In 2011, Peter Reinhardt and his co-founder Ian Storm dropped out of school to join Y-Combinator with their idea for a classroom lecture tool. They built the product, raised a little funding from YC Demo Day, and deployed the tool in Universities in Boston. In Peter’s words, “it was a total disaster”.
In short, they built a product that nobody wanted or needed. This, according to many sophisticated data sources along with common sense knowledge, is the number one reason why most startups fail- and theirs did.
Peter was not convinced. He didn’t see how an open-source library of roughly 100 lines of code could be a business. He explains, on an episode of the 20 Minute VC, how he recognized they only had about 6 months of runway left and couldn’t afford to waste time on this “little idea”. Then, he tried to kill it.
He asked himself a crucial and brilliant question:
“how do I kill this as fast as possible?”
The answer he came up with was pretty simple: build a beautiful landing page, put it up on HackerNews, and we’ll see what happens.
“This will definitely kill it, nothing ever does well on HackerNews”
He describes how the team designed the landing page, posted it up, and he was “just wrong”. The site went straight to the top of HackerNews and got thousands of email signups. People were reaching out to the team demanding access to the beta version of this “little” open source library.
In short, this product- which started as “analytics.js” but is now known as Segment- found product-market fit rapidly. It’s not because their landing page was beautiful or because they had driven thousands of dollars worth of eyeballs to their big product launch- it’s simply because they built something that people wanted. That’s the heart and soul of product-market fit.
They say “if you’re wondering whether you’ve found product-market-fit, you haven’t” and it’s so true.
Rapid Testing & Honest Evaluation
Without knowing it, the Segment team mirrored the process that we use inside startup studios to build our ventures. It’s a framework that practices lean startup methodology alongside MVP (really basic, almost pre-MVP) style prototyping to rapid-test and iterate concepts.
Building products like this can tell you very quickly if you’re on to something or if you need to move on to something else. There are two truths we live by as entrepreneurs- one: we have dozens of ideas going at any given time and two: we think they’re all origional and great.
The truth is, 95% of ideas are bad and won’t work. The fastest way to find out is to test the idea is by trying to kill it. If it survives, you have a winner. If it doesn’t, it’s better you know early so you can try something else.
How to kill your ideas:
1. Brainstorm the viability of the idea.
Here is the only prep you’re going to do on the idea. Don’t spend more than 2 hours on it either. This is not a massive market research undertaking, it’s a quick sanity check- treat it as such.
- What’s the problem you’re solving? (Problem)
- Who are you solving the problem for? (Customer/ Market Size)
- Why do they need this problem solved? (UVP)
- How are you going to solve the problem? (Solution/ Product Features)
- How is this different than what’s out there? (Differentiation)
- How will you make money? (Business and Revenue Model)
2. Make a beautiful landing page.
Spend no longer than 24 hours on this. I love the Unicorn Platform for building beautiful landing pages because I’m not a designer nor am I an engineer. Unicorn makes it easy and super fast to throw a beautiful landing page together- you almost can’t mess it up.
*I have no affiliate connection with Unicorn, just evangelizing he product!
On this landing page, be sure you have a “sign up form” for a waitlist or beta test. Even a “learn more” button leading to a one line email input field is fine as a CTA at this stage.
Your only goal is to validate that you’re on to something. If people give you their emails, they’re interested. If they don’t, their not. It’s really that simple.
3. Define the success criteria and time box.
In startup studio land we call these the “stage gates”. Before launching the test, you want to clearly define what success looks like and what you’ll consider failure.
These metrics depend on the size of your market and who your customer is. In general, 100 signups in a week is pretty good for a consumer product. If your market is businesses (B2B product) you can expect a much lower conversion rate. Generalizing again, 10–25 enterprise customers signing up for a waitlist is good indication of demand.
Be sure to set a time cap on the experiment and define how much you’ll spend (if any) to drive traffic to the page.
As an example, your success/ failure criteria might look like:
Success = 100 signups in 7 days with a traffic spend of $100
Failure = <75 signups in 7 days with a traffic spend of $100.
Bonus challenge: create a Gumroad page and charge for early-access.
4. Launch the page and drive traffic to it.
This one is pretty self explainatory. Make the page public and get creative with driving traffic. Sure, you can use social media or Google ads but each market is unique in it’s own way.
Where do your early adopters hang out online?
Go there and join the conversation.
If you’re building something people want, they’ll click your link to see what it’s all about. Try to get others to share it as well. This is a great way to see if people are being nice and signing up or if they belive in what you’re doing with such conviction that they’re willing to stand behind it publicly.
5. Success or failure?
At the end of the time period you’ve set- analyze the results.
Did you hit your success criteria or not?
If you didn’t that’s fine- your job now is to understand why not. What can you learn from the experiment? What will you do differently next time? Of the emails you did collect, can you get any of those people to talk to you about the good/ bad/ confusing things they found with your offering? The goal is to lear, synthesize the insights, and move on.
It can be hard to kill an idea you’re passionate about but giving up on one solution doesn’t mean giving up on the idea. A few weeks back I wrote this article about picking your “passion problem” and running mini-startup experiments to work out the right solution. That’s what you’re doing here.
When it really comes down to it, you win either way. If your experiment was a success then you win, but if it wasn’t then you lost $100 and 7 days of time. Not bad considering what you could have lost if you worked on the idea for a year and spent thousands to hire developers, designers, and sales reps only to find that you’re building something no one cares about.
It’s not failing it’s learning, and you did it quickly- that’s success.
Next time you’ll do it more efficiently. And the time after that you’ll be even better. Entrepreneurship is a skill and, just like with any other profession, you have to practice to achieve greatness.