Test Fast, Die Cheap: How to Uncover Unviable Ideas and Avoid Wasting Time

“To close the gestalt” is a popular expression used mainly in the context of an unrealized dream, task, or need. Until a solution is found, it occupies all thoughts and deprives one of the joy of life. Similarly, with the launch of a startup, an entrepreneur or product manager encounters a valuable “genius” business idea – the same unclosed gestalt that they rush to bring to life, at least in the form of an MVP. As a result, 90% of startups fail, and, however unfortunate it may be, this is a confirmed reality backed by research.

In this article, I will explain how to quickly, inexpensively, and almost painlessly identify and “kill” intrusive but unfeasible business ideas. And with the one that survives, you will have a chance to enter the 10% of successful startups.”

A Bit about the Market: Why Startups Fail

The most challenging period for a startup is to survive the first 2-3 years, during which the young company establishes itself, refines processes, and, of course, seeks funding. According to statistics, 70% of newly created companies face failures between 2nd and 5th year of existence. Overall, only 10% of startups become successful, and only 1% of them transform into unicorns, such as Uber, Airbnb, Slack, Stripe, or Docker.

There are many reasons for such failures, but the main one is the flawed understanding of market demand. As a result, 34% of startups fail to achieve Product-Market Fit (meaning they fail to create a product that meets market needs) and join the ranks of unsuccessful companies.

Great Idea, Great Effort

When you’re “burning up” with an idea, you’re confident that it’s a fresh solution and everyone will like it. Accordingly, you want to implement it quickly.

A common approach to creating companies, especially product-oriented ones, is the “Lean Startup” approach. Its adherents advise starting to build an MVP (minimum viable product) as quickly as possible, launching it on the market, and then analyzing demand and overall results.

The problem is that creating an MVP is expensive, time-consuming, and requires a team. It’s not necessarily a cost-effective way to test hypotheses, as essentially you’re creating a finished product without any guarantees that it’s needed by the customer.

If you’re willing to take risks, then there’s a reason to create an MVP, but it’s a long and expensive way to close the gestalt. Moreover, it can lead to reputational losses. The best approach is to first ensure the relevance of the idea, its alignment with market needs, and the technical feasibility of implementation before moving on to development.

Three Steps to Close the Gestalt: Verifying the Viability of an Idea

Given that 9 out of 10 startups don’t become successful, it’s important not to overly rely on the hope of being an exception. If failure is inevitable, it’s best to fail quickly and with minimal losses. As for myself, I’ve condensed the idea validation process into 3 steps.

My approach is to test the idea and separate “fantasy” from reality, so as not to waste time on unrealistic concepts. From my experience, it’s highly likely that when you see the idea laid out in detail on paper, it might lose its appeal to you as the creator. Moreover, you might not actually have the resources to bring it to life even if you have competitive advantage over your competitors. Once you come to terms with this, that’s it — the gestalt is closed, and you can move on.

But above all, our foremost task is to outline the product idea. It should be based on a problem, followed by the search for a solution and an understanding of the customer’s motivation: what exactly they want to gain from our product and why it matters to them. However, this sequence is frequently reversed.

How to identify the problem and build a solution concept from it?

I’ll provide an example using a hypothetical product, and we’ll continue to develop this very business idea onwards.

I occasionally subscribe to certain products and services or sign up for trial periods to give them a try. As a result, I receive numerous notifications about subscription charges. I would like to cancel most of them, but I keep forgetting to do so. Does that sound familiar? 

That’s how we identified the problem, and from there on, the idea for a potential product starts to take shape: a service that notifies users about subscription charges and allows them to confirm or reject these transactions. This way, I could manage my subscriptions and eliminate unwanted expenses. The next step is to assess whether this idea is relevant to the market.

Step 1: We start with the problem and describe the business model

Considering the example of the subscription management product: Many customers tend to forget about the trial periods or subscriptions they’ve started, which leads to unexpected credit card charges. This causes stress and a loss of control over their finances – and this is the problem.

Next, let’s consider the target audience. For our service, I suggest categorizing users into two distinct categories:

 Early Adopters: These are the individuals who are most affected by the problem and the easiest to reach. 

Potential Clients: This group comprises those who will need to be introduced to the idea and its benefits, so this includes everyone else. For instance, it could be people who generally manage subscription cancellations in a timely manner, but find it uncomfortable and time-consuming. They would also appreciate a convenient tool for canceling subscriptions, but it’s not a problem that greatly concerns them.

Next, we move on to creating a value proposition, where we outline why the customer should purchase our product – in other words, the specific value we offer them. For instance, with our subscription management service, users can avoid unforeseen charges, eliminate issues with refunds, and efficiently manage subscriptions with speed and clarity.

The next crucial element of the product strategy is the business model, which will encompass:

Revenue Streams (Monetization): Sources of income, such as subscriptions, advertising, etc.

Pricing: Willingness to pay and the payment model.

Lifetime Value (LTV): The average revenue a customer will generate throughout their lifetime.

Cost Structure: Fixed and variable costs for business owners.

We need to consider, outline, and anticipate various hypotheses. Using our idea as an example, we could generate revenue through service subscriptions (subscription fee), or create revenue shared models and take a percentage, such as cashback from transactions made with MasterCard and Visa cards.

At this stage, numerous challenges may surface, indicating potential impracticality of the initial idea. In the end, when the document is ready, I always ask myself if I want to continue developing the idea. If there are no reservations, we proceed to evaluate the idea more extensively.

Step 2. Envision yourself as the customer

Now you need to put yourself in the client’s shoes and look at your proposal through their eyes. You can create a landing page for a hypothetical product and consider whether you’re willing to pay for it.

Additionally, you can use ChatGPT to outline the landing page structure. This outline will provide a rough visual of how the page will be arranged, including details like buttons, testimonials, calls to action, and accompanying text.  Alternatively, you can work with a copywriter and a designer.

After you’ve put together a detailed description or a refined website mockup, take a break for a few days. This break will give you a chance to look at your work with fresh eyes and understand how potential customers might perceive it. If you don’t encounter any doubts during this phase and your idea still seems strong, you can confidently move forward to the third step.

Step 3. Marketing Research

When conducting your own verification — ask for the input from the “market”. There are always certain gaps left during analysis and a deeper evaluation of the idea can be achieved by consulting experts in the field. They may provide an interesting perspective on the situation and unique experience that will broaden the outlook and understanding of risks. Based on their feedback and results, we identify weaknesses and refine, and eliminate “blind spots.”

It’s crucial to assess both direct and indirect competitors. There’s a chance that someone has already developed or revealed a similar solution, but this may not be a problem or the reason to “bury” your idea. You can identify your strengths and create a product that’s not just similar, but superior. The key consideration is whether you have the necessary resources and, most importantly, whether you’re still enthusiastic and confident in the idea’s potential for success.

At this point, we’re conducting interviews with potential customers and conducting marketing research. This challenging yet essential stage yields valuable insights. The survey includes participants from all customer categories – both those with pressing needs and potential users.

It’s important to remember that we’re not selling, but rather engaging in meaningful conversations. We are interested in the respondent’s opinions and aim to solve a specific problem, uncover additional ‘pain points’. Artificially enhancing the idea isn’t necessary. During the interviews, we touch on all aspects of the product strategy, ask clear and probing questions, and based on the responses, we adapt and enrich it. It’s important to note that clients might provide answers that are unclear, contradictory, or not entirely definitive. We’ll need to delve deeper into these responses.

Here are a few techniques to test the potential market response to your product:

Mass surveys: These surveys are used to determine how well customers resonate with the problem you aim to solve and whether your value proposition appeals to them.

“Smoke tests”: Those could be like the “fake door test,” where a button is placed on an existing website inviting users to try a new product. Clicking the button might lead users, for instance, to a pre-order form. The number of clicks helps gauge people’s interest. Another example is the “landing page test,” where a complete landing page is created for the new proposition. The focus here is on conversion rates – how many users click the link or take the desired action on the landing page. These tests evaluate how effectively your value proposition resonates with the customers’ problem. They also provide insights into the audience engaging with the test.

Prototypes: We use prototypes to determine whether we can deliver the value we’ve promised and to give clients a tangible experience with our product.

Pre-sales: We use those when we need to check if our pricing strategy suits the clients. If we are working in the B2B segment, it’s better to prepare a detailed pitch presentation. If we are interested in B2C, for example, we can go to Kickstarter to gather feedback, and assess the willingness to pay for such a solution.

Product tests, namely MVP (this is the final step): As mentioned earlier, before creating a product (even its simplest version), it’s best to proceed when we are already convinced of the relevance of the idea and want to explore the customer’s real experience.

So the Idea Turned Out Not That Great? That’s Actually a Positive Outcome

If you’ve made it to the last step and your idea is still viable, then it’s worth pursuing – chances are, it has even improved considerably along the way. In that case, it’s time to proceed further by assembling a team, seeking funding, and growing the company.

On the other hand, if you come to realize that the idea isn’t valid, that’s still a positive outcome. At least you haven’t introduced a product that would have ended up among the unsuccessful ventures on the market. This means that your efforts haven’t been wasted.