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Payment is the best validation

When you have to prove the value of your ideas by persuading other people to pay for them, it clears out an awful lot of woolly thinking.

Tim O’Reilly, founder of O’Reilly Media

You have an idea, but you want to be confident it’s a good idea before pouring yourself into it. How can you be sure about your idea without expending effort or money? The answer is elegantly simple. You can’t.

But don’t despair. You can start small and only take risks in proportion to your confidence level. Just don’t get overconfident after a single affirmative lunch with a friend.

Friends and family can muddy the waters of ideas. Some of the time, they’ll think your idea is great when it isn’t. Some of the time, they’ll think it’s a terrible idea when it’s actually great. Other times, they’ll just tell you it’s great for fear of hurting your feelings. Of course, those outcomes all assume that you were able to effectively communicate your vision.

That’s not say you shouldn’t have some of those conversations. Just don’t take the results as gospel.

There’s only one true way to validate your idea. Convince people to give you money for it. Don’t convince people to tell you they’re willing to give you money–get them to give you real money.

How do you do that? You can’t get people to give you money for paper prototypes, mock-ups, or pitch decks. You have to create something that provides enough value that they’re willing to pay you for it. But you don’t want to invest too much effort without knowing whether people will pay for it. It’s a catch-22, right? Not quite.

There’s a secret. That first version doesn’t need to be software. At least, it doesn’t need to be a working web application. The only thing that it needs to be is helpful. It can be an intensely manual process whereby you go and do some labor and give them results. Maybe you start with little more than spreadsheet. Maybe it’s just email. It doesn’t matter. Just find a way to help them just enough that they’ll pay for it.

With the first version of CD Baby, Derek Sivers did everything by hand:

For the first nine months of CD Baby, every page was hand-coded HTML and the site did nothing but email the order details to me. I had to copy-and-paste all the info from each email into four places: a mailing label, a thank-you email, a vendor-alert email, and a Filemaker database. It was as lo-fi as can be, but it was enough to get started, and it was profitable.

Too often, we get caught up focusing on the “final draft” of our business idea and expect it to come out fully formed, but there’s a whole spectrum of options that fall far short of final drafts. Even the simplest manual process can be a healthy business. You may not have to write any code at all. Maybe a combination of Zapier and AirTable can serve as the first version of your business.

The goal is to create something–anything, really–that can serve as the core for a sustainable business. Iterate on it. Do manual labor. Work with people. The more you work with them, the better you’ll know the process, and the more likely you’ll be able to build the right thing when you’re ready. You’ll also find your first customers as you go through the process.

Then, when you’re fairly confident, the next step is getting paid. Work as efficiently as possible to get your creation to a point where you can reasonably ask people to give you credit card information. That’s the only true measure of validation. Not surveys. Not asking friends and family. Not vague promises. Or “Yeah, I’d use that.” Not even promises of payment. Nothing matters except getting people to give you real money.

You know the really powerful side effect of that validation? You end up having money in the bank. You know what you can do with that? Anything. Pay yourself. Improve your product. Now you’re onto something.

When you have so many people willing to pay for it that you can’t keep up, find a way to automate and scale it so you can keep up. Let the demand for the thing grow the business.

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