How to Validate Your Idea

A how to instruction guide

Section 1: Be the Solution

This guide assumes that you already have a business idea in mind. If you need guidance on brainstorming an idea, this guide may not be the best fit for you. This guide focuses on testing your idea and should be considered the second part of the process of launching your new business idea; the first being the ideation phase. In this section, we will discuss the mindset you should adopt when thinking about your business idea and how to position it for adoption.

Let’s get into it.

The first thing you need to do is understand the problem you’re solving. Before diving into the solution you are looking to offer, it's essential to have a clear understanding of the problem your business idea is addressing.

A great example of what not to do is what Segway did. Segway was a two wheeled balancing transporter that was essentially developed out of technological capability, without a solution in mind. When the product was finished, the company attempted to find a market for the product.

In business we call this a solution looking for a problem. Just because you can make something, doesn’t mean you should. Just because you made something novel, doesn’t mean the market will want it.

For Segway, once they found a market for their product, they were quickly disrupted by a competitor that approached the market Segway discovered from a solution first perspective. As a result, Segway was discontinued and is largely cited in business books as being the case study of choice for poor business strategy.

Take a problem first approach. Look for a real problem in the market. Some people will push back on this and say “well what problem does Coke or Pepsi solve?”. My rebuttal to this is those are businesses that are highly propped up by ad dollars and years of media campaigns. They initially got momentum when consumers weren't aware of how bad those products were for you, same with cigarettes. So if you have millions of ad dollars in your pocket, you can try pursuing a product with no solution in mind and over the years try and change the public perspective to fit your worldview. Pursuing an idea like that is going against the grain and a high risk gamble.

Another common push back is citing influencers like Emma Chamberlain who launch influencer brands like “Chamberlain Coffee”. Chamberlain Coffee is in a highly commoditized category. Coffee is an extremely difficult business to pursue as there are so many brands that are from a consumer perspective, largely undifferentiated. When influencers put out brands their brand is their differentiation. Brand as a differentiator is a weak strategy to pursue and often unsustainable. Many influencers as a result will sell the business at some point to a larger entity if they can get enough fans to convert to consumers and thus be compelling enough to get bought out. Smart influencers that launch products in commoditized spaces create these businesses with an exit strategy in mind. If you look closely, most of these brands are created in economic booms and become less compelling when the economy declines. For maximum sustainability you may consider looking for business ideas that cater to people's needs so that when the market gets weak you can still generate revenue.

Finding an idea that is solving a problem sets you up for success. Most high achieving entrepreneurs like to set themselves up to have the highest chance of success. If you would like to do the same, minimize your risks by pursuing a solution to a real problem.

With that said, once you believe your product idea offers a solution to a real problem in the market you will need to build a brand. Let’s learn how to do that in the next section.

Section 2: Bootstrap Your Brand

Many first time founders go off the rails with this one. You don’t need to hire a designer to make you a $1,000 logo. You don’t need expensive elaborate brand kits. We’re looking for product market fit right now. We want to validate the market as cheaply as possible. In other words, our goal is to find out “do people want what I'm offering?”.

If the market truly wants something you’re building, you can get to product market fit for under $50. We’re going to try to stay under $100 for the sake of giving ourselves a little financial buffer.

You’re going to build the brand yourself. This is a great skill to learn because the more you do it, the faster you get and the better you will be at building an online business. Ultimately this will enable you to build a portfolio of companies if that’s something that you are interested in.

So let’s get started…

First thing you want to do is go on and search for a name for your website. We want the name of the website and the name of our company to be the same, for continuity. Some companies like to use abstract names like “Google”, some like to use more practical and straightforward names like “AirBnB”. This is up to you. Personally I prefer more straightforward names as they’re easier to remember and get market validation on because people can quickly and easily understand what your business is about.

Keep trying new names until you find a name that you are both happy with and that’s listed on Godaddy as available.

I don’t ever try to buy a domain name from someone else that owns one I'm interested in. I just keep trying new names until I find something that’s available. I also try to keep my extensions limited to; .co, .com and .io.

That’s not to say .ai or .xyz or another extension is bad, I just feel they’re not as evergreen and could phase out as the market changes in the future.

Once you have your domain picked out, buy it for 1 year and don’t buy an email or any of the upsells. We haven’t validated the product idea yet so we want to minimize our costs. The end order value should be around $12. You can also use Namecheap or a similar competitor but I like to use Godaddy because I find the UI easy to navigate.

Second thing you want to do is get a Canva subscription. You can try Canva Pro for free for 30 days.

Click the “Create a design” button and then click “logo”.

This will open up the canvas section of the website. This is where you build your logo, choose fonts etc.

In the left hand sidebar you can search for a logo category and a bunch of copyright free logos with text will populate. Everything is 100% editable and copyright free so feel free to play around and get creative.

I like to look at the pre-made logos, font pairings, color schemes etc and basically find a great foundation of fonts and a solid color scheme.

To build a logo I sometimes use Canva for the actual logo image, sometimes I use Midjourney. Midjourney is an AI platform that operates in Discord. I hyperlinked the Midjourney Discord here.

Here’s a picture of what it looks like to give you an idea. Basically, you type “/imagine” and then type what you want to see.

So for example, you could type “/imagine a futuristic metaverse logo of a brain, abstract” and the AI will create a logo you can use for your business that’s copyright free. The founders set up Midjourney in Discord because it’s a simple UI a lot of technology early adopters are familiar with, it’s easy to upload content etc.

Behind the scenes Midjourney is processing your request with AI using GPUs, essentially they need to create the logo using their computer processors because it takes too much processing power to run the AI on your own computer.

Midjourney has a free trial as well. If you decide to use that just make sure you crop out the background and isolate the logo part of the image so that you can drag and drop in Canva to complete your Font, Logo, Color Scheme.

Whatever you decide, feel free to get as creative as you would like. The opportunities are endless and by leaning into the free trials you can build something professional, unique and free.

Fun fact, I sold one of my businesses in 2021 and used Canva to make the logo. Also, the Exploding ideas logo was made using Midjourney and Canva. You can do a lot with free tools and some creativity.

Section 3: Your Tech Stack

For the tech stack it’s important to understand that tech is a tool. The infrastructure you use won’t make or break your project.

If you want to use Carrd, Nextjs, React, Wordpress, Shopify, Webflow, [Name your favorite website builder], it will work. Just find whatever is easiest for you to use and keep your costs as low as possible.

I personally built the landing page using Nextjs, Google Sheets API and deployed it through Vercel. I coded it from scratch but you could easily build the same thing with whatever website builder is out on the market. These are basic features. You can also use the Godaddy free website builder trial to build a website for 30 days for free.

Build something super simple like the above. The user should only be able to do one thing, sign up or buy your product idea. This will minimize potential confusion and paradox of choice when they arrive at your website.

Prior to going into the next section I need to take a second to note that it’s important to be honest with your potential customer. If you have a signup form on your website but no product, you should email them after they have signed up saying you will let them know once it is available.

If you are testing a physical or digital product that is for sale, you can include a stripe payment integration or whatever native payment your website tech uses. You should be set up to receive real payments. This is a test of true purchase intent. If we get any payments we will immediately refund the user as we are testing the market, the product may not be available yet.

Section 4: Free Promotion

Do not run ads in this phase. Ads are optimized to work and designed to find you users for your product. Ads prior to getting market validation are a false indicator of product market fit and should not be used when market validating a business that you are funding out of pocket.

During overly speculative times Venture Capital firms invest tons of money into new businesses making it normalized to spend copious amounts of money on advertising to break through the noise, but this is unsustainable and will make it extremely difficult to make a profit especially if we’re using ads right out of the gate as a way to achieve product market fit.

What we want to do instead is look for communities that want the product.

For example, I built a music software company a few years ago and tested it by finding my audience on Facebook. I joined Facebook groups with names like “Music producer group”, “Beats for sale”, “Rappers in Houston”. This was my audience that would potentially buy my product. I would join private groups in this category that had 10k or more members in the group. This is so I knew my post had the chance to get seen by people.

I would post something like “Does anybody want a vocal preset I just made?”

The first time I did this in one of the Facebook groups I got about 5 responses saying “Yes” or “here’s my email [email protected]”. I saw that this worked, so I doubled down. I joined every facebook group that pertained to my audience and replicated the strategy for 1 hour each day. Sometimes I would post and get 100 email addresses in the comments. This is product market fit. People wanted something enough to give me their email in public. I ultimately made the software and emailed it to them.

Then I built a website on Shopify and made it so they had to submit their email in exchange for the software. I pursued the same strategy on Reddit. I looked for music producer subreddits and asked if anyone wanted some vocal presets. Some of these posts are evergreen posts that still drive traffic to that website today. Ultimately I eventually started releasing software bundles and more higher end software as variants for the people that were interested. I built up a newsletter subscriber list of 55,000 people.

Once I got product market fit by identifying free marketing channels I could utilize I then started running Facebook and Instagram ads. This was complimentary to my free traffic strategies. Since I had product market fit and my free traffic strategies worked so well, my paid traffic strategies as a result worked extremely well.

When you get product market fit in a difficult environment where the market is ruthless (like on Reddit, Facebook groups etc.), it translates to paid advertising performing extremely well because you take a concept that people want and run a super optimized system of finding all of your potential customers on top of it.

Section 5: Assessing the Results

So I will typically run this process from start to finish, meaning idea to brand creation to testing, over a 3 to 5 day period and then assess the results.

Did I get signups or not? Did I get purchases or not?

If I get no results, can I change the strategy to find my audience on Instagram or TikTok?

If not, it’s probably not a great idea and I will kill it and try something else. Then go back and repeat from section 1.

If I get some signups I will double down, repeat step 4, and see if I can get over 100 sign ups in a few days. That will show me the project has real market momentum.

If I get a purchase, or a few, then I will refund peoples money and build the product. I see this as real purchase intent and know it is worth pursuing the idea at this point. Purchase intent is the hardest to pull off so if you can achieve purchase intent (not just signup intent) you probably have something valuable on your hands.

When I'm looking to build a new business I will run through this playbook 2-3 times a month until I get an idea with momentum.

It is essential to remember that finding the right business opportunity can be a numbers game, much like early-stage investing or gambling dynamics. You might strike gold on your first attempt, or it may take multiple tries to find the right fit. The key is to stay persistent, learn from each experience, and maintain a positive attitude.

As you embark on your entrepreneurial journey, keep in mind the following points to stay motivated and maximize your chances of success:

  1. Stay committed to the process: Building a business takes time and effort. Embrace the journey, and don't be disheartened by setbacks or obstacles. Run through this playbook regularly to refine your approach and keep moving forward.

  2. Learn from each attempt: Whether it's your first try or your tenth, treat each business idea as a learning opportunity. Analyze what worked, what didn't, and how you can improve in future ventures.

  3. Be adaptable: The online business landscape is constantly evolving. Stay informed about new trends, technologies, and platforms to remain agile and adapt your strategies accordingly.

  4. Network and collaborate: Connect with other entrepreneurs, industry experts, and potential partners to gain valuable insights, advice, and support. Leverage the power of collaboration to create new opportunities and expand your business reach.

  5. Keep an eye on the market: Continuously monitor the market to identify emerging needs, trends, and opportunities. This will allow you to stay ahead of the competition and pivot your business when needed.

  6. Believe in yourself: Trust your instincts and have faith in your abilities as an entrepreneur. Maintain a positive mindset and surround yourself with supportive people who share your vision.

  7. Celebrate small wins: Recognize and celebrate your accomplishments, no matter how small. This will help keep your morale high and motivate you to continue pushing forward.

Remember that persistence and a willingness to learn from each experience are critical to finding success in the online business world. Use this guide as your playbook, iterating and refining your approach until you find the business opportunity that resonates with the market. With determination and a growth mindset, you'll be well on your way to cracking the code and realizing your entrepreneurial dreams.