Want to know if your product will sell? Answer these 3 questions

This article is part of the author’s Seed to Series A series which seeks to help seed-stage companies looking to grow to series A. For more articles in the series, go here.

In the first article, we looked at how a VC validates your market size. For this post, we now turn to validating your solution.

How painful is the problem?

A common mistake founders make is to assume that a product that solves a problem will surely get traction. However, if the problem simply exists but is not important for customers, it will never be adopted.

A useful rule of thumb is answering this question: Is this problem one of the top three problems the buyer faces?

For example, spas often identify the lack of customers at off-peak hours as their biggest problem, followed by rising salaries and rents, and difficulty in retaining staff. In response, they often need to boost off-peak bookings by offering coupons and incentives.

Solutions that facilitate bookings and scheduling of customers frequently struggle to get traction because they are not solving a core problem.

If the problem is not sufficiently painful, there is almost no pricing power, and the sales effort will be too great to achieve rapid growth.

How do your potential customers feel about the solution?

In gauging how painful the problem is, it is essential to get honest customer feedback on both the idea and the early prototypes.

Founders with industry experience often skip this essential step and make multiple incorrect assumptions since “they already know the market.” In our experience, these assumptions often turn out to be incorrect and lead to poor product decisions.

The most important rule for getting honest feedback from potential users is to listen and not talk.

Founders are often in “sales mode” when demoing early prototypes, pushing for a positive response (e.g. “looks great”, “really interesting”).

What’s much more effective is to briefly explain the problem and the solution, and then ask for comments. This usually elicits more candid and honest feedback. Compare the following examples:

“We have solved the problem of invoicing your customers. Let me show you our alpha product. We think this would be an excellent solution. Would you agree?”

vs

“We are trying to solve the problem of issuing prompt and accurate invoices. Here is how we are solving the problem. What are your thoughts or comments on this?”

Is it easy to use or adopt?