Find Business Ideas Customers ACTUALLY Want 💡 Josh Kaufman

0:00favorite things in the world, which is validating new business ideas. And so when when Rob invited me to speak, uh I asked him, you know what? I have never been to a microcon. What what does it feel like? What's the tone? He's like, hey, we have a whole bunch of videos. So look at all the videos from Microcon 2012, and you can kind of get a feel for for what we do here. So, I was watching these videos and I noticed a phrase come up over and over and over again in those videos, which was, "Shut up and take my money, right? H building a business,

0:34having some idea that is so good that you can be sitting in front of a customer explaining what it is you do, and they just say, "Stop. I've heard enough." And they take out their wallet, checkbook, or credit card and say, "I will take one, please, right now. It's the ideal situation, right? We want to build something that is so valuable that it's irresistible, that the people that we are trying to sell to want it right now. So, today we're going to talk about a couple of things. We're going to talk about how to test and evaluate ideas and how to do that in a way that is not just

1:11finding an idea that is likely to work or an idea that something that somebody is going to want. finding an idea that is likely to result in a long-term sustainable business which is an entirely different matter. So first a little bit of background on me. I got my start in the business world by working for a very large company Proctor and Gamble and my background was in technology. I was in systems administration but I found myself working in marketing doing product development at this very very large company. So, every once in a while you you'll see in the Wall Street Journal or another large paper this really big

1:50feature article about all of the crazy research that Proctor and Gamble researchers do to like figure out how people feel about toilet paper. I was that guy. Not about toilet paper but about dish things like dish soap. So, my first uh work experience was developing products for Mr. Clean, Swiffer, Dawn, Cascade, and Fbreze. All of these big big homeare brands and trying to understand what the science department in PNG was capable of doing and then going out into the world and and trying to figure out what people wanted in these particular needs. Right? So, my first experience was doing huge product development and market research for for Proctor and

2:35Gamble. At the same time, I was developing something called the personal MBA, which was my attempt to learn the fundamentals of business. As I said, my background is technology, not business. And so, everybody that I was working with had MBAs from Harvard and Stanford and Wharton. And that was super super intimidating. And so, I decided that I wanted to learn for myself what are the fundamentals behind every business. what ties the huge multi-billion dollar multinational corporations of the world with the micro businesses that that we're here to discuss today. So, in the process of putting together the personal MBA, I did a lot of research on all of

3:16the fundamental parts of a business as well as how do you come up with an idea and translate that into something that makes money. Now, as a result of that, I have put this framework to use for over hundreds of businesses. So, I have a lot of Are we Are we good soundwise? I kind of hear

3:36myself going up and down. Are we good? All right. So, I have a lot of experience applying this approach to businesses that are going from nothing to something. So the focus of my consulting and advising business was helping entrepreneurs who had an idea just didn't know how to get started. Okay. So what we're going to talk about today, three related but very distinct ideas. Okay. The first is market research. It's kind of what we all think about going out into the world and finding the next great business idea, right? Market research is just that you're going out, you're collecting information, you're generating ideas, you're trying to find something that you

4:17think maybe looks interesting, right? The second phase of that is market evaluation. So once you have an idea, it's very very dangerous to get all excited about the idea and jump in and spend a lot of time and a lot of money uh developing something that ultimately doesn't work. Right? So market research is not enough. You have to take the next step and be able to evaluate that that idea what it's going to look like when you translate the idea into a business that is serving customers. Right now that evaluation process, you're still collecting information. You're not quite sure whether or not it's actually going to work. So the third step is market

5:01validation. going out into the actual marketplace, presenting an idea to a real prospective customer and asking them a question. Do you like this? Will you buy it? And that is the point where you get the real solid information that you need to have, which is, is this something that's valuable enough for someone to pull out their wallet, checkbook, or credit card and buy? Does that make sense? Three very different

5:28processes. One goes right into the next. Okay. Now, one of the things just getting started and getting our heads screwed on straight uh about this is it's important to understand that market evaluation. So, seeing if this idea is going to be interesting and making sure it's going to be a viable process. This is a twoway process. Right? So, just like for those of us maybe back in our our old days when we were interviewing for a job, you're in a much stronger position to

6:03negotiate a good situation for yourself. If you walk into a job interview and you think to yourself, I am evaluating this company on whether it is the right fit for me. Right? I'm not trying to impress. I'm not trying to get validation. I'm not trying to make the other person happy. I'm going to see if there's a mutual fit. Is this good for them? Can I provide value to the company? Is this good for me? Are they going to reward me for it? Right? Market

6:30evaluation is exactly the same thing. Right? There are all sorts of things that you could you could possibly do to make a customer happy if you were so inclined, right? But those things may not be good for you. Actually, I have an experiment. Anybody have a dollar bill in their pocket? You pull it out. Okay. Dollar bill. I'm gonna make you an offer, sir. What's

6:59your name? Dave. Dave. Dave, I'm going to make you an offer. I will give you this $50 bill if you give me your $1 bill. Right. Thank you. Deal. Deal. Thanks. Now, I just made Dave a really happy guy. Right. That was a business transaction. I had something he wanted. Uh he had something I wanted. We traded and we both agreed. That was a business transaction, but it was horrible for me,

7:32right? And a lot of times we we have these business ideas and we get so excited about it that we skip this step. Market evaluation has to be a two-way process. You have to go through figuring out, is this going to be a good thing for me long term? Is this something that I

7:49actually want to get in and do? Right? Does that make sense? So, we're going to talk about how to do that because going out into the world and finding things that people may want super easy to do, right? Who here does not want a flying car? I want a flying car. Like bad. Some

8:09somebody says, "Here's a flying car. I'll be the first taker." But actually doing that thing is a very very different thing. Okay. Now, there's an issue in doing this this research and evaluation process. And the two key issues are uncertainty and change. We don't know whether or not it's going to work. Right? We can have an idea. We can think it's a good idea, but until we actually go out into the marketplace and test it, it's an open question. You don't know in advance whether it's going to work or not. To make matters even more interesting, the marketplace is changing all the time. Needs are changing, tastes are changing,

8:51expectations are changing, and they're changing while we're in the process of trying to figure out whether this idea is going to work or not. Right? So, we need to have some principles. We need to have some ways to break down this very complex process that we're trying to do, right? anticipate what people are want and imagine a business that can actually deliver this thing. We need to be thinking about both steps at the same time while the world is changing and spinning around us. Right? So, it helps to have a framework and it helps to have something that allows you to break down the problem and make sure you're not

9:28missing anything. Okay. Has anybody here read uh a tool gande the checklist manifesto? Couple hands in the back. I would recommend this book for everybody here and a very short version uh Atul Gawande is a surgeon and he's also a writer for the New Yorker and the book is about how some very simple practices primarily using checklists can give you massive improvements in results if you just sit down and work through the checklist to

9:59make sure you're not missing anything. Sounds bra and dead simple, but by using checklists, by going through and making sure you're covering all the bases from the beginning, you can get a much better result, which is a more accurate anticipation in whether or not a a product idea will work. Okay. Now, the reason that it's so important to uh account for uncertainty and change is

10:23what I call the iron law of the market. There's a famous quote by uh Mark Andre about 10 10ish 12-ish years ago. He said this markets that don't exist don't care how smart you are. Right? Anybody can put together something but it's an open question on whether somebody else out there will want to pay you money for it. Right? So all the things that we are going to do in the market research and the market evaluation phase is trying to be on the right side of the iron law of the market. We want to make really damn sure that people are interested in what we offer and are willing to pay for what

11:01we offer before we go through the time and effort and and expense of making that thing real with me so far? Good. Now one thing that I think is really interesting and this this is a uh a an approach that is taken from engineering. If you want to understand how something really works, understand

11:23it when it breaks. Understand when it explodes. Look at how this system or how this thing you're trying to do can fail and then don't do those things or do things to overcome those things. Right? So you want to figure out how to build a really tall building that won't collapse. Study buildings that have collapsed or in the process of collapsing. You can learn a lot lot that way, right? Want to learn uh want to

11:49build a car that is really reliable. Look at cars that break, right? So let's look at the failure modes. Let's look at businesses that end up building something and really really regret it. What do they say? Let's say this is five years down the road. They've invested a lot of time, a lot of money in what they do. Here's what they say. I can't find people who are interested in what I offer, right? There's no market. There's no uh group of people who who will raise their hands and say, "Yes, this is for

12:18me. Give me more information." Right? The second is people say they want what they offer. They're willing to talk to me, but no one actually buys from me. Right? No money coming into my bank account means no viable business. Okay. And the third is I can't bring in enough revenue or profit to make my effort worthwhile. Right? People are paying me money, but it's not enough. I'm putting in a lot of time, a lot of energy, a lot of work, and it's not rewarding me enough. I'm going to go off and do

12:49something else that is more rewarding. Right? Those are the three major causes of failure long-term in a business. So if we can anticipate these things during the market research in the market evaluation process, we can have a much better anticipation on whether something will work or not. Make sense? Okay. Now, one thing and this is I can't believe

13:12it's not taught more widely. If you're running a business, it would stand to reason or you want to run a business, it would stand to reason that you should probably understand what a business is and how it works at a fundamental universal level. But if you go out and you read books, you know, get some books from Amazon or you go to the library and you go to the business section and you look at this question, what is a business? What are we doing here? When we say we want to start one

13:40and run one, the answer is very fuzzy. It's not very useful. So, one of the things that's really important for us to understand is what a business actually is and what it actually does and how it works so we can put together one that works. Now, every business has five parts. And we've been

13:56talking about the first one a lot here. Value creation. Every business creates something of value for other people. Could be anything. Could be a car, could be dish soap, could be a software service, um could be a roller coaster. The value that is created is very wide and very varied. But every single business, large or small, creates

14:16something of value for other people. Right? Now, once you've created something valuable for other people, it doesn't matter unless people know that you exist. Right? Nobody knows that you exist. It doesn't matter how what how valuable the thing you've you've created is, right? People have to be aware that you have something to offer. And this is the process called marketing. Marketing is going out into the world and telling people, "Here I am. This is what I do. This is why you should be interested in this thing that I have built for you. Right? The outcome of the marketing proc process is called a prospect. Right? You have a person who

14:53has raised their hand said, "Yeah, that looks interesting. Tell me more about that." Right? Now, once you have a prospect, the third part of every business is sales. And sales is the magical part of every business where money actually changes hands, right? I have something you want. You have something I want. Let's trade and we're going to be better off for the trade having happened, right? It's the only part of this process where money flows in. So, it's super important. But it's

15:22not the same as marketing, right? Marketing is attracting a prospect. Selling is actually going through a transaction with that prospect. Right? Now, once you've taken somebody's money, you have to give them the thing that you promised. Right? What do you what do you call an operation that takes somebody's money but doesn't give them the value? It's a scam, right? And we're not

15:46running scams, we're running businesses. And so, one of the things that you need to anticipate as you're evaluating a business idea is what is it going to take for me to actually deliver this thing that I've promised to a paying customer in a way that's likely to make them happy. Right? If you don't anticipate that, you can set yourself up in a really bad situation by taking people's money and not delivering in a way that makes them happy. Right? And then finance is just the process of looking how much you're spending, looking how much is coming in in the terms of sales and answering two very

16:22very important questions. First, am I bringing in more than I'm spending? Important question, right? And number two, is it enough? Is it enough to make my time and effort worthwhile here? If it is, great. Congratulations. You're a su successful business. Doesn't matter if you're bringing in $1,000 or $und00 billion. The scale the scope and scale of the business does not matter. If you if you are bringing in more money than you're spending and it's worthwhile for you to keep going, then awesome. You are

16:52a successful business person. Right? Does that make sense? Fundamental process. It doesn't matter if it's a multi-billion dollar corporation or the smallest garage venture that has ever existed. Every single business in the world does these five things, right? So, we've all heard a lot about business plans and the importance of having one or not having one or whatever. You do need to have one, but the only thing that needs to be on your business plan are these five things. Take a take a sheet of paper, five headings. Value creation, marketing, sales, value delivery, finance. If you cannot describe what the b how the business is going to

17:33operate doing each of those five things in that order, you don't understand the business well enough to make it work. That make sense? Only takes an hour if that to do, but it's super super important. All right. Now, as you are searching for things for your business to do, I I find one phrase really, really valuable in terms of priming, going out into the world and looking for things that could be beneficial to somebody, whether it's a business or an end consumer. Those two phrases are more awesome, less awful, right? So, you can you can walk down the strip this afternoon and start looking for ways to make the place

18:14more awesome. What would be cool? flying cars more awesome, right? Or less awful trash everywhere. How what could we do to remove that? Right? You can go out into the world and find all sorts of ideas that would either make the world more awesome and less or less awful. Right? The other thing that you can look for that's a really good place to start

18:38is looking for hassles. Kind of falls into the less awful territory, right? things that just generally suck to do, are really time consuming or are really frustrating or are very errorprone or somebody would rather if they have their way just not ever think about or deal with ever again. The larger the size of the hassle, the

19:00greater the business opportunity. Right? So with this morning with Jason's presentation, WP Engine is a hassle premium business, right? Running a WordPress site beyond a certain scale sucks. I've done it. It sucks. And so instead of doing it yourself, you can pay Jason a lot of money and he will remove that hassle for you. Right? So the larger the hassle, the bigger the business opportunity and you can go out into the world and start collecting ideas. This is market research, right? Go out into the world, look for hassles. Okay. The other thing that you can do is is removing friction. Things that take too much attention or energy or

19:44effort or uh require a lot of manual processing where you know as as software entrepreneurs we're really good at making a system move more efficiently, right? Anything that you can do to remove friction or remove effort or remove time or remove attention is very valuable. If you do that in the case of a businessto business system, just removing a little bit of friction can be worth a ton of money. So for example, you go on Amazon, Amazon one click, click a button, you buy it, it's automatically delivered. You never have to think about it. That's an example of moving removing friction. And that is an opportunity that makes Amazon a ton of

20:26money every year. Right? Does that make sense? Okay. Now, when you've gone out into the world and you've been looking for hassles, you've been looking for ways to make things more awesome or less awful, you have a bunch of ideas, it's helpful to have some way of figuring out, okay, let's say I have 10

20:49ideas. Which one should I do? Right? It's helpful to have some type of framework, some way to break it down and analyze it to be able to say, "This opportunity looks interesting, but so does this one, but I'm going to do A instead of B because it's more likely to work." Okay, so the 10 ways to evaluate a market is a way of putting your ideas through the ringer and figuring out does this idea have characteristics that are likely to lead it into being a good and

21:16profitable business in the long term. Now, the first is urgency, right? How urgently do people need this? Right? Is this something that they could buy a decade from now and never think about in the meantime? Or is this, for example, something like a cancer treatment? I need it right now to survive. Right? The more urgent it is, the better the

21:37business idea. The second is size. How large is the potential market for this? As best as you can tell. Is this something that can serve millions of people or is this something that a few small practices in a small town in Iowa are going to understand and appreciate, right? How large is the potential market? The larger the better. The third is pricing potential. How much could you feasibly charge for this thing? Is this something that you're going to sell for 99 cents on the app store or is this an aircraft carrier that you're going to sell to the Department of Defense for billions of dollars? Right? The larger

22:15the pricing potential, the more attractive the business is, right? The fourth is cost of customer acquisition. How much is it going to cost you to find a person who may be interested and go through the entire process that leads to the transaction? The less it costs, the more attractive attractive the business, right? Same goes for cost of value delivery. How much is it going to cost you to deliver this thing that you've promised to a customer? The less it

22:42costs, the more attractive the business. Uniqueness. Are you the only one in the world that is doing this thing or is this a commodity product? Is this something that anybody can copy or anybody can compete directly head-on with you with no differentiation? The more unique the offer is, the more valuable the business. Speed to market. How quickly can you actually start selling somebody something? If it's going to take you a decade before you have anything to sell, like in the case of a pharmaceutical, really big deal, right? If this is something that you could sit down, code a product today or write a book or whatever and have it available for sale

23:20tomorrow morning, awesome. The faster the better upfront investment, how much you're going to need to spend. If you have to spend hundreds of millions of dollars before you have anything to sell, not so attractive. If it's next to free, very attractive. The less you have to spend, the better. Upsell potential. Are there other things in this market that these prospective customers may be also interested in buying? Right? One of the brands I did a little bit of work on at Proctor and Gamble was Gillette has something like 90% of the blades and razors market for men. Right? Nine out of every 10 razor blades are Gillette

24:00blades. not a whole lot of room to to grow or expand, right? Except when you think of all the upsells, right? So So guys who want razors, want shaving cream, uh want shampoo, want cologne, want deodorant, want all sorts of other things that are kind of in the category of taking care of yourself, right? The more potential upsells that you have, selling more things to the same person, the more attractive the business. Okay? and

24:29evergreen potential. How much work are you going to need to continue to do to make this thing available for sale? Right? Is this something that is done once and will sell to happy customers for the rest of eternity or is this something that you are going to have to put in lots and lots of work keeping it up to date, keeping it relevant. The more evergreen it is, the more attractive it is. The less evergreen it is, like for example, technology is not very evergreen in a lot of senses, right? The less evergreen it is, the

25:03less attractive. Okay, any questions so far? That's been a lot of information. So, let's just check in. Does everybody understand how this works? What's important and what's not? Okay. Now, once you have this idea, it's also in your best interest to figure out, this is another checklist I use called the 12 standard forms of value. When you're creating something new that you intend to offer a customer, it helps to know that you don't have to create it from scratch, right? There are standard forms that value provided to a customer or to a business tend to take. And so just understand the forums and use it as a

25:51way of generating ideas of how you can serve that customer or that market better. Now the first form of value very common is a product, right? A ball that you buy at a toy store, a app that you buy on the app store, those are products, right? Tangible or intangible, there's a unit available for

26:12sale. It's a onetime transaction. Services are intangible benefits in exchange for a fee, right? So, you go get your haircut, can't buy it from a shelf. You go to somebody and they do that to you or for you and you pay them for it. That's a service. A shared resource is something that you create once and then you let lots of people use it in exchange for a fee, right? So, let's say a museum or an amusement park, right? company builds the amusement park first once and they let lots of people ride the roller

26:46coaster. That's a shared resource. Software as a service is a shared resource model, right? You build the system once, you let lots of people use it in exchange for a fee. Okay? It's not a product. It's not a service. It's its own thing. It's a shared resource. Okay? A subscription is buying some value now, but also having your customers pre-commit to

27:11future value in exchange for a fee. Right? So, you sign up for a magazine, for example, you subscribe, you are paying for issues of that magazine that don't exist yet, but you've pre-committed to buying that once it comes out, right? In exchange for that lump sum fee. Subscriptions are awesome, as Jason said, because it's recurring

27:31revenue, right? You can count on that. Okay, resale is buying one thing at a wholesale price, a low price, and selling it for a higher price. The lower you buy it for, the higher you you sell it for. That is your profit margin. The more money you make, right? Retail businesses follow this model. Lease is buying something and then letting people use it in exchange for a fee, right? Car rentals, hotel rooms, all sorts of thing. Netflix is a quasi lease subscription model, right? All sorts of different ways to do this. As long as you have an asset that survives

28:06loaning to somebody else, it's a lease. Agency is selling something that you don't already own. So, for example, Airbnb, they're helping people lease their apartments, their inventory they don't own or control, right? They're just brokering a transaction on behalf of a buyer and seller in ex in exchange for a fee, right? Marketplace models are

28:28agency models. Audience aggregation is collecting a huge group of people who all have similar interests and then selling access to those people in exchange for a fee. This is usually called advertising. One of the hardest business models to get right because usually the people you're collecting don't want to be advertised to, right? But that collecting of an audience and selling that limited attention to companies that want that marketing is very valuable. So audience aggregation and there are a couple more and these

29:03are financial insurance. You buy an Apple laptop, they say, "Do you want the three-year warranty?" Right? It's insurance transferring the risk of some bad thing happening to you, the seller, versus the buyer in exchange for a fee. Insurance takes all sorts of different forms. Uh a standard insurance contract, warranties, whatever. If you think about ways that you can transfer risk from your purchasers to you, you

29:30can sell insurance. Options, giving people the ability to do something but not necessarily mandating that they do that. Movie tickets, for example, or purchasing a product that doesn't necessarily have to be used, but they have the option of using it. So support support retainers often uh take this model right here is I am available for your support if you need it. You have the option of contacting me at this information. You're going to give me a couple thousand a month so I can be

29:59available for you. That's an option. Loans we're all pretty familiar with, right? Mortgages are are the the standard example. Lots of different financing. Pay for this over 12 months instead of paying for it all at once. That's a form of a loan. You can charge for that, right? And capital, which we're all familiar with in the form of venture capital. Okay? So, when you're thinking about things that you can offer to somebody else, you can package them

30:31in one or more of these 12 forms, right? You don't have to invent the wheel from nothing. Use one of the forms that historically has worked for thousands of years. It's one of these. So, you said it's a checklist. Here's a market of people who want something specific, have a need, or have a hassle or something that they would want to be more awesome or less

30:51awful. Choose one or more of these forms of value to say, "Here's a thing that I can do for you that gets you more of what you want." Right? Now, you have an offer. Okay? Now, when you present somebody an offer, it's not guaranteed that they're going to take it. Why? They have alternatives. There are

31:18trade-offs to be made. Right? So, I want a flying car, but I don't want a flying car that costs $12 billion, right? People are making decisions in the face of all sorts of competing alternatives. And so, it's important to understand what people tend to economically value. What are things that people want enough to spend perfectly good money for? And there are nine things. The first is

31:45efficacy. How well does it work? Does it work better than other options? Right? If it works better, they're probably going to be willing to pay more for it. Speed. How quickly does it work? Fast, slow, the faster the better. Reliability. Does it work all the time? Is this something that I can count on? So, for example, when you're buying a a car, do you want to have a 10% chance every time you get in the driver's seat and turn the key that it's not going to

32:15start? No. That reliability comes at a premium and people are willing to pay for that. Ease of use. How much work is it for me to understand? What do I need to do to get this end result? The less I have to do, the better. Flexibility. How many things can can it do? Is this something that is only good for this one very narrow use case or is this something that can be applied to lots of different things over a long

32:44period of time? The more flexible it is, the more valuable it is. Okay. Status. How does this make other people perceive me or the customer? So, for example, you can either buy a Rolex for several hundred or several thousand dollars, depending on which one you buy, or you can walk into Walmart and buy a a

33:10quartz watch for $2.98. They both tell the time equally accurately, right? But that's not the reason people buy the Rolex. People buy the Rolex because of status of what it tells other people, the people around them about who they are and their their situation in life, right? The higher the status this makes the purchaser uh look or appear,

33:34the more valuable it is. Aesthetic appeal. How beautiful is this thing? This something that I want to look at, something that I want to play with. The higher the aesthetic appeal, the higher the value. Look at Apple laptops, right? Sold almost entirely on aesthetic appeal. Makes lots of trade-offs in terms of of specs and specifications, but that's not what customers are buying. They're buying an aesthetic

34:02appeal and they're buying status. Okay. Emotion. How does this make me feel? Am I happy every time I use this thing or look at this thing? Or is this something that's a pain in the butt to deal with every single time? easier it is to use, the more emotion, the more happy feelings around this thing that you are offering, the better, right? That's why software as a service, so many so much work has been done in adding personal touches. It's like this is not just a software system. There are real people who care about your result behind this thing, right? Adding personality to a product is an appeal to

34:37emotion and that's valuable and cost. What do I have to give up to get this? The less the better, preferably. But as long as I'm getting more value versus what I'm giving up, it's worth it for me. Does that make sense? Nine economic values. So when you come up with an idea of something that you can offer to somebody, this determines your tactics on how you talk about that, right? What are you going to appeal to? What are you going to say? This is the reason you should buy this thing. It's really valuable because it's going to get you fill in the blank. The fill-in- thelank

35:21are these. Does that make sense? So, these are designed to be universal. It doesn't matter who you are, what you're offering, what type of business you're running. You can always use these as a checklist to figure out what to offer, how to position it attractively, and how to make sure that people are going to perceive it as something worth

35:43buying. Does that make sense? Now, the outcome of all of this checklist stuff is either prototype. here's this thing that I've created that I want that is now capable of being shown to somebody else to see what they think. But sometimes prototypes or detailed prototypes are expensive or they're hard. And so the other thing that you

36:10can do is what's called a cell sheet. And this is something that we used to proctor and gamble a lot because actually delivering a new prototype bottle of dish soap was really expensive. And so what we would do is pull out a sheet of paper and we would describe and Joanna's going to going to talk about copywriting here here in a little bit as a copywriting exercise, right? Here's this thing that we want to create. Here's what it is. Here's what

36:37it does. Here's how it benefits you. Here's why it's appealing. Here's how it's going to make your life more awesome or less awful or remove a hassle. And here's the price. So you have this nice sheet of paper that you can give to somebody and say, "What do you think?" Right now, we're in the validation phase. All of the work that we've been doing up to this point is just trying to isolate enough of an

37:01idea to actually show to somebody. Getting a prototype or getting a cell sheet allows you to take that step into validation, right? Putting it in front of somebody and saying, "Is this good for you?" And there are a couple ways to validate a market. The first is you need to be talking to your ideal prospects. Not any any prospect, not your family, not your friends, not your colleagues, real people who are in the position to buy this thing if and when it is

37:33available. Okay. Talk to the people who would be absolutely ideal. I I I love Jason the example that you gave about paying consulting, paying consultants and going and talking to them because those were your ideal customers, right? Those were the people who would sign up for the $300 a month plan, right? You want to talk to the people this is perfect for or you think it's perfect for. The more ideal the customer, the better the feedback you're going to get. Okay? Now, the ideal feedback that you can get is putting this prototype or putting this cell sheet in front of a person and asking them a very simple question. Will

38:15you buy it? Until you ask that question, you're never going to know whether or not you have something that is worth paying for. If you ask that question, you're going to get loads of super valuable feedback. Uh, where's Nathan Barry? Can you raise your hand? I want to pick on Nathan for a second because he did this amazingly well. Uh I actually I I got a an email saying, "Hey, hey, can we talk? I have something that may be interesting to you." So, we got on the phone and he explained his new business, which is called ConvertKit, and how it can help with email marketing, doing this thing

38:53that I am in the process of doing, and it can remove a massive hassle from my life. Awesome. And I told Nathan, "This would be something that I would be perfectly willing to buy." Right? Good feedback, right? I'm in the market. I would be an ideal customer. This is something I'm willing to buy. And then Nathan asks, "Can I have your

39:13money?" I said, "Hey, hold it. Hold it. What about this?" All right. there's there's this feature that's holding me back from actually g like I can say that I want it. But when I get to the point of actually pulling out my wallet, minds change extremely quickly. So here's what you want to know. Are people actually willing to give up something to get this

39:40thing right? Not in theory in practice. And if they're not, and a lot of times they aren't, what's holding them back from that? Why aren't they? They say they're interested. Why aren't they willing to take that next step and actually purchase? For me, it was the lack of a feature, which I just heard from Nathan yesterday is actually in the process of being implemented. So, yay,

40:01Nathan and yay me. But until you actually ask that question, are you willing to pre-order? Are you willing to spend actual money on this thing? You're not going to know whether or not it's going to work. Okay. Now, sometimes it's not possible or feasible to do that. So at minimum, absolute minimum, you should be

40:24collecting email addresses. Here's why. If somebody is not willing to give you a good email address, they are never going to give you money. Right? It's a very low hurdle to reach. But just by collecting email addresses, people are raising their hands and giving you permission saying, "I am interested in this thing. let me know when it comes out or give me more information when it's available. So, at minimum, if you can do nothing else, collecting personal information like an email address gets you that step further. If people aren't willing to trust you with information, they're not willing to

41:01trust you with money. Make sense? Okay. And invalidation. Always the focus is on close real sales as quickly as humanly possible. That's what validates a market. That's when you know that there's something here. So the faster and this kind of getting getting into all of the lean startup stuff, right? The faster you can make something that actually sells to people, the more you know that this is a market

41:30that's going to work. Have fun. This is one of the most in in my opinion this is one of the most fascinating parts of a business, right? Because we get to do fundamentally what businesses are built to do which is go out into the world and find a problem and make a solution to that problem in a way that delivers lots of benefits to the end user and in a way that supports

41:56us. And there's this wonderful virtuous cycle where we go out and help a bunch of people and they give us money so we can go out and help a bunch more people which gives us more money. And that cycle can continue as long as you want it to. So go out in the world and find those problems. Find those hassles and figure out a way to fix it. That's

42:18the fun part. Have fun. Thanks. [Applause]