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How to Test Drive Your Business Idea Before Quitting Your Job

shanwang 10y ago
What this article suggests is just one way of starting a startup. It won't work for everyone because for some of us, other's people's problems are only worth solving if the problem also troubles me or the solution somehow deeply interests me. After all, for some the point of starting a startup is not only about business and money, as a software developer I want to build an application I love, and see it appreciated by others by making it a product and profitable business. If you have read Paul Graham's essay, you'd know there's another way, the so called "organic ideas", i.e., to build a product that you love and useful to yourself, then sell it to others who have similar needs. To me this is a better way (albeit riskier), in the end of the day if I fail, I still would have a lot of fun and learnt useful skills, rather than just failed to fill a market gap.
whamlastxmas 10y ago
Nothing really new here that isn't covered in Lean Startup materials. >We've spent millions of dollars ... so you don't have to. This two person company that's had, from what I can tell, a hand full of clients, has spent millions of dollars testing their marketing? I find that a little hard to believe. That said, their Playbook page is pretty cool and informative, even if seemingly most of it is behind a paywall. It'd be nice to have more information about how these ROIs were calculated. If it's a sample size of three it doesn't mean much. Or whether it was done in combination with other things, and how long those results were measured for also matters a lot. As it stands right now it just sort of comes across as marketing bullshit because it's impossible to tell how meaningful the ROIs are. The case studies are also pretty weak. Your solution is two sentences? Really?
- 2michaeltaylor 10y ago
  Hey, author and one of the co-founders here, michael taylor. Thanks for checking us out and taking the time to comment! We definitely are standing on shoulders of giants here; I sleep with Lean Startup under my pillow. We just saw this blowing up on HN and I'm personally pretty excited because it's the first time I've had anything on here. Didn't even expect it as a marketer, so that's awesome. We've actually just hired our 15th person and for the past 2 years we've worked with 70+ startups and spent around $2m. That's not counting one client who spends about $40k a day on FB ads. Before that I worked at Efficient Frontier (now part of Adobe), Travelzoo and ShopStyle. In each place I managed or optimized multi-million dollar budgets; the learnings from which I applied whilst building our playbook, and I apply every time I write a post. ROI for our playbook is calculated based on the average of the experiments we've run. Looking at the numbers we've averaged about 2 concluded tests per tactic, but those numbers are highly skewed; there are some that have run 10+ times, others that have never 'run' (just things I've tried before but don't have conclusive data to hand, or things I've read about in blog posts). Either way, this data should be taken with a pinch of salt and used directionally; while eventually we dream of being able to build a recommendation engine that auto-prioritizes these tactics, the reality is that we'll need a lot more people using the system (hence the incessant blogging). :-) Hope that helps explain where we're coming from?
  - whamlastxmas 10y ago
    My advice as a nobody who's done nothing except be cynical on the internet: * Have a page for your team to show the size of your business. It adds a lot of legitimacy in an often slimy, fly-by-night industry. * Advertise that you've worked with 70+ startups. I had assumed this was a fairly new landing page for a two-person project who struggled to get three clients so they could put up a case-studies page. Obviously this isn't the case. * You spent $2m of your own money that could otherwise be in your personal bank account right now? Or $2m of clients' money? Because there's a pretty big difference, and it's blatantly misleading if you meant the latter. It would be accurate to say "We've managed the spending of millions of dollars" if that's the case. * Having a percentage ROI attached to a tactic suggests a degree of accuracy of at least 1%. That's obviously not the case. These are, as you described, calculated from statistically insignificant data or complete guesses. Maybe just consider a 1 through 4 ranking system of importance. * Have meaningful content in your case studies. Be more specific. Give concrete examples. Of course, maybe these changes aren't what sells a client on your services in this industry. My advice would definitely make for a more honest, less-bullshit website, but it might not make for a more profitable company. Just don't expect a warm reception on social media sites, especially ones like HN that are known for cutting through the bullshit. That said, you handled the shit I threw at you very well.
    - 2michaeltaylor 10y ago
      Cynicism is definitely healthy. * Very fair point, just added to our Asana. * Client's money. We've spent about $20k of our money over the past six months or so. I would argue we're even more on the hook when it's someone else's money (and we do a lot of design / content marketing in house, that you may normally pay for externally), but I definitely take your point. * Also fair point, but some data is better than no data IMO (otherwise how do you prioritize this massive list?). Open to suggestions though! * Yeah we do try to; are you talking blog post now or playbook? We see our blog posts as living, dynamic products in their own right; we plan to update this with more useful information (and edit it down to remove unnecessary info) over time. * We actually get that feedback all the time. "I don't know what you guys do, but it looks cool" is like the main line we get when we talk to leads. However, the site converts at 19% (seriously) and we haven't been able to beat it yet by being more informative. Working on it! <tips cap> I'm relishing people actually caring enough to take the time to (fairly) criticize us. Much better than languishing in obscurity. :-)
- suyash 10y ago
  Beware if you think after reading this you know all about starting a startup. This is just 10% of material - mostly surface knowledge. Read a book such as Running Lean to get more in depth knowledge.
  - kumartanmay 10y ago
    Agree Running Lean is the go-to book and of all the credits, the author forgot to mention this book and the author as well despite using The Lean Canvas as a base for the entire blog.
    - 2michaeltaylor 10y ago
      Hey - author here. Fair point, all credit goes to the various 'lean' books; Lean Startup, Running Lean, 4 Steps to the Epiphany and Lean Analytics all come to mind when I think what inspired this. I didn't mention as I didn't expect anyone to think I invented these concepts, but I'll add a disclaimer. Cheers. :-)
      - 2michaeltaylor 10y ago
        Just updated the post to make credit explicit.
  - stefanmancevski 10y ago
    Of course! This is just step 1 - validating your idea. Actually starting a startup takes a whole lot more time, effort, stress, and hard work.
k__ 10y ago
The biggest issue for me is to identify meaningful problems in the first place. I mean, when I work for other companies I can crack down on problems they identified and have customers for and often I have good solutions for them. But finding these problems is hard.
- stefanmancevski 10y ago
  Totally get that. You've already got a great way to identify the meaningful problems - it doesn't come out of thin air, but out of your experience working with people, clients, etc... That's the point of Step 1: Wanna know what problems a client is facing? Ask. If you don't ask, you'll never know what solution to build. The quitting of the job can come later :)
  - k__ 10y ago
    I'm already a freelancer, so I don't need to quit much, haha. Point is, the people I work for see me as a tool. They pay me money for my time to solve the problems they identified themselves.
    - stefanmancevski 10y ago
      Ah - well you're directly tapped into the problems they all have, even if they see you as just a tool. You're working with so many different businesses that you have a bigger sample size. What's a recurring problem? How can you solve it at scale? Not saying it's easy at all, but you probably have an advantage over someone who just works for a single company.
    - newman314 10y ago
      If you run into the same problems over and over again and do not have a readily available tool to address it = OPPORTUNITY
    - 2michaeltaylor 10y ago
      We just started by solving our own problems as a marketing agency. Eventually we found one that enough other people had (through this testing process).
pawanpe 10y ago
Good write up! Learnt some new points.
- stefanmancevski 10y ago
  Thanks! Glad you enjoyed it.
lilcarlyung 10y ago
Is quitting your job for your own startup idea, when working in tech, really that big of a deal? Especially if you are a software engineer? You'll probably end up doing the same thing as on a corporate job but for yourself while learning a lot of new things about building software (marketing, sales, design, etc.) and about yourself (grit, character, etc.). You are still gaining experience. If shit hits the fan, with all digitalization going on everywhere, finding a new job won't really be that big of an issue.
- stefanmancevski 10y ago
  For some it is, for others it isn't. Remember that not every potential entrepreneur is in the same boat. Some are non-technical founders. Some just graduated college and are flooded with debt. Others are risk-averse. But they all want to do something big. The test-drive concept is to go into building your new startup with data-backed reasons for why it's the right thing to do. It helps you justify your decision to yourself and those around you. It's not just the job, but the people involved. At the end of the day, the entrepreneur is NOT the only one affected by the decision of starting a new business.
- morgante 10y ago
  > You'll probably end up doing the same thing as on a corporate job Except the part where you get a paycheck. The opportunity cost of quitting your job is thousands of dollars a week. That's a big decision to make.
  - bbcbasic 10y ago
    A week? Maybe a month :-)
    - morgante 10y ago
      Software engineers make thousands of dollars per week. Even on the lower end, $120,000/52=$2.3k/w.
      - 10y ago
gricardo99 10y ago
Great writeup. Very informative, speaking as someone new to the realm. It seems it's only applicable to business models that rely on getting revenue directly from customers (i.e. buying subscriptions or widgets). Do you have any thoughts about how you might test an idea where your service is free, but you get revenue through advertising to your users? It would still be very valuable to get some sense of how useful users would find your site, how often they'd visit, etc..., but you don't really have a strong test (i.e. will they pay?)
- stefanmancevski 10y ago
  Well I can give an example from an old startup I worked on in the past. We wanted to see if a CRM for job seekers would be useful. But we didn't build it so they could come. We repurposed Trello as a CRM, got a group of job seekers on board from Reddit, and proved there was value in the idea. Then we built it. The proving of willingness to pay came from surveys of those and subsequent users that said "yes, i would pay X per month for this"
boyter 10y ago
Not really sure if I want to give this one away as I want to use it more myself but https://nugget.one/ https://nugget.one/ seems to be applicable here. They claim to do most of the filtering for ideas for you showing market size, how to reach them etc...
- stefanmancevski 10y ago
  Thanks for the resource! Though I would argue it's still not quite comparable to actually talking to and getting feedback from your target customer base. That's where you hear about the real pain points firsthand, and that is invaluable for validating your business idea.
inputcoffee 10y ago
Two quick points: 1. I like the blog post. It may sound similar to the methodology in Lean startup, Y Combinator, and a bunch of other stuff but so what. It is clearly written and specific. 2. I have no idea what ladder.io does! I looked at the web page, and it is very slick, but I still can't figure out what you do. Quite a difference. You have a "real time tactic database". Is that the same as a listicle on the top 5 areas to spend marketing $? You offer continuous testing. Is that Google Analytics?
- 2michaeltaylor 10y ago
  Good question! Lots of people don't know what we do from our site, but it's actually working pretty well at the minute; our conversion rate is 19% for that page! We've been trying to improve the copy but we haven't been able to beat it yet. Basically; we started as a growth hacking agency and then built our own platform for keeping track of what we tested (and what worked). If you want a free trial + demo, just sign up on the site and we'll walk you through it. Thanks for the interest!
pragmatic 10y ago
I'd love to know where to find these people to interview. Where do I go, the supermarket, the park? Also I don't think my network is big enough to hit up a significant number for a new software idea aimed at a specific niche (ex used cars sales). Those are the pieces I've never been able to put together in all my time with the Lean Startup methodology.
- stefanmancevski 10y ago
  If you don't have the network, you have to build it. There's no real way around that. If you want to start a business and need to stress test your idea like this, you'll need to do outreach. Whether that's cold outreach or attending events or joining the right groups and communities, it's all about the legwork. But the point is you can still do that on your own time without making huge sacrifices. Taking the concept of "go out and talk to people" too literally just serves to prevent you from actually finding and reaching your ideal audience. Need to know where to start? Angel List, LinkedIn, Meetup, and the like. Write some cold emails. You can always build a network, and you should if you want to start a business.
  - le-mark 10y ago
    So I have this problem, I built an mvp and signup page, attracted a lot of page views, got quite a few signups for the free tier (50 for example) and they were all of the type: sign up, login, look around, never came back. So using these 50 signups/emails as my network, I've done two things; emailed a survey link, and emailed just asking for feedback. And nothing, not one single response to either the survey, or the email. Of the 50 only one unsubscribed. What am I to make of this? Is the fact I got 50 signups a signal the product has value and I should continue, or does the fact users don't return a signal the product is crap I should scrap it? I'm really at a loss here.
    - jaytong 10y ago
      start with what you want to measure - what exactly is the metric for success here? is it just signups? might help us to know a bit about what the product is, but is there something specific that users should be doing in this free tier? what % of the 50 are taking this action?
andrewfromx 10y ago
you could re-title "How to make sure you talk yourself out of taking a risk and keeping your job" isn't the limitus test from zuckerberg you should have this burning desire to change the world in this particular way, and the burn should be so intense that you wouldn't even consider for 1 second keeping your job.
- stefanmancevski 10y ago
  Zuckerberg ran his test drive in college. He reached his audience, sold them on Facebook, it worked, so he quit and did it full time. His burning passion was already validated when he took his huge risk. What we argue is you don't have to have a platform built out to get the same validation.
  - andrewfromx 10y ago
    yes but had Zuckerberg had his idea for facebook when he was older and already working, would he have quit and started working on it? I think his argument is facebook was so important to him, regardless if it was a viable business, there is no question to pursue it.
    - SapphireSun 10y ago
      Dude. Facebook was hot or not written in a shitty PHP app in a college dorm. There's no way he thought it was going to change the world back then and nor would you have. The validation is probably what allowed him to keep going and developing his vision.
nikatwork 10y ago
> Yelp for people? What a truly heinous product. I've known a number of people who have been stalked, I can't begin to imagine the harm a stalker could cause with this kind of app.
akanet 10y ago
I gave a talk at Dropbox called "How to start a business without quitting your day job" that I think delivers a lot of the punch on this page without the weird culty vibe. Give it a watch (for free, obviously) if you like: https://www.youtube.com/watch?v=J8UwcyYT3z0 https://www.youtube.com/watch?v=J8UwcyYT3z0
- Cyph0n 10y ago
  Thanks for sharing! Watching it right now ;) Edit: damn, I love your presenting style. Keep it up man!
- foxhop 10y ago
  Very neat, I have always intuitively followed these constraints and I have noticed that they keep me out of trouble. I don't shoot for the stars, I shoot to create value and make a bit of some money. That said, I end up passing on a lot of way more interesting / world changing ideas, for more boring ideas.
- fpgaminer 10y ago
  Thank you for sharing. For quite awhile now I've had in the back of my mind that I want to develop some kind of side business. I'm perfectly happy at my full time job, and incredibly busy ... but I've always been the kind of person to spend my free time tinkering with hobby projects. It would be nice to pour that time into something that generates a little extra cash and has the potential to blossom into a small business. Trouble is ... my ideas suck. Either I have a really good idea that requires inventing new technology, or I have a niche idea that I can't fathom how to monetize or market. I'll take your points about being boring to heart and hope something finally springs to mind under those constraints. But as of a month or two ago I already realized that I needed to tone my ideas down, and after all that time with it in the back of my mind ... I still have nothing. Frustrating.
  - irremediable 10y ago
    What are some examples of the ideas that need a new technology, if you don't mind sharing? I'm interested to hear whether the ideas are really pie-in-the-sky, or they're just a bit too tricky for practical implementation in the present day.
deleted 10y ago
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highd 10y ago
I highly recommend considering consulting/freelancing when looking at starting a company. Hourly rates generally price in an expectation of not having work full-time, so you work less than 40 hours/week to begin with. Drop an hour or two of commute every day on top of that and it's a big win in terms of time that can be spent on a startup or side-project. Of course consulting requires more in terms of people skills - you're basically "interviewing" every time you find a new client. But I think in some sense that's a hump to get over either way - there aren't many startups that don't benefit from founders having soft skills. Sort of an orthogonal point to the article, of course.
- morgante 10y ago
  In addition to the time and flexibility advantages, consulting will also give you some transferrable business skills and practice with the basics. You get experience with things like accounting, sales, and marketing which are all essential for your startup. If you cannot even run a single-person consultancy successfully, you probably shouldn't try a startup.
- crdb 10y ago
  Been doing it for 2 years. Funnily enough I just had a discussion on this topic with my current CTO/co-founder (I'm the business guy). Pros: - indeed you bill much more per hour, so in theory spend less hours. - your work actually gets implemented, because you bill much more per hour. Generally "project management" is much better because they are buying a product and are incentivised to get a return on their investment. - you deal with CEOs/managers as a peer, and learn (faster) from successful CEOs as a result. - you will rapidly learn to sell. How do you differentiate yourself from the other 1,000 consulting outfits out there? How do you justify charging 5x what that Bangalore outsourcer is charging? - it's a series of small successes that give you a boost psychologically when the product is so far away and the startup side seems not to be progressing. - you think you're different because you're not taking money from "these risk-averse people" who "don't understand" your product. You'll get there the hard way but own everything at the end! Once this feeling becomes less important to you, you are ready for seed investment. Cons: - by far the biggest is the time suck, and focus suck. You're context switching constantly. My first CTO quit in part because he was consulting as well, and the product got nowhere for months because we invested too much time in our main client. This time around I'm the only one consulting, CTO is full time on the product. It's still exhausting and inefficient, and he's justifiably annoyed when I'm unable to do startup stuff because I'm focusing on clients. Client takes precedence because you cannot screw up with them, you're delivering a professional product at certain standards. The business stuff is very important, more than it looks, and so the product launches later, sales happen later, marketing happens later, etc. which hurts the company because time is also a currency, arguably your most precious. The dynamics are well depicted in the movie Primer, where one of the group is working full time to pay for the others to build their time machine experiment. Watch the group dynamics when he returns home late at night. - at some point you'll have to cut off clients, when your startup takes off. When this happens, if you were actually good at consulting, it's going to suck for them. If you are professional and ethical, this hurts you as much if not more as it hurts them, you grow to like a good client. - Clients quit without notice. In my case, one sold to a larger group, another ran out of money. Then you're scrambling to fill the gap and spending time doing consulting sales instead of startup sales, because cash is king. - should probably point out: what you bill and what you do is not exactly the same. If my client wants me on site for a 1h meeting, I'll probably commute half an hour there, then have lunch with the PM afterwards, then commute back to my office - total 3 hours for 1 billable. On top of which you are now on the Manager's Schedule [1] and have important opportunity costs from not having blocks of time to yourself. A nice parallel is when I was a student and many of my colleagues had this idea in their head that they could be "everything" - have a phenomenal career, be a helicopter parent always there for the kids, retain a cool and active social life with Facebook worthy trips. After a few years they all ended up picking one of the three, because there's only so many hours in the day, and sleep deprivation actively harms your ability to think, which is a prerequisite to making progress in at least two of the above. You can't be an MD at Goldman and know what your kid was up to at school today. Money buys you the time to focus on the startup and that's much more valuable than it looks. Of course this comes up on HN all the time, I just wanted to add a bit of flavour and an extra data point. [1] http://www.paulgraham.com/makersschedule.html http://www.paulgraham.com/makersschedule.html
SmokyBorbon 10y ago
While this might have a good rate of success, the risk is much higher than simply quitting your job. While under contract, the intellectual property you create quite likely belongs to your employer.
a_c 10y ago
well, I wish I had read this article before quitting. Now my freelancing is experiencing delayed payment/possible default and had little progress on my idea. Would love to hear some advice
stuntgoat 10y ago
I hear this is what the creators of Pokemon Go used before they launched their product.
- 2michaeltaylor 10y ago
  LOL. Well they already had jobs where they could work on their idea. It's funny though he did kind of start lean and build up: http://bulbapedia.bulbagarden.net/wiki/History_of_Pok%C3%A9mon http://bulbapedia.bulbagarden.net/wiki/History_of_Pok%C3%A9m...
- stefanmancevski 10y ago
  Niantic was an internal startup at Google before spinning out into an independent company in 2015. By that point they already proved out their business idea with a cult hit game called Ingress, off which Pokemon Go is based. So technically yes, you're right :)
stuntgoat 10y ago
I hear this is what the creators of Pokemon Go used before they launched their product.
free2rhyme214 10y ago
Great post Michael. Despite what people say about vanity metrics, I think proving people want what you're going to build before you build it is incredibly important. I heard Flexport did this by getting 300 companies to sign up before Ryan (the founder) wrote any code. Eliminating risk isn't entirely possible. You could create a website for DoorDash/Ladder or Flexport, get traction, build Version 1 and then get told NO but I bet statistically you're more likely to have success with this method than building V1 first. As an example, Optimizely got something like a $2-$4k commitment to pay without writing any code. Again not everything works out this way. Snapchat, for example, would be a terrible example for this methodology but it works for some ideas.
- 2michaeltaylor 10y ago
  Thanks! Yeah I agree; I'd still be happy if I never made the next Snapchat. I'd rather make little fun businesses that make money and can grow without too much insanity.
atapex 10y ago
Here lonely girl looking for fun with the guys http://u.to/b_g3Dw http://u.to/b_g3Dw

What this article suggests is just one way of starting a startup. It won't work for everyone because for some of us, other's people's problems are only worth solving if the problem also troubles me or the solution somehow deeply interests me. After all, for some the point of starting a startup is not only about business and money, as a software developer I want to build an application I love, and see it appreciated by others by making it a product and profitable business. If you have read Paul Graham's essay, you'd know there's another way, the so called "organic ideas", i.e., to build a product that you love and useful to yourself, then sell it to others who have similar needs. To me this is a better way (albeit riskier), in the end of the day if I fail, I still would have a lot of fun and learnt useful skills, rather than just failed to fill a market gap.

whamlastxmas 10y ago

Nothing really new here that isn't covered in Lean Startup materials. >We've spent millions of dollars ... so you don't have to. This two person company that's had, from what I can tell, a hand full of clients, has spent millions of dollars testing their marketing? I find that a little hard to believe. That said, their Playbook page is pretty cool and informative, even if seemingly most of it is behind a paywall. It'd be nice to have more information about how these ROIs were calculated. If it's a sample size of three it doesn't mean much. Or whether it was done in combination with other things, and how long those results were measured for also matters a lot. As it stands right now it just sort of comes across as marketing bullshit because it's impossible to tell how meaningful the ROIs are. The case studies are also pretty weak. Your solution is two sentences? Really?

2michaeltaylor 10y ago
Hey, author and one of the co-founders here, michael taylor. Thanks for checking us out and taking the time to comment! We definitely are standing on shoulders of giants here; I sleep with Lean Startup under my pillow. We just saw this blowing up on HN and I'm personally pretty excited because it's the first time I've had anything on here. Didn't even expect it as a marketer, so that's awesome. We've actually just hired our 15th person and for the past 2 years we've worked with 70+ startups and spent around $2m. That's not counting one client who spends about $40k a day on FB ads. Before that I worked at Efficient Frontier (now part of Adobe), Travelzoo and ShopStyle. In each place I managed or optimized multi-million dollar budgets; the learnings from which I applied whilst building our playbook, and I apply every time I write a post. ROI for our playbook is calculated based on the average of the experiments we've run. Looking at the numbers we've averaged about 2 concluded tests per tactic, but those numbers are highly skewed; there are some that have run 10+ times, others that have never 'run' (just things I've tried before but don't have conclusive data to hand, or things I've read about in blog posts). Either way, this data should be taken with a pinch of salt and used directionally; while eventually we dream of being able to build a recommendation engine that auto-prioritizes these tactics, the reality is that we'll need a lot more people using the system (hence the incessant blogging). :-) Hope that helps explain where we're coming from?
- whamlastxmas 10y ago
  My advice as a nobody who's done nothing except be cynical on the internet: * Have a page for your team to show the size of your business. It adds a lot of legitimacy in an often slimy, fly-by-night industry. * Advertise that you've worked with 70+ startups. I had assumed this was a fairly new landing page for a two-person project who struggled to get three clients so they could put up a case-studies page. Obviously this isn't the case. * You spent $2m of your own money that could otherwise be in your personal bank account right now? Or $2m of clients' money? Because there's a pretty big difference, and it's blatantly misleading if you meant the latter. It would be accurate to say "We've managed the spending of millions of dollars" if that's the case. * Having a percentage ROI attached to a tactic suggests a degree of accuracy of at least 1%. That's obviously not the case. These are, as you described, calculated from statistically insignificant data or complete guesses. Maybe just consider a 1 through 4 ranking system of importance. * Have meaningful content in your case studies. Be more specific. Give concrete examples. Of course, maybe these changes aren't what sells a client on your services in this industry. My advice would definitely make for a more honest, less-bullshit website, but it might not make for a more profitable company. Just don't expect a warm reception on social media sites, especially ones like HN that are known for cutting through the bullshit. That said, you handled the shit I threw at you very well.
  - 2michaeltaylor 10y ago
    Cynicism is definitely healthy. * Very fair point, just added to our Asana. * Client's money. We've spent about $20k of our money over the past six months or so. I would argue we're even more on the hook when it's someone else's money (and we do a lot of design / content marketing in house, that you may normally pay for externally), but I definitely take your point. * Also fair point, but some data is better than no data IMO (otherwise how do you prioritize this massive list?). Open to suggestions though! * Yeah we do try to; are you talking blog post now or playbook? We see our blog posts as living, dynamic products in their own right; we plan to update this with more useful information (and edit it down to remove unnecessary info) over time. * We actually get that feedback all the time. "I don't know what you guys do, but it looks cool" is like the main line we get when we talk to leads. However, the site converts at 19% (seriously) and we haven't been able to beat it yet by being more informative. Working on it! <tips cap> I'm relishing people actually caring enough to take the time to (fairly) criticize us. Much better than languishing in obscurity. :-)
suyash 10y ago
Beware if you think after reading this you know all about starting a startup. This is just 10% of material - mostly surface knowledge. Read a book such as Running Lean to get more in depth knowledge.
- kumartanmay 10y ago
  Agree Running Lean is the go-to book and of all the credits, the author forgot to mention this book and the author as well despite using The Lean Canvas as a base for the entire blog.
  - 2michaeltaylor 10y ago
    Hey - author here. Fair point, all credit goes to the various 'lean' books; Lean Startup, Running Lean, 4 Steps to the Epiphany and Lean Analytics all come to mind when I think what inspired this. I didn't mention as I didn't expect anyone to think I invented these concepts, but I'll add a disclaimer. Cheers. :-)
    - 2michaeltaylor 10y ago
      Just updated the post to make credit explicit.
- stefanmancevski 10y ago
  Of course! This is just step 1 - validating your idea. Actually starting a startup takes a whole lot more time, effort, stress, and hard work.

k__ 10y ago

The biggest issue for me is to identify meaningful problems in the first place. I mean, when I work for other companies I can crack down on problems they identified and have customers for and often I have good solutions for them. But finding these problems is hard.

stefanmancevski 10y ago
Totally get that. You've already got a great way to identify the meaningful problems - it doesn't come out of thin air, but out of your experience working with people, clients, etc... That's the point of Step 1: Wanna know what problems a client is facing? Ask. If you don't ask, you'll never know what solution to build. The quitting of the job can come later :)
- k__ 10y ago
  I'm already a freelancer, so I don't need to quit much, haha. Point is, the people I work for see me as a tool. They pay me money for my time to solve the problems they identified themselves.
  - stefanmancevski 10y ago
    Ah - well you're directly tapped into the problems they all have, even if they see you as just a tool. You're working with so many different businesses that you have a bigger sample size. What's a recurring problem? How can you solve it at scale? Not saying it's easy at all, but you probably have an advantage over someone who just works for a single company.
  - newman314 10y ago
    If you run into the same problems over and over again and do not have a readily available tool to address it = OPPORTUNITY
  - 2michaeltaylor 10y ago
    We just started by solving our own problems as a marketing agency. Eventually we found one that enough other people had (through this testing process).

pawanpe 10y ago

Good write up! Learnt some new points.

stefanmancevski 10y ago
Thanks! Glad you enjoyed it.

lilcarlyung 10y ago

Is quitting your job for your own startup idea, when working in tech, really that big of a deal? Especially if you are a software engineer? You'll probably end up doing the same thing as on a corporate job but for yourself while learning a lot of new things about building software (marketing, sales, design, etc.) and about yourself (grit, character, etc.). You are still gaining experience. If shit hits the fan, with all digitalization going on everywhere, finding a new job won't really be that big of an issue.

stefanmancevski 10y ago
For some it is, for others it isn't. Remember that not every potential entrepreneur is in the same boat. Some are non-technical founders. Some just graduated college and are flooded with debt. Others are risk-averse. But they all want to do something big. The test-drive concept is to go into building your new startup with data-backed reasons for why it's the right thing to do. It helps you justify your decision to yourself and those around you. It's not just the job, but the people involved. At the end of the day, the entrepreneur is NOT the only one affected by the decision of starting a new business.
morgante 10y ago
> You'll probably end up doing the same thing as on a corporate job Except the part where you get a paycheck. The opportunity cost of quitting your job is thousands of dollars a week. That's a big decision to make.
- bbcbasic 10y ago
  A week? Maybe a month :-)
  - morgante 10y ago
    Software engineers make thousands of dollars per week. Even on the lower end, $120,000/52=$2.3k/w.
    - 10y ago

gricardo99 10y ago

Great writeup. Very informative, speaking as someone new to the realm. It seems it's only applicable to business models that rely on getting revenue directly from customers (i.e. buying subscriptions or widgets). Do you have any thoughts about how you might test an idea where your service is free, but you get revenue through advertising to your users? It would still be very valuable to get some sense of how useful users would find your site, how often they'd visit, etc..., but you don't really have a strong test (i.e. will they pay?)

stefanmancevski 10y ago
Well I can give an example from an old startup I worked on in the past. We wanted to see if a CRM for job seekers would be useful. But we didn't build it so they could come. We repurposed Trello as a CRM, got a group of job seekers on board from Reddit, and proved there was value in the idea. Then we built it. The proving of willingness to pay came from surveys of those and subsequent users that said "yes, i would pay X per month for this"

boyter 10y ago

Not really sure if I want to give this one away as I want to use it more myself but https://nugget.one/ https://nugget.one/ seems to be applicable here. They claim to do most of the filtering for ideas for you showing market size, how to reach them etc...

stefanmancevski 10y ago
Thanks for the resource! Though I would argue it's still not quite comparable to actually talking to and getting feedback from your target customer base. That's where you hear about the real pain points firsthand, and that is invaluable for validating your business idea.

inputcoffee 10y ago

Two quick points: 1. I like the blog post. It may sound similar to the methodology in Lean startup, Y Combinator, and a bunch of other stuff but so what. It is clearly written and specific. 2. I have no idea what ladder.io does! I looked at the web page, and it is very slick, but I still can't figure out what you do. Quite a difference. You have a "real time tactic database". Is that the same as a listicle on the top 5 areas to spend marketing $? You offer continuous testing. Is that Google Analytics?

2michaeltaylor 10y ago
Good question! Lots of people don't know what we do from our site, but it's actually working pretty well at the minute; our conversion rate is 19% for that page! We've been trying to improve the copy but we haven't been able to beat it yet. Basically; we started as a growth hacking agency and then built our own platform for keeping track of what we tested (and what worked). If you want a free trial + demo, just sign up on the site and we'll walk you through it. Thanks for the interest!

pragmatic 10y ago

I'd love to know where to find these people to interview. Where do I go, the supermarket, the park? Also I don't think my network is big enough to hit up a significant number for a new software idea aimed at a specific niche (ex used cars sales). Those are the pieces I've never been able to put together in all my time with the Lean Startup methodology.

stefanmancevski 10y ago
If you don't have the network, you have to build it. There's no real way around that. If you want to start a business and need to stress test your idea like this, you'll need to do outreach. Whether that's cold outreach or attending events or joining the right groups and communities, it's all about the legwork. But the point is you can still do that on your own time without making huge sacrifices. Taking the concept of "go out and talk to people" too literally just serves to prevent you from actually finding and reaching your ideal audience. Need to know where to start? Angel List, LinkedIn, Meetup, and the like. Write some cold emails. You can always build a network, and you should if you want to start a business.
- le-mark 10y ago
  So I have this problem, I built an mvp and signup page, attracted a lot of page views, got quite a few signups for the free tier (50 for example) and they were all of the type: sign up, login, look around, never came back. So using these 50 signups/emails as my network, I've done two things; emailed a survey link, and emailed just asking for feedback. And nothing, not one single response to either the survey, or the email. Of the 50 only one unsubscribed. What am I to make of this? Is the fact I got 50 signups a signal the product has value and I should continue, or does the fact users don't return a signal the product is crap I should scrap it? I'm really at a loss here.
  - jaytong 10y ago
    start with what you want to measure - what exactly is the metric for success here? is it just signups? might help us to know a bit about what the product is, but is there something specific that users should be doing in this free tier? what % of the 50 are taking this action?

andrewfromx 10y ago

you could re-title "How to make sure you talk yourself out of taking a risk and keeping your job" isn't the limitus test from zuckerberg you should have this burning desire to change the world in this particular way, and the burn should be so intense that you wouldn't even consider for 1 second keeping your job.

stefanmancevski 10y ago
Zuckerberg ran his test drive in college. He reached his audience, sold them on Facebook, it worked, so he quit and did it full time. His burning passion was already validated when he took his huge risk. What we argue is you don't have to have a platform built out to get the same validation.
- andrewfromx 10y ago
  yes but had Zuckerberg had his idea for facebook when he was older and already working, would he have quit and started working on it? I think his argument is facebook was so important to him, regardless if it was a viable business, there is no question to pursue it.
  - SapphireSun 10y ago
    Dude. Facebook was hot or not written in a shitty PHP app in a college dorm. There's no way he thought it was going to change the world back then and nor would you have. The validation is probably what allowed him to keep going and developing his vision.

nikatwork 10y ago

> Yelp for people? What a truly heinous product. I've known a number of people who have been stalked, I can't begin to imagine the harm a stalker could cause with this kind of app.

akanet 10y ago

I gave a talk at Dropbox called "How to start a business without quitting your day job" that I think delivers a lot of the punch on this page without the weird culty vibe. Give it a watch (for free, obviously) if you like: https://www.youtube.com/watch?v=J8UwcyYT3z0 https://www.youtube.com/watch?v=J8UwcyYT3z0

Cyph0n 10y ago
Thanks for sharing! Watching it right now ;) Edit: damn, I love your presenting style. Keep it up man!
foxhop 10y ago
Very neat, I have always intuitively followed these constraints and I have noticed that they keep me out of trouble. I don't shoot for the stars, I shoot to create value and make a bit of some money. That said, I end up passing on a lot of way more interesting / world changing ideas, for more boring ideas.
fpgaminer 10y ago
Thank you for sharing. For quite awhile now I've had in the back of my mind that I want to develop some kind of side business. I'm perfectly happy at my full time job, and incredibly busy ... but I've always been the kind of person to spend my free time tinkering with hobby projects. It would be nice to pour that time into something that generates a little extra cash and has the potential to blossom into a small business. Trouble is ... my ideas suck. Either I have a really good idea that requires inventing new technology, or I have a niche idea that I can't fathom how to monetize or market. I'll take your points about being boring to heart and hope something finally springs to mind under those constraints. But as of a month or two ago I already realized that I needed to tone my ideas down, and after all that time with it in the back of my mind ... I still have nothing. Frustrating.
- irremediable 10y ago
  What are some examples of the ideas that need a new technology, if you don't mind sharing? I'm interested to hear whether the ideas are really pie-in-the-sky, or they're just a bit too tricky for practical implementation in the present day.

deleted 10y ago

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highd 10y ago

I highly recommend considering consulting/freelancing when looking at starting a company. Hourly rates generally price in an expectation of not having work full-time, so you work less than 40 hours/week to begin with. Drop an hour or two of commute every day on top of that and it's a big win in terms of time that can be spent on a startup or side-project. Of course consulting requires more in terms of people skills - you're basically "interviewing" every time you find a new client. But I think in some sense that's a hump to get over either way - there aren't many startups that don't benefit from founders having soft skills. Sort of an orthogonal point to the article, of course.

morgante 10y ago
In addition to the time and flexibility advantages, consulting will also give you some transferrable business skills and practice with the basics. You get experience with things like accounting, sales, and marketing which are all essential for your startup. If you cannot even run a single-person consultancy successfully, you probably shouldn't try a startup.
crdb 10y ago
Been doing it for 2 years. Funnily enough I just had a discussion on this topic with my current CTO/co-founder (I'm the business guy). Pros: - indeed you bill much more per hour, so in theory spend less hours. - your work actually gets implemented, because you bill much more per hour. Generally "project management" is much better because they are buying a product and are incentivised to get a return on their investment. - you deal with CEOs/managers as a peer, and learn (faster) from successful CEOs as a result. - you will rapidly learn to sell. How do you differentiate yourself from the other 1,000 consulting outfits out there? How do you justify charging 5x what that Bangalore outsourcer is charging? - it's a series of small successes that give you a boost psychologically when the product is so far away and the startup side seems not to be progressing. - you think you're different because you're not taking money from "these risk-averse people" who "don't understand" your product. You'll get there the hard way but own everything at the end! Once this feeling becomes less important to you, you are ready for seed investment. Cons: - by far the biggest is the time suck, and focus suck. You're context switching constantly. My first CTO quit in part because he was consulting as well, and the product got nowhere for months because we invested too much time in our main client. This time around I'm the only one consulting, CTO is full time on the product. It's still exhausting and inefficient, and he's justifiably annoyed when I'm unable to do startup stuff because I'm focusing on clients. Client takes precedence because you cannot screw up with them, you're delivering a professional product at certain standards. The business stuff is very important, more than it looks, and so the product launches later, sales happen later, marketing happens later, etc. which hurts the company because time is also a currency, arguably your most precious. The dynamics are well depicted in the movie Primer, where one of the group is working full time to pay for the others to build their time machine experiment. Watch the group dynamics when he returns home late at night. - at some point you'll have to cut off clients, when your startup takes off. When this happens, if you were actually good at consulting, it's going to suck for them. If you are professional and ethical, this hurts you as much if not more as it hurts them, you grow to like a good client. - Clients quit without notice. In my case, one sold to a larger group, another ran out of money. Then you're scrambling to fill the gap and spending time doing consulting sales instead of startup sales, because cash is king. - should probably point out: what you bill and what you do is not exactly the same. If my client wants me on site for a 1h meeting, I'll probably commute half an hour there, then have lunch with the PM afterwards, then commute back to my office - total 3 hours for 1 billable. On top of which you are now on the Manager's Schedule [1] and have important opportunity costs from not having blocks of time to yourself. A nice parallel is when I was a student and many of my colleagues had this idea in their head that they could be "everything" - have a phenomenal career, be a helicopter parent always there for the kids, retain a cool and active social life with Facebook worthy trips. After a few years they all ended up picking one of the three, because there's only so many hours in the day, and sleep deprivation actively harms your ability to think, which is a prerequisite to making progress in at least two of the above. You can't be an MD at Goldman and know what your kid was up to at school today. Money buys you the time to focus on the startup and that's much more valuable than it looks. Of course this comes up on HN all the time, I just wanted to add a bit of flavour and an extra data point. [1] http://www.paulgraham.com/makersschedule.html http://www.paulgraham.com/makersschedule.html

SmokyBorbon 10y ago

While this might have a good rate of success, the risk is much higher than simply quitting your job. While under contract, the intellectual property you create quite likely belongs to your employer.

a_c 10y ago

well, I wish I had read this article before quitting. Now my freelancing is experiencing delayed payment/possible default and had little progress on my idea. Would love to hear some advice

stuntgoat 10y ago

I hear this is what the creators of Pokemon Go used before they launched their product.

2michaeltaylor 10y ago
LOL. Well they already had jobs where they could work on their idea. It's funny though he did kind of start lean and build up: http://bulbapedia.bulbagarden.net/wiki/History_of_Pok%C3%A9mon http://bulbapedia.bulbagarden.net/wiki/History_of_Pok%C3%A9m...
stefanmancevski 10y ago
Niantic was an internal startup at Google before spinning out into an independent company in 2015. By that point they already proved out their business idea with a cult hit game called Ingress, off which Pokemon Go is based. So technically yes, you're right :)

stuntgoat 10y ago

I hear this is what the creators of Pokemon Go used before they launched their product.

free2rhyme214 10y ago

Great post Michael. Despite what people say about vanity metrics, I think proving people want what you're going to build before you build it is incredibly important. I heard Flexport did this by getting 300 companies to sign up before Ryan (the founder) wrote any code. Eliminating risk isn't entirely possible. You could create a website for DoorDash/Ladder or Flexport, get traction, build Version 1 and then get told NO but I bet statistically you're more likely to have success with this method than building V1 first. As an example, Optimizely got something like a $2-$4k commitment to pay without writing any code. Again not everything works out this way. Snapchat, for example, would be a terrible example for this methodology but it works for some ideas.

2michaeltaylor 10y ago
Thanks! Yeah I agree; I'd still be happy if I never made the next Snapchat. I'd rather make little fun businesses that make money and can grow without too much insanity.

atapex 10y ago

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