I’ve been helping build startups (or building startups myself) for most of my career. The first was just a few years into my career, and one of the most recent was an a16z-backed startup. At IDEO, I built and ran a practice called Venture Design, which helped corporations incubate successful startups. I’m currently building my own startup.
I know startups.
Here’s what I’ve seen most of them miss: Exploration and Validation. Exploration is the art of understanding how people operate now, in the realm of your startup idea. And Validation is trying many small, fast, intentional experiments that give you confidence your proposed solution is the right one… for your customer and your business.
Say you’re building a new retirement planning service: Exploration is digging under the skin of how people currently plan their retirements, what’s not working, what hacks they’re using.
Validation is saying “we think the solution is X” (say, an app that helps people visualize themselves at 75, 85, and 95, living on the money they’ve saved thus far…yikes!). Rather than building that app, validation is hacking together a solution that acts like that app would, charging people money, and seeing who bites and how they use it. It’s not about volume, it’s about you becoming the product and getting first hand experience as to how people “use you.” The benefit of validation: you get better answers than you would from an MVP, without the cost and time of coding.
When I work with startups, I provide them with a four-staged map that starts with Exploration and Validation and continues to Piloting and Scaling. Nobody wants to do the first two steps, for two main reasons: impatience and hubris. I know this not just from guiding dozens of startups, but also because, when launching my own startup, I felt the same.
Impatience: The founders have taken the big step to start a startup. They’re anxious to get it off the ground.
Hubris: They’ve launched a startup because they saw a market need, and they feel they know the customers’ pain points and how to solve them.
The Case for Prioritizing Exploration and Validation
People are inherently motivated to continue doing things the way they always have. That’s just human nature. (For proof, just look back to your own most recent new year’s resolutions. How’d those work out for you?)
So you don’t just need a good product idea. You need to understand how people are experiencing the world you hope to impact, to learn:
- What pain is big enough to cause people to even look around for another solution
- How they currently operate, so that you can build something that slips as seamlessly as possible into their lives.
To get there, you need Exploration and Validation.
If I haven’t convinced you yet, consider this: If there’s a chance you got the need or the solution wrong (or even not quite right), jumping straight into product build (even a coded-up MVP) is going to cost you more than the time and money it will take you to explore and validate.
And, chances are very good you didn’t get it right… that’s part of building something new.
Many of my clients come to me with a floundering MVP they’ve spent time and money to build but which isn’t resonating how they hoped. People aren’t using it, they’re not willing to pay for it, or both. When I gently dig into their approach, invariably they’ve spent more of their early dollars on code than on conversations with potential customers. It’s those conversations — not the code — and the ensuing insights about people’s needs, pain points, and behaviors that will drive the successful launch of their business.
The Venture Design Framework
Exploration: The art of understanding how people live and operate now, in the realm of your startup idea. It should cost relatively little. You’re burrowing into people’s lives to see how they currently address the problem you’re trying to solve. You’ll want to do this with a surprisingly small number of people. Your goal: deep understanding of needs, behaviors, and motivators.
Validation: Conducting many small, fast, contained experiments that give you confidence that your proposed solution is right, for your customer and business sustainability. Again, you’re not spending a lot here. The idea isn’t to see how many people like your idea (some back-of-the-envelope market sizing calculations can help there), but rather how they would use your solution should you create it. This how is critical to knowing whether you have a solid startup: It signals your potential customers’ exuberance, their willingness to advocate for you to others, and how much they’re prepared to give (in money and integrating something new) to have your solution in their lives. Stay in this stage until you’ve lit on something people don’t just like, but obsessively love.
Piloting: Creating a robust version of your product / service / experience (this is what most think of as an MVP) and launching it in a test market to make sure the product and the go-to-market strategy work as planned. The main objective has flipped. You’ve got confidence in the problem and your solution. You’re looking at how to create a solid, repeatable version of the solution that generates stable revenue for your business. You may well be profitable at this phase, and I hope you are, but you shouldn’t make tradeoffs that optimize your profit. First, nail the solution. And, relief: you should be bringing in consistent revenue at this point.
Scaling: Launching across multiple markets with an eye towards optimizing the business. This is when you want to focus on optimizing profitability. You’ll continue to iterate the solution as you learn and as your business grows, but you’re fine-tuning the business model rather than discovering it.
The arrows between the phases are a reminder that it’s never a straight line, but always iterative to get from the seed of an idea to a scaled business. Don’t be afraid to go back a step to move forward with greater confidence.
Why Not Try It
Startups I’ve worked with who’ve employed this approach have found both funding and scaling easier. This is because they’ve aligned the business so tightly with the needs and behaviors of their customers that growth steps become clear and inevitable.
So, give Exploration and Validation a go. Because patience and humility usually go further in the end than impatience and hubris.
* Turtle photo credit: Nick Abrams for Unsplash
