In order to validate your product before you build it many people advocate for attempting to sell it first. Different people have different ideas about what this means. Obviously the strongest interpretation is to actually get people to give you money before the product exists - selling nothing more than the idea. This feels like a pretty tall order and, given that most ideas aren't going to make the cut, it's a lot to ask of your audience to validate your ideas repeatedly. So, for anyone out there who is actually attempting to collect money before you have built anything: How and where are you collecting money and has this affected your reputation?
For example, if you're accepting preorders and you get a couple hundred but it's not enough to justify building an expensive product then I assume that you refund your customers. But, it's fairly likely that those people are in your target audience for your next idea. Do they get sick of you canceling their orders, feel betrayed, or lose faith at some point? If you're protecting yourself from loss of reputation by creating new brands for each product idea then what's it costing you to spin up new brands? If you're using crowd funding then are you asking people to sign up for a crowd funding platform from your ads and is it working? Glancing at Kickstarter, it looks like most software projects are not hitting funding goals.
TBQH, my intuition is that for most small shops, asking people to pay before anything has been created is not actually going to work unless you have an established reputation and audience and that asking your audience repeatedly for validation of ideas that you abandon is going to damage your reputation. What do you think?
I asked chatgpt
There are many examples of successful companies that sold their idea before the product existed, before build started. By 'sold' chatgpt did not interpret this as a payment made in all cases.
Here are a few examples:
Free, with a constraint. SaaS later. Intitial funding was not from subscribers.
Commission
Physical Item
These examples show that selling your idea before the product exists can be a successful strategy for validating your product concept and securing initial funding.
I use dealroom.co if I want to understand what funding a startup received and their business model adoption.
Kickstarter, Patron is different. They are transparent around intent and purpose. If you misuse these vehicles then expect a loss of reputation.
Kickstarter you need to be transparent with your budget. If you failed in your budgeting you can explain that. If you failed in assumptions you made, you can explain that.
I did read your post, and am shaking my head. Why on earth make it soo complicated? Why not be true to self, build in public, course-correct with feedback from early adopters? Not a tough exercise. It does take courage.
Hey, thanks for taking the time to read and respond. I think that we agree that transparency is the way to go. I guess the question is - does anybody actually sell a small SaaS before they build while also being fully transparent? Is it actually something that's worth pursuing or should we settle for weaker forms of validation like getting people to sign up on an email wait list?
If I clicked on a promotion and went to a mocked up product landing page and it said, "We haven't decided if we're going to build this, but please pre-order now and we'll refund you if we decide not to build it" then I definitely would not pre-order. If they asked me to go signup for Kickstarter and donate money to their crowd funding campaign I wouldn't do that either. On the other hand, if someone had already made a commitment to build something then I might consider giving them money in either of those cases but that's not validation through selling because we're committing to building the thing already.
As you have articulated it is about value received or if no value then trust in the commitment. This is not distinct to building apps. It is this way -- for whatever a person wishes to create and sell. Yes, you cannot abuse kickstarter, patron, promotion or any mechanism and be deluded it will not impact your reputation.
I just don't get why it is complicated for you. (sorry) I keep feeling like there is an important back story so we really get your point.
From my short time on IH I see "what" is actual validation sorely misunderstood. Reality check is needed as marketing guff has caused some nonsense.
absolutely. ChatGPTis the on-mass example. Not only is the world experiencing this revolutionary technology, we are experiencing 'Building in Public" on mass. All citizens can be part of the journey. Sure you need to pay for dependability e.g. chatgpt plus subscription. Paying that nothing in compared to its instant value. It transformed how I work in 1 day. No video needed, I just started playing. Paying the subscription is not a pre-order as I am getting instant value. I think of it like a donation as super happy to support and have the good fortune to be part of such a moment in history.
OpenAI released early, buggy, still building as they purposely wanted to alter the design based on the collective. The long podcast by Lex speaks to this. "Sam Altman: OpenAI CEO on GPT-4, ChatGPT, and the Future of AI | Lex Fridman Podcast #367"
https://www.youtube.com/watch?v=L_Guz73e6fw
If the SaaS is resolving a process issue that is common to many businesses -- that works if the 'small' is complete part of the process e.g. micro. Like POS. Like Audit. It is actually how ERP evolved back in the day. CRM too. CRM started as pure lead generation + contact, then expanded from there to full B2B, B2C and NFP options.
Yes, you are correct. This is not idea validation. This is called engagement management.
I think the part of my question that's confusing you is selling to validate a product before you build anything. ChatGPT is an existing product, so they are validating something that has already been at least partially built. A SaaS that resolves a small but complete process must exist in some capacity, right? Meaning that it should be already built. And, if I'm going to sell something and then learn from those failures then I must have built something to begin with, right? If I'm going to course correct then I must have something built to evaluate, right?
I understand the argument for building an MVP and then selling that. But, there are a bunch of people out there who advocate for actually selling before you have built anything to validate the product, and I don't see how that specifically can actually work for brands that are launching their first product without being unethical.
I see. Your understanding of building in public and mine differ.
ChatGPT is not a finished product. Its in an iteration. Building in public is you launch early, build the rest of product, iterate, embedding public feedback.
Nope in terms of being unethical. OpenAI is a brand. OpenAI founders could seek funding for another AI thing that has not started the first line of code (e.g. no build). They can do this as they have a reputation. This is not idea validation. This is either engagement management (if for a business) or investing. But not unethical.
yes, the points of what is idea validation and what is not idea validation are the key.
yes, MVP, one has built something.
This sentence is not communicating "idea validation" to me. It is using validate in terms of 'proof of concept' / 'prototype' e.g. "validate your product". In your post, I would of stated your observation upfront so use simple-ones can get what you are asking or seeking viewpoints on.