prototype, but some people might need it as an in between if they don't if they don't have the resources or knowledge to to build it themselves.
Brian Casel:Yeah. Mean, like, at this stage in terms of, like, free versus paid, I I I would consider asking them to pay for something on day one of using the prototype. To me, that's that's kind of like pre selling in a little bit. I mean, you're very close, but it's it's it's in a way. Like, what I'm thinking here is like like, the very next step that we have here is get money from using customers who are using it.
Brian Casel:But the this is kind of like a short period of time where it's like, let's just because there we know that they're gonna be bugs. We know that they're gonna be issues with, like, how we solve this problem. Let's get in into the hands of, like, ten, twenty free beta users who are highly engaged and agreed to to, like, help me develop this product. And for a couple of weeks, kind of watch them use it. And then as we get into that next that that that next phase here, the question is, like, is anyone willing to pay for this?
Brian Casel:You go to those free users who are clearly getting the value from and say, okay. You you've received this value from it. Are are you ready to become a paying customer? And what will likely happen is not all of them will. I mean, maybe they were just kicking the tires or whatever, but some of them probably will assuming that they're getting that that value.
Jordan Gal:Yeah. So I think we're we're not as far apart on it as as I originally thought because the this prototype before asking for payment might or might not actually work. It it might just be it might just be screenshots if you have the ability to build something very simple or to deliver it manual manually, whatever it is you want the customers to get value from it. Even if it's just screenshots that they click and the next screenshot comes up, and they say, oh my god, if I could actually do this, this would solve my problem. So that's really the right question to focus on.
Jordan Gal:Yeah. This resonating? Right?
Brian Casel:Yeah. And I think I think this is a step that can actually be that, that wall that that shuts everything down. Because even if you have those conversations with customers and they tell you, yeah, that's a burning problem. I'm resonating with that, and the solution sounds great. You know, a lot of times customers don't know what they actually want or they actually need.
Brian Casel:And then when it comes down to it and they start using it, it's like, oh, actually, it's not quite
Jordan Gal:Right. Or that means I have to stop using this other thing. I don't wanna do that.
Brian Casel:Yeah. All of a sudden, new objections or just the problem doesn't seem as important as it was before. So, like, these are the kinds of things that can crop up in this prototype phase, and that might cause you to reassess and go back to square one, you know, or or it is providing the value as expected, maybe with a few tweaks, and you can move on to the next phase, which is paying customers, getting your very first, like, one and two, three paying customers.
Jordan Gal:Yeah. The the business before Cardhook, the idea before Cardhook, I shut down at at the prototype stage. And thank god, it it's a lot better to shut it down at that stage than to get any more into it. So I that that whole appraiser thing I talked about, I I went through this whole thing. I had conversations and I had meetings and I built the screenshot prototype and showed it to people.
Jordan Gal:And then these new objections came up and they said, that's amazing, but I also needed to do this. And but how is it gonna work along with this other thing? And it just kinda got to the point where I wasn't anywhere close to delivering the value, and and I shut it down at at this stage. And it's better off.
Brian Casel:Yeah. And I remember with with Restaurant Engine, I did do like a free beta, the people who had signed up for that early access list. If I remember correctly, I think I think there was something like a hundred hundred, a 120 people on the list, and about sixty, sixty five of them signed up and started, like, creating websites with Restaurant Engine for free. And I ran that for about two or three months, and then and then at the end of that free beta period, I announced to all of them, you can lock in a 20% discount to become a paying customer, and six of those people became our first six paying customers. So, I mean, that that does go to show that a large portion of those people who are using it for free just won't convert even if they're using it.
Jordan Gal:They weren't they weren't they weren't getting enough value out of it. Right? That's that's it. Cool. So now now we're getting to the fun stuff.
Jordan Gal:Yep. Money, paying customers, the real sign of somebody else getting value from your product. Right? The the the real validation that you're looking for, that up until now, have tried to maximize your, chances of getting to this point. Right?
Jordan Gal:All those other steps before this lead up to, okay, somebody's willing to pay money because they think it's worth
Brian Casel:Yeah. Exactly. And, you know, I'm calling this, like, 50% valid, which even though you have a a couple of paying customers that it's it's easy to think that, okay, that's that's validated. We've got paying customers. You know, one or two, three paying customers, you know, I I think it's it's a lot easier to get one or two people to to pay for something than to get a sustainable value where lots and lots of of customers will eventually come on.
Brian Casel:There's a difference there, and and that's how we get into these next steps.
Jordan Gal:Yeah. I think that's I think that's smart. You know? At first, I I hear that. I'm like, but if they're paying, then it's validated.
Jordan Gal:And and the truth is, you know, that that's not right. If if I look back at Kartok, I don't even I would I didn't consider Kartok validated until a few months ago because only once you get these these other pieces in place can you really say, okay, this is a business and now I should I should do the things that a business deserves. All this automation, all these other things to go beyond it. So I I think that's smart. The pain Right.
Jordan Gal:Piece of validation, but not fully valid.
Brian Casel:Yeah. I mean, it's a huge milestone to get over for sure. Yeah. There's no doubt about it. But Yeah.
Brian Casel:Yeah. I mean, is this a it's one thing to be like, alright, I I landed one person who's willing to pay for this. It's another thing to say, this is a viable business and it's ready to grow.
Jordan Gal:Yeah. It's definitely a great milestone, you know, go out during lunch, have a beer, you know, look up into the sky, be happy with yourself for a few minutes before you start coming down hard on yourself again. Yeah. Then then it's time to get to work.
Brian Casel:Yeah. And so now we get into this next phase, which which I called, like, sustained value, 60% valid. Right? So now the question is, are those first customers willing to stick around? Like, if if it's a SaaS subscription model, then will they actually continue to month two, month three without canceling?
Brian Casel:Or is, you know, is is churn? Is cancellation gonna be an issue? Like, is every paying customer gonna cancel before month two? I mean, that's a real question because there could be very serious objections or maybe the value works for a couple days and then for whatever reason, the nature of the product, it it kinda tapers off.
Jordan Gal:Yeah. This is a the sustained value question reminds me of of that talk from Jason Cohen about the perfect Bootstrap business and how the the if the nature of the product and the problem is such that it delivers value constantly over time, you're in an infinitely better situation. I think I can think of one recurring service I use right now. It's very expensive. I pay for it for one month.
Jordan Gal:I extract all the value I need out of it, and I shut it down. Yeah. It's not because I'm a bad guy. It's because I'm human, and I'm rational. So, yeah, this is a real a real
Brian Casel:concern think of, like, event based stuff. Like, if you're selling something to, you know, couples who are having a wedding Right. The the wedding comes and goes, you know, and that's it. Right.
Jordan Gal:And a website for your restaurant, that you need that at all times on an ongoing basis.
Brian Casel:Yeah. And that's the other thing about sustained value is it's it's one thing if it's a see, like, it it can be a tool, and it can give you sustained value, but only if the customer uses it, like, actively goes into it and extracts the value from it every single month. Or it can be a tool that maybe it has a little bit of setup in the beginning, but then it just it's like set it and forget it, and it continues to to bring in value. And, you know, there there whether it's a productized service or just like an automated, tool or or product or something that just the customer doesn't have to be active. And things can come up with the customer and they and they can get distracted, but the thing still makes them more money or saves them time or whatever it does.
Jordan Gal:Yep. Yep. And that yeah. That that is best represented by people not leaving. Yep.
Jordan Gal:By people consciously you know, some people forget and this and that, and I have services that I should cancel. But you're paying customers, sticking around month after month, that's that's what you're looking for.
Brian Casel:Yeah. And, I mean, in terms of, like, actionable things that you can do because this is this is a process. Like, you're gonna need to work through getting those first customers to stay because there will be some who who who inevitably cancel. So I think it's important that you as the founder are manning the support desk in the in the early days, doing the live chat, doing the email. You're the one who's who's on the front lines hearing every one of those issues that come up or hearing those, objections that come up.
Brian Casel:You know, that that kind of helps you know, alright, now that we've built this core minimum product, what are the next few holes in this bucket that we need to fix?
Jordan Gal:Yep. And if you do if you do have that validation, if people are sticking around, maybe it's not perfect, but there are people who are getting value on a consistent basis that don't leave you and are happy to pay you, then you're a good way toward a a a validated business. The next step is, can you acquire customers on a scale larger than just, hey. I'm the founder, and you saw me in an interview, and you reached out to me now and now you you give the free trial a try. It it has to be more repeatable.
Brian Casel:Yeah. Totally. This gets into the next phase here, customer acquisition. We're getting up to, like, 80% validated here as as as a viable business. Here, we're starting to test repeatable customer acquisition channels.
Brian Casel:Like you said, it's one thing to just kinda, like, hack and and claw your way up to, you know, a couple of a handful of paying customers, and you can do that forever, but you'll you'll run out of days of your life if you do it that way. Here, you're looking for that those scalable repeatable processes, whether it's running paid acquisition or, you know, content marketing or ongoing email outreach perhaps, you know, just different things.
Jordan Gal:Yeah. Something that gives you a sign of hope that if you did it this month and it worked to a certain extent, if you did it next month, it would work to a certain extent again. And then you can try to improve it and you can keep doing it. I think the scrappiness is necessary, and it should be the focus in the beginning. You you have to be able to claw your way to ten, twenty, 30 clients.
Jordan Gal:Yep. If you can't do that, then it's it's unlikely that other things are gonna work out and the more scalable acquisition is gonna work out. So I think it's great to focus on that, the early scrappiness and directly finding people on LinkedIn and messaging them and emailing them and seeing. You know, I I I remember looking at, like, the Inc. Five hundred.
Jordan Gal:I go to the retail ecommerce section, and I find stores, I send them an email. I say, congrats on being included in the Inc. 500. You guys are awesome. You know, I'd love to talk.
Jordan Gal:Here's what I'm working on. I used to run ecommerce store. If you can't do that stuff at conferences and all that to get your first paying customers, you're in trouble.
Brian Casel:Yeah. And and like as a bootstrapper, you're self funding this whole thing. So you do need paying customers in the beginning, just to give you a little bit of cash flow, to give you a little bit of runway to then test things like paid acquisition or and, you know, doing other other methods. Like, if you're just gonna skip the the, you know, the manual dirty work of getting those first customers and try to jump straight into, you know, testing these scalable customer acquisition strategies, then it's you can you can run out of money very fast before you get enough data to figure out what's working and what's not.
Jordan Gal:Yeah. This it it's interesting to look at look at these different pieces and and compare them on a scale. I put them on a scale of of stages of the company. Right? And and maybe I would say up until this piece, this customer acquisition piece, the ideal is to self fund.
Jordan Gal:The ideal is to get this up and running on your own, maybe another person really lean and mean and quick. And this this customer acquisition piece is the first time that outside money might make a difference. Like, if you just if you just have an idea, like, don't don't whether it's friends or family or your own money, it doesn't really make sense to put money toward it. This customer acquisition piece is the first time where you say, we figured out all these things, people are paying, people are sticking around, they're getting real value from it. Now, let's take a little bit of money and see if we can acquire people on a more consistent basis.
Jordan Gal:And if you can, then you're starting to get into that last step, a 100% validation and and that we'll call funnel optimization. So you have a product that delivers value, and now you're gonna optimize how to get people from being strangers into that product, deliver them value, and then have them pay you for that value on an
Brian Casel:ongoing basis. Yeah. I mean, like building that so so you've tested a bunch of marketing channels, customer acquisition channels. You found one or two or three that that work. Now it's really optimizing that funnel and making it a predictable revenue stream.
Brian Casel:And then once you have that, it's it's about how how can we actually grow this. We we know the engine that will grow it. What are the steps that we needed to take? Whether whether it's it's funding or, you know, continuing to self fund, but double down and and, you know, get the optimizations in place and grow it.
Jordan Gal:Right. That that's the time to put capital and resources toward it, whether it's your own or other people's. Once you've figured out all these other things and you figured out a way, a place, a channel to to acquire customers at a reasonable or efficient or whatever you wanna call, the amount of money you need to pay for each customer, then you can feel confident in putting money toward it because it should keep coming back, in in the same way, and then you can optimize it and and make it better. So that's Yeah. Then you have a business.
Brian Casel:Yeah. And, you know, it you could be listening to this and thinking, like, well, if you get to that point, if you get that far along, like, is are you really still in the validation process? Right? And I think in in a way, you are because you you can you can bring a a business to a certain point and then kind of run up against this this friction of, like, well, how much farther can we take it? Or what are the necessary next steps to or what does this look like in in in the next phase of this business?
Brian Casel:And, like, maybe, you know, it's just not the right fit for you at this stage or given the current circumstance or whatever. Like, you know, maybe it's it's valid and viable for you as the founder for a while, and then it's not at a certain point.
Jordan Gal:Yeah. I I think it's right. I think it's right. If I look back at my ecommerce business, I was between these two stages. I was between 70 and a 100% validated.
Jordan Gal:And the truth is the reason that we sold the business is because it wasn't a great business. If it was a great business, we wouldn't have let it go. But it wasn't a 100% validated as a great business. Right? We figured out all these pieces.
Jordan Gal:We figured out how to acquire customers at scale. We put resources toward it. We grew it to $60.65 k a month in revenue. But the truth is it wasn't it wasn't optimized. It wasn't a great business.
Jordan Gal:And that's that's what brought us to, hey, you know what? Maybe we should unload this thing and sell to somebody who who has a better situation for Yeah. And I get I guess that that really means it was not a 100% validated. Even at 65 k a month, it was not validated as as a great business. And we we let it go and sold it, not because, you know, someone's throwing 8 figures at us.
Jordan Gal:It's because it wasn't a great business, and it was the right time to to to unload it and take money off the table.
Brian Casel:Yeah. And maybe it's, you know, it it's just not a great business for you at that time. But for someone else, it can be a huge opportunity or it can fit perfectly within their existing infrastructure or something. You know? Like Yep.
Brian Casel:So yeah. It Yeah.
Jordan Gal:Didn't mean
Brian Casel:It's a good question to think about.
Jordan Gal:Right. It's the the asset had value, but it was not it wasn't a great business for us.
Brian Casel:Yep. Cool. Well, that that about wraps it up. Sounds like we've validated an idea from start to finish. That that was easy.
Jordan Gal:Oh, yeah. No no no problem.
Brian Casel:By the way, all of this, you should be able to run through it in about a week.
Jordan Gal:Yeah. A week or two. Yeah. No big deal. Easy.
Jordan Gal:I think looking back at everything we talked about, the single most important thing for me is getting people on the phone. Getting strangers on the phone. Yeah. People that don't know you and talking about their business and what you're considering solving and getting feedback on whether or not this thing makes any sense to them. I think that's that's the best thing you can do of of all this stuff.
Brian Casel:Yeah. I I do agree there. I think for me, it took me a little while to get on the phone and feel comfortable with that. And like, even in the early days of restaurant engine, I got on the phone with those first early early lists early access subscribers. But even that, it was, like, begrudging.
Brian Casel:You know? Like, I I was I got I did maybe five or six conversations. And then then after that, I was like, alright. I'm just doing it because people on Make sure you tell me to do it. And I'm not you know, I didn't really put the the emphasis that I should have.
Brian Casel:But, I mean, things kinda worked out. But then even in the first year, I stuck so much to doing, like, email and live chat when I should have been getting on the phone at any chance I could. And then once I started doing that, it really worked.
Jordan Gal:It works. Yeah. I've had the same experience. At the beginning, I talked to everybody as much as I possibly could. And then I went away from that a little bit and things were not as good.
Jordan Gal:And then recently, I started reaching out and asking existing customers to get on the phone. And then all of a sudden, you just you just start to learn a lot more. You start to, yeah, get help on where you should focus, what features you should build. Yeah. Those those the those conversations over the phone.
Brian Casel:Totally. Well, should we wrap it up?
Jordan Gal:We should. I hope this has been helpful to people, you know, thinking about ideas. There's a lot of resources all over the place online. This is kind of our take on it, our personal experience, and our knowledge of these different, different systems. So just hope it was helpful.
Brian Casel:Yeah. And we, you know, we'd love to hear from you guys what's what's working for you, what what's not working for you, where are you having trouble with this kind of stuff? You can leave us a comment on on the blog post or even better, leave it as tell us what you're thinking in a review on iTunes or just ping us on Twitter. So, yeah. And with that, as always, can go to bootstrappedweb.com.
Brian Casel:That's where you'll find this blog post and all the archives for the show. And, and we will we will talk to you guys next week.
Jordan Gal:Good stuff. Talk to you soon.
Brian Casel:Alright. Later, go.
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