Problem Validation & the “Stealth Mode” Myth

Straight to you from Denver, Colorado, this is Precursa: The Startup Journey. We share the ins and outs of building a tech startup from inception to launch to revenue and beyond. If you’ve ever wondered what building a startup from scratch really looks like, you’re in the right place. With full transparency and honesty, we reveal it all about Precursa on our ride from idea to exit: the wins, the lessons learned, and the unexpected twists and turns.

Hello everybody. Welcome back to Precursa: The Startup Journey, where you get to follow our journey real time and real life as we build the startup designed for startups. So today I want to dive in a little bit, we’ve talked last week about user personas and defining the problem. And today I want to dive into how do you find people to talk to, how do you know what persona they fall into. And I want to talk about the stealth mode myth. So we talked about how you’re building a user persona. Usually at least two personas, maybe up to four, all the four starts to feel like you’re trying to boil the ocean, especially when you get to launch and marketing and just creates a lot of complexity. But in order to get good data, we need to actually talk to people who fit into those personas. And so it kind of seems like, okay, we created these personas. We gave them a name. We gave them an age. We gave them an income level. We gave them particular traits like, are they married? Do they have kids? And it can start to feel like, well, if I have to find people that are exactly like that, that’s going to be really hard because that’s pretty specific. The point of the persona is not to create so specific a niche that there’s like five of them on the whole planet. It’s actually to give you a reference point from which to build marketing messaging and build advertising and build landing pages and make sure that you’re speaking to a particular group of people who can identify with what you’re selling and know that it’s for them. So that said, once we take those user personas and we say, okay, now we need to talk to some people, okay, we need to go do some interviews. We need to figure out, is this a good idea? Do people resonate with this idea or not? When we were doing this for Precursa, for us it’s sort of like, okay, let’s just talk to a bunch of entrepreneurs. And as we talk to people, we kind of started to figure out our Cody and our Eva better. So Cody and Eve are our two personas. If you’re not familiar with them, go back and listen to the previous episode. When we first created Cody and Eva, they weren’t nearly as specific as they got the more people we talk to. And that’s because we made some guesses, we made some hypotheses, we had some assumptions and some preconceived notions about what we thought about Cody and Eva before we started talking to people. But once we started interviewing entrepreneurs, we noticed some trends and some patterns, and those trends and patterns allowed us to start narrowing in and saying, okay, these are the real traits of a Cody.

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And these are the real traits of an Eva. Like for example, we, last time we talked about how Eva actually is probably married and probably has kids. And the reason for that is because female entrepreneurs tend to be less, maybe willing or less able to take a big level of risk. Whereas Cody is willing to jump in and take huge risk. And so that’s a big difference between those two personas. We didn’t realize that that was the case until we talked to, like I said, I think in the first episode we talked to over 200 entrepreneurs over the course of about six months about this idea and this problem. And so first of all, the purpose of the interviews is to uncover all of the things that we don’t know. We don’t know, and to either validate or invalidate our assumptions and our hypotheses. So in Precursa’s case, we validated that, yes, this is a big problem for entrepreneurs.

They don’t know what’s supposed to come next. A lot of them ended up spending a lot of time and money working with the developer, getting a product out there, not realizing that this process matters or realizing that it matters, but not knowing who to go to, not having a place to go, not knowing what information they need, or even in some cases finding the information, but being like, I don’t know how to apply that in my life. Right? Like I don’t know how to take all this information and turn it into something meaningful and useful that I can actually use to build a business. So we validated that the problem does exist. What we didn’t know, or some of the assumptions in our hypothesis that were incorrect had to do with who is the right target audience. Now here’s how the works practically, right? Let’s just say that as Precursa, we didn’t do any of that work, and we went with our original assumptions, probably would get the product, I’m going to say maybe 70% right. Because remember understanding our users is not just about how to market to them. It’s also understanding their emotional journey as they go through the platform so that we can make sure that we’re hitting, you know, when they’re on emotional highs, we’re reinforcing that; when they may be experiencing a low or like a bummer, we’re lifting them up and reassuring them that you’re on the right track. And this is exactly how you’re supposed to feel right now. Right. So we probably would have gotten some of it right. But we wouldn’t know for sure. Before we went and spent hundreds of thousands of dollars, certainly before we went and borrowed 750 grand to put into this venture, we wanted to know as much as we possibly could about who’s the person we’re building for and how do we build a product that serves them.

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So a big piece of that, like I said, it was interviews, talking to real people, getting on the phone, getting on zoom calls, going to coffee shops, remember when that was a thing, talking to real people. Now, there were some interviews that we conducted where we realized this person probably isn’t really an entrepreneur. Like they might think they want to be, but they would get a little bit into the process and realize, Oh my gosh, this is so much work. And I didn’t, I didn’t really realize what it takes to build a startup. This probably isn’t for me. And that’s okay too, because we learned, what do they say about this problem versus what do our ideal customer say about this problem? Right? So even data that is not in the realm of what you’re looking for can be really useful to say, yes, you’re going in the right direction, or, hey, there might be something over here that you need to pay attention to. But most of our conversations were with entrepreneurs who either signed up for the startup program, through Raika Tech, didn’t sign up through the program, but were really interested in it and didn’t do it for a different reason or were prospective clients that hadn’t started their programs yet. Like we talked to so many people and the things that we learned are what’s helping us hone all of the pieces along the way that will make our launch more successful. So our goal for launch is to get 10 to 15,000 people on an email list who are qualified so that when we go live, we can push that out to those 10 to 15,000 people and reasonably, we should expect to get about 1 to 2% from that list, a really, really successful launch would be like 5%. If you got 10%, that would be like killing it. But if you build your expectations based on 1 to 2%, so if we can get 500 users in the first month of launch, we are doing really well, like that’s really successful. But what we really want is for those 500 users to go through the entire process and stay in the platform, not just sign up, be there for, you know, a couple of weeks and then be like, yeah, I don’t know whatever, and cancel right. Talking to users is how we know how to keep them. It’s like, it’s, it’s not only telling us how do we get them in the platform and how do we attract them by saying the words, using the words that they use. So like one of the things that we build out as we finished out, all of our interviews was we said, what are the complaints? What are the phrases? And the pain points that people are using to describe the problem. Because the more we use their language, the more they will see themselves in it, the more likely they are to be searching the terms that we are also using, because we got them right from them, right? So you can start to see how talking to people can make or break not only your launch, but how successful you are in meeting the customer, where they are in order to serve the need and, and solve the problem. The thing that always comes up whenever we start talking about this is the myth of your idea being stolen. I call it the stealth mode myth because I see a lot of entrepreneurs who are like, wait a second. If I start talking to people, somebody’s going to find out about my idea. Somebody is going to think it’s awesome.

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They’re going to steal it. They’re going to go build it. They’re going to potentially do it better than me. And I’m going to lose out. Like, I’m just going to give somebody a really great idea. Here’s two things you need to know about that. And there’s a lot of stuff about this. Okay? We were not stealthy at all. We haven’t been all along. And in fact, we’ve made strategic partnership agreements with companies that we used to have on our competitors list in our pitch deck. Because when you look at the problem we’re actually solving versus the problem they’re solving, it’s actually a natural match. And the two things work really well together. So you never really know what’s considered competitive versus how can you be complimentary in the market? So the first thing about stealth mode is you miss opportunities to create strategic partnerships or find partners or potential advertisers or potential vendors or potential lead generators. If you aren’t talking about what you’re doing, but the other piece of stealth mode is you don’t get enough data to get outside of the realm of your own understanding. Okay? In stealth mode, people are generally operating on this, this mistaken idea that we have the best thing ever. Like we’re convinced it’s going to solve the world’s problem. It’s unmatchable in its brilliance, and we just need to get it built and get it out there. And it will sell itself.I can promise you, that’s not the case, unless you’re building something that is so revolutionary and so cutting edge, and those things happen so incredibly rarely. Most companies, you can be super innovative. You can be building a better mouse trap. You can be doing something far better than the competition. You can be filling a niche in a market that doesn’t exist yet, but for the 99.99% of everybody out there, who’s going to be building a startup, you’re not creating the iPhone, right? The iPhone was disruptive on so many levels. And it was the first thing in decades that really was like that. And there’s lots of argument about this. Believe me, don’t believe me, that’s fine. But the reality is new startups that are truly disruptive, and that really benefit from secrecy, are exceptionally rare. They’re like a Yeti. They almost don’t exist. So I want to caution you that stealth mode only cuts off a really valuable source of data about de-risking what you’re doing. Valuable data about your user, your customer, valuable data about assumptions you’ve made. And the reality is at this point in the game, when we’re doing problem validation interviews, where we’re asking users, how do they see the problem? What did they say about the problem? Does this problem exist? We actually don’t have to talk very much at all about our solution. And in fact, I don’t want you talking about the solution at this point. I want you giving enough context to the person you’re interviewing for them to be able to say, Oh, I get the problem you’re trying to solve. Ha how do I relate to that? And what do I do today? And getting them in that mindset so that they can give you the information you’re looking for. So for example, in Precursa, we didn’t walk around saying to everybody, Hey, we’re building this really cool platform.

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This is what the dashboard is going to look like. This is how you would go through your ideas. Here’s the AI algorithms we’re thinking about implementing; that was about us. Problem validation is about the user. So we had a very short one-sentence statement. We are creating a platform to help new tech startup entrepreneurs answer the question, now what, when they have a new idea for a company. Like that was basically it. And that’s, that’s not word for word, but that was basically it. And then we said, what do you think about that? And we shut up and we listened. And people talked and they told us, Oh my gosh, you can’t believe the amount of information that’s out there. And I have no idea how I’m supposed to use it. And I have no idea how to apply this to my situation. And I have no idea how to turn that into steps that I can take. Right? We heard this over and over again, but the reason we were able to hear it is because we weren’t talking, we weren’t trying to convince anyone of our assumptions, our hypotheses, any of that, we asked a lot of open-ended questions. We asked people things like, we’d say, what are you doing to solve this problem now? And then we would be quiet and listen. And we use why, the power of why, a lot. So following up an answer, especially short answers, like a yes or a no, or like a couple words with the question why gets at motivation. It gets at the underlying cause for people’s decision to do a thing or what led them to think that or what led them to take that action. Motivation is what gives us so much about the complaints. People have the pain points they have and what causes them to change their habits or spend money to solve a problem that they have. That’s also how we start to derive relative value, which goes into the pricing conversation, which we’re going to talk about that in a future episode. But for now we just want to gather as much of that data as we can. And I always tell people, I want you talking 10% of this interview or less like the most you’re going to talk will be right at the beginning. When you ask them, can I record this so I can do data entry later? Here’s sort of what you can expect. I’m going to ask you some questions. This is just a conversation. And you’re going to tell me your opinions. Does that sound good? And then they say, yep, that sounds great. Then you read your problem statement. We are building a platform that helps new tech startup entrepreneurs answer the question. Now what, when they have a new idea, what do you think about that? Now I’ve done the majority of my talking already, and you can see it took me less, less than a minute. Now might take two, two minutes when there’s a human sitting across from me. And maybe they ask a question that I answer, but I don’t want to put any of my bias, any of my assumptions, any of my hypotheses into the conversation as little as humanly possible, even to the point where people would say, well, I’m trying to think of a good question that we got asked, and I’m not thinking of one right now. Most people, if you hone your problem statement really well, mostly people aren’t left with questions about it, but if they ask you and like, well, what would that look like? Would it be a mobile app? We always say, respond with a question now, not to a level where you’re like stupid about it, right? Like if they ask a question, that’s a simple answer. That’s a clarifying thing. Like, well, what does tech startup mean? Oh, that means if you have an idea for an app or a SaaS or an e-commerce site or a piece of software that would live on the web or an IOT device, like an internet connected device, that’s the kind of stuff we’re talking about. Okay, great. Now I get it. But if somebody says to you, well, would this be in a mobile app or an only be on like a web browser on a desktop? Which would you prefer? Why would you prefer one or the other? I want to know what prompted that question because they have something that’s going through their mind that made them ask that question. I want to know what it is and what they would expect to see or what they would want to see in a solution.

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One of my favorite questions that I always put into any interview that I design, and we did it with Precursa too, is I always ask the magic wand question, which is if money didn’t matter, time didn’t matter, and I could give you a magic wand and you could wave it and solve this problem today, what would you do? What would you ask for, with your magic wand? What would you design? What would you want it to look like? How would you want it to work? People get really excited when you actually ask them to vent and you’ll get really brilliant stuff out of it. I mean, we knew that we wanted a lot of data analytics because we’re building a platform where, as you’re going through the process, we’re giving you exercises to do where you’re putting in real data about what your market research and your interviews and your problem statements. And we’re evaluating all of that to give you the Precursa score, which basically tells you, it’s sort of like a FICO score for your, for your startup. It’s giving you an objective measure saying, how are you doing compared to other startups in the Precursa platform, but also where are you compared general startup activity in the community? You know, we have lots of sources for that data and lots of ways that we pull that in and kind of do comparisons, but we knew that the more data about what you’re doing, we have, the more your score will be accurate. And the better we can guide you with some of that strategic stuff that normally pay thousands or tens of thousands of dollars to work with a coach or a consultant to get that strategic advice. But we weren’t sure how far to go. People hold their ideas less, more or less close to the vest, depending on their perception of how much do they think it’s going to be stolen. Right. We talked about the stealth mode myth. And so by talking to people and asking the magic wand question, they were like, I would love to be able to put all of this stuff into a system and have it tell me what areas should I dig into and what areas am I good on, and where am I weak, and where am I strong, without the fear of it being stolen. And we said, great security matters. It’s no accident that one of our co-founders is an expert in cyber security. She owns her second cyber security consultancy. And she does a lot of work with DoD and the government and a lot of private sector work. That’s not an accident because what we realize is from talking to people, we can help combat the stealth mode myth by building technology that helps them protect the pieces that they need to protect, but still gives them the power of AI and the power of machine learning and the power of my knowledge and strategic coaching ability and my expertise in building startups, the expertise of other people that we bring in as experts turning that into an automated process that costs them a lot less money. They want that, but they want it in a way where they know that they’re protected. And so all of this led us to understand that if Precursa is going to be successful, the entrepreneurs, the center of the universe, nothing happens without the entrepreneur being cared for being nurtured, being loved for lack of a better term. And so when we started building the platform and all the messaging and all of the materials, all the content, all of that is designed around protecting, caring for snuggling, the entrepreneur, and anything else we do has to be in service of that mission. Otherwise we can’t do it. So advertisers, we we’ve talked a lot about bringing advertisers into the platform and how would we do that? Because it is a source of generating money, right? It’s an income source revenue source. It’s a, it’s a revenue stream. The thing that we hate is several fold. One is most of the traditional advertising networks track you everywhere you go. So even the stuff that you’re putting into the system, or it’s looking at all of that, it’s looking at cookies on your machines, looking where you’ve been, and it’s trying to put stuff in front of you that it thinks you want. So a great example of this as an, a scary example, one of my developers and I were sitting in the office, he had never heard of the purple mattress before and David and I, my fiancé and I, we love our purple mattress. In fact, all of our guest rooms have purple mattresses in them now because we love them. And actually we’ve been trying to get our kids to let us put them in their rooms too. But they like more firm beds than we do. So, whatever, but we were in the office and David and I were talking to grant who’s our lead architect, our principle architect about the purple mattress, because grant was considering buying a new mattress. He didn’t Google it nothing, right? Like we were just talking about it in the office. And then he went back to work and we went back to doing what we were doing. And it was two days later, he sent me a message over Slack. And he was like, I literally just started getting purple mattress advertisements on Amazon, on my phone. And he’s like, that’s crazy because I didn’t search it. Okay. But that’s what happens. They’re listening. They’re they? The big “they”, but advertiser networks are designed to leverage all of that stuff to put in front of you things that they want you to buy. For Precursa, if we’re going to have advertisers and vendors who advertise in the platform, the first thing, it was really important for it to be relevant to your entrepreneurial journey. We don’t want you seeing a purple mattress ad on precursor that doesn’t actually help you.

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I mean, maybe sleeping better does help you build a better company. We can make that argument, but we don’t have any control over what you see. And when you see it, the other piece of it is we care a lot about who we put in front of you. And that’s not just because we care it’s because we know that you are trying to build a company. You are trying to figure out the right next steps to take. And we don’t take that lightly. When I said that the whole universe is built around startup entrepreneurs, I meant it. And so if we bring in an advertiser who advertises a good or a service that’s designed for a startup entrepreneur, but the way they treat their entrepreneurs doesn’t line up with how we treat our entrepreneurs, how we treat you as a customer. If those two things don’t line up, we don’t want them advertising to you because whatever good or service they have, I guarantee there’s at least one or two other companies that also do that, but do it in a way that we can get behind. And that we are confident that if we put our people who we love and value and cherish, who are the center of our universe in front of them, they will take care of them exactly the same way. And that matters dramatically to us. So we learned that by talking to people. So hopefully I’ve convinced you why it’s important. So the last piece of this is how do you find people to talk to, right? You might think, well, I talked to my mom and I talked to my sister and my brother-in-law and I talked to my nieces and nephews and some cousins and a couple of my close friends. And, Oh, I got my buddy who built a startup. I talked to him about it. That’s good. You should be talking to people in your life. Because if someone in your life who loves you is like, wow, that’s a really stupid idea, that might give you reason to pause. I don’t know. Some people just, they don’t have any vision who knows, right? Talking to people who are actual end users, who would actually consider buying your product or who fit into one of your user personas is better. And the reason is they know more about the problem because they have it and they know more about their willingness to change their habits or spend money to solve it because they have it. Okay. So how do you find these people. Depending on the kind of product or service you’re building will depend on how you find people. If you’re building something that’s D to C direct to consumer and your potential customer is millions of people, and it’s a $5 widget or a $5 app download or whatever, just walk down the street, walk down a main street in a town or a city or a village or whatever near you, sit outside of a Starbucks with $5 Starbucks gift cards and say, Hey, will you give me 15 minutes of your time for a $5 Starbucks gift card and design an interview that doesn’t take more than 15 minutes. If however, like with Precursa, we have a pretty specific type of end user, right? This is somebody who is actively has an idea for a tech startup, an app, a software, a SaaS, et cetera, you know, IOT device. And e-commerce, whatever that is in order to find those people is a little bit more challenging. So you can’t just walk down the street and say, Hey, have you ever had an app idea and get 15 or 20 people a day answering it and spend 15 minutes talking to them. So we had to go about it by looking into our client lists. I actually, I think I have annoyed my family more than once, but I have a little radar that in a crowded restaurant, I can hear across the room when somebody says to their friend or their spouse or their business partner or whatever, I had this idea for an app, what do you think; my little radar goes off and I’m not afraid to walk over and be like, excuse me, I’m so sorry to interrupt. I just heard you say you had an app idea. That’s what I do. I help people build startups. Would you mind if I like, could we set up a time to talk? I would love to interview you about your process, getting to this place and then ask you some questions and you would be shocked 90% or more of the people are like, sure, that’d be cool. Because usually I say in exchange, I will give you a free hour of startup coaching and we’ll talk through things and I’ll give you some ideas and point you in the right direction. It’s a more than fair trade. And people are usually pretty glad to do it. So you might have to get creative, but remember to ask people that do talk to you, okay, now that we’ve had a conversation, does anybody else come to mind that I should be talking to?

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Because once they understand what you’re trying to do, usually one or two other people will come to mind. They say, you know what? I should introduce you to this person, this person that you could talk to because they have this problem all the time, or they’re constantly complaining about this. So get creative. People are out there in the world. And the number of people who really would love it, if you ask them to give their opinion is earth shattering. I mean, it’s mind blowing, right? You’re like how a little bit of that, like potential for rejection. Cause like I said, it’s not everybody. I mean, there’s maybe one out of 10. That’s like, okay, quit, bother me, go away. And you’re like, okay, thanks very much. You know? And you walk away. So you learn to get good at dealing with rejection. Right. But you don’t have to be that good at it because most people, if you say I’d really love your opinion and I’m willing to give you something in exchange for it, they’ll be like, all right. So use that to your advantage and get creative and consider where are your people? So you did a user persona. Did you look at, based on their demographic? What social media channels are they most likely to be on? If they’re a woman between the ages of 35 and 50, they’re most likely to be on Facebook. So go on Facebook, start poking around, do some posts asking, Hey, I’m looking for people who know something about X, Y, Z to talk to you. I want, I want some opinions and see what comes back. You’ll be shocked. You’ll be over run if you do this. Right. Okay. And you will easily. We always tell people. We like to see depending on the market size and the niche and how complex or simple your ideas, we like to see at least 75 interviews with people you don’t know, closer to a hundred to 150. Like I said, with Precursa we did over 200 getting to that number. Actually, isn’t that hard. If you are always thinking about, talking about, doing all the things, right, that I’m saying, and the more data you have, the better your models will be, and the better your messaging will be. And the better you’ll be able to predict the customer journey when they’re using your product. When they’re making a buying decision, when they’re using the product and then where do you lose them? Or where did they fall off or where do they stop buying or whatever that is like, you’re going to know so much more, the more data you have now, if you find that you’re getting a lot of people who don’t fit your user persona, that tells you one of two things, either it tells you, Hey, maybe we’re wrong about our user personas. Or if they not only don’t fit your user persona, but they don’t have the problem or they don’t understand the problem. Maybe the problem doesn’t exist. Or maybe you’re just talking to the wrong people and you need to go back and think about, okay, I’m getting the wrong kind of people. Let me rethink about where could I find some people? And maybe that’s where you go into people that you do know, or your network on LinkedIn. And you say, okay, I’m looking for people who have this type of problem. And from there, you’ll get new leads, new ideas. People will tag other people who are like, Hey, I don’t know anything about that. So a perfect example of this. I was interviewed on a podcast by a ten-year-old girl. Now her dad is the one who has the podcast, right? He and his buddies, but she had this idea, she’s learning Scratch. So she’s learning how to be a programmer. And she was like, I’d really like to talk to a girl programmer, like somebody who does that for a living, he dug into LinkedIn and said, Hey guys, my daughter had this really great idea to interview on my podcast. He called it the Ivy takeover. So adorable. She wants to interview on my podcast, a girl programmer, who do we know? And he got so many responses of people tagging other people and saying, reach out to this person or this person does that. Or whatever. The LinkedIn networking actually does work if you use it with intentionality. Okay. So social media is a great way. Walking around a city street or sitting outside of a Starbucks is a great way. Reaching out to people you already know through email or making phone calls to people you already know, even if they don’t have the problem, if you can describe it in a sentence or two, somebody will come up in their mind that they can refer you to and like attracts like, so the person who has the problem probably knows other people who have the problem. So always make sure you’re asking, do you know anybody else that I should talk to about this thing? Like anybody else who has this problem who experiences this, who could give me more information and more feedback. So like I said, we did over 200 of these interviews for Precursa over about six months. Every time I talked to someone new, I usually throw into our conversation, a few of those questions now, because I’m doing more solution validation, which is different than problem validation. We’re talking about problem validation right now, but usually I can throw in a little bit more about assumptions in my biases and my hypothesis and my beliefs about it, but I can do it in a way where, when they come back with a response, they’re not trying to please me by agreeing. I can get a pretty honest yes or no, or well, maybe, but it’s more like this kind of answers out of people and all data’s good. All data’s good. You just have to know how to interpret it. All right. So that is a wrap for today. Next episode, for the very first time we’re going to have all three of the founders on together and we’re going to be talking about what does that look like, getting co-founders. I started this idea almost three years ago by myself and really only in the last six to eight months have I had partners. What was that like sort of shifting from doing it myself, to having co-founders and partners. What is it like for them coming in and jumping into an idea. We’re going to talk about all that stuff and you’re going to get to meet Paige and Sarah on the next episode. So stay tuned, make sure you come back. You don’t want to miss it. I remember to subscribe wherever your favorite podcasts are. This is Precursa: The Startup Journey. We’ll see you next time.

Thank you for listening to this episode of Precursa: The Startup Journey. If you have an idea for a startup and you want to explore the proven process of turning your idea into a viable business, check us out at precursa.com. Make sure to subscribe to this podcast wherever you listen to podcasts, so you never miss an episode. Until next time…