Market validation from an early stage startup perspective

We wrote this article for Straight Up, a monthly startup resource that tackles common sticking points of early stage startups. Get yourself on the list for the rest of April’s market validation edition here.

Nearby is one of the 9 female founded, early stage startups going through Lightning Lab XX right now. Their vision is to connect people to list and find local jobs instantly, creating a new way to obtain financial independence through community engagement. Nearby has been doing an awesome job validating their market as an early stage startup so we talked to CEO/ Founder Vanessa and CDO/Co-founder Charlie to find out more about their journey so far.

Lightning Lab XX Nearby early stage startup

How does Nearby work and what are you trying to achieve?

Nearby started after I (Vanessa) founded and sold two businesses in Whangarei. I was a full time stay at home mum at the time and needed a lot of on demand help for those businesses to keep them going, so I created a facebook group called Odd Jobs. The group started my journey in building up a network of people that could do this work for me and it spiralled from there.

I had a bit of a lightbulb moment around wanting to connect the people, like myself, who have no time but have the money to pay for services, with people who have lots of time but next to no money. We’re providing the tools to financial independence for people and we think more time or more money equals more freedom on both ends of the spectrum. We’re providing on demand solutions and we’re nearby.

The main values and aims of Nearby are helping people to help themselves, a sense of honest community engagement, and showing people to find the tools to be financially better off. We want to think differently about how we solve this issue because so many have tried and failed, and be real about what it is we’re actually trying to achieve.

What market is Nearby targeting and how did you find this out?

Initially we started with identifying the unemployed as our target market: students, stay at home parents predominantly. Then we identified the target market on the other side of the platform – time poor working professionals that need some on demand help at work or around the home.

It was bringing those two markets together and finding out who was the most motivated that gave us the most insight. We did this using the Odd Jobs Facebook group and kept a close eye on which customers were really engaged with it to get a good feel for who the target market on both sides of our platform were.

Have you got any advice for good ways to validate your market and find warm sales leads if you have never done it before?

We were fortunate enough to have created a group of early adopters that are looking for the service we are providing, so we had access to the right customers that would use our product from the get go. Our early adopters were always the most active on facebook. Having access to a pool of people that you don’t know is really useful at the early stages of a startup, you can obtain accurate and unbiased data. It was really just engaging with these customers in an authentic way and drilling down to their motivations through a series of conversational questions, asking a lot of ‘why’ questions.

Once we spoke to a couple of our early adopters, we were able to see we had an assumption that our target market was the unemployed but we were able to make the distinction that it’s really the motivated unemployed customer we’re targeting, for example the motivated customer might have a family to support and don’t want to rely on government. This was a key distinction for us in our customer discovery process.

We also found that talking to the customers that don’t have this pain are some of the most useful conversations that we’ve had, so don’t rule out customers who have cracked the solution to your problem! Every customer is very valuable, for getting your idea further along in the process and validating it.

Have you picked up any tricks for testing assumptions without influencing customers answers?

Keep your questions as neutral as possible. It is really easy to fall into a positive or negative fueled question, so keep an eye on the wording you use.  For example I asked a student “What’s the worst part about working and studying at the same time?” And this question is loaded straight away giving you a negative spin or biased data.

Keep the conversation going with a customer by keeping the focus on what they’re doing. The 5 whys is a useful model to base the conversation on, you get to the root of the pain for the customer and are able to help fix the problem. For example “Tell me more, that’s interesting, why does that work?, why doesn’t that work?” And so on.

The core of our business is around the value that we’re providing people and encouraging them to help themselves, and this translates into our ‘sales’ conversations not sounding very ‘sales’y at all. We speak to them like they’re friends from the beginning and it’s very easy to build rapport this way. We ask lots of step by step questions to map out the customer journey and how they solve the problem themselves which personalises it for each person. It’s understanding what the problem is for the individual and getting on a level with them where they know you can help fix their problem and that you’re there to do just that.

When we first started out we had the wrong idea about what our customer discovery cold calls were about. When we called someone up and asked if they had the problem we are trying to solve and they responded with no, we would end the conversation there. In retrospect we should’ve been focusing on these customers, giving them a lot of attention because they already solved our problem. These customers have the solution, so it is important to find out why or how they managed to do it – don’t be afraid to call these customers back from the perspective of “we’d like to help our customer achieve what you’ve achieved and want to get a better idea about how you do that”. Most are super keen to share how they’ve done it.

What advice could you pass on to other startups for getting access to the right customers? What preparation do you have to do to get appropriate and useful data/customer feedback?

  • Have set plans in place for what you are trying to discover about your customer.
  • Have a very clear idea of what it is you are trying to achieve with your customers and keep this goal in your forefront – look at how customers engage and interact with your MVP to discover and validate your assumptions.
  • Learn how to cold call!
  • Create a pool of customers/early adopters and use them to test your assumptions – both through talking to them directly as well as observing how they are using your service if possible. For example with your Facebook group, one of our assumptions was that don’t customers like having to write out lots of information. We tested and validated this and used it to inform the customer journey process by not having any big forms to fill in anywhere in the process.
  • Don’t lead with the nuts and bolts of what the idea is (or talk about this at all), be broad and get them to talk instead. Ask relevant simple questions to prompt them to give you as much detail as possible about their processes, behaviours and needs.
  • Always ask if they know someone else who needs the solution you’re providing!

What’s the single most useful piece of advice that you’ve received regarding validating your product or service?

Be prepared and ready to move with the flow of your startup idea, be really honest with yourself about what you are trying to validate and be prepared that the outcome may be very different to what you were expecting it to be. Really question why you are doing something. Ask yourself am I holding on to this because I can’t let the idea go/morph/change or because I think this is valid information. Be honest with yourself when distinguishing between your gut feeling and data you’re collecting – it’s a balancing act between your gut instinct and what is actually working.

Looking for more information on how to validate your market?

For more insights on market validation from local mentors and startups, get yourself on the list for April’s market validation edition of Straight Up – Creative HQ’s monthly startup resource that focuses on a different topic startups struggle with each month.

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