How to Validate Your Business | OkDork.com

How to Validate Your Business

Tim: Where to even begin? I think where we should start is perhaps telling people a little about AppSumo and how it came to be, would be perhaps a good place to start. If you’d like to start somewhere else, we can do that too.

Noah: I guess. I mean, I think what’s interesting is kind of the journey of how it got to AppSumo.

Tim: Yeah, well let’s talk about that.

Noah: A lot of people out there, maybe some of the audience, some of the fans, some of the people watching, I started off with a crappy job. I started at Intel. One of the things I was known for was sleeping under my desk. I brought a sleeping bag. I would position the chairs. I would bring candles. I hated my job, and I was literally working the 1-hour work week where I didn’t do anything.
I wanted a change, so I ended up just kind of sending my resume to Facebook, and that kind of started me off into the startup world. From there, Facebook, I was able to build a lot of products. Some of you guys may have heard of them. Anybody in the chat room heard of Facebook?

Tim: Facebook. You worked on the ad platform also, right?

Noah: I built Facebook ads, did Facebook mobile, Facebook status updates. It was one of these things where I think a lot of people were building businesses. Really, what I found is you have to really be doing what you’re interested in and things that you’re using actively, because my mom and my grandma, my family were like, “Facebook? What is this Facebook? MySpace is killing them.” My mom’s like, “I saw them on Oprah. I saw MySpace on Oprah. You are screwed. What are you doing? Stay at Intel.”

It was just like I loved what they were doing, I was really excited to be going there, and I think that’s a really big takeaway for a lot of people is just think about what you’re already interested in using or doing, or think about what you’re doing in your weekends. Be like, “How do I make a business out of that?” From there, after Facebook, I went to Mint.com. Then a few years later now I work at AppSumo.com. AppSumo, for the people that don’t know, we promote cool products. That’s really…

Tim: And AppSumo is yours also?

Noah: Yes. It’s the first…I kept getting fired. People were like, “Why are you an entrepreneur?” I was like, “I either get fired or let go.” I wanted to have the say and have the freedom to run a business the way I wanted to run it.

Tim: Yeah, awesome.

Noah: Yeah, it’s been an interesting story, interesting journey.

Tim: This is a side note. Entrepreneurs and chefs have actually a lot in common. They’re both totally crazy generally. People are like, “Oh, that’s so courageous of you to be an entrepreneur.” “Oh, that’s so courageous of you to follow your passion, become a chef.” They’re like, “Nobody else would hire me.”

Noah: Yeah.

Tim: I’m unemployed.

Noah: There’s nothing else. You know what’s interesting about that is that I’m actually risk-averse. Most people think entrepreneurs like, “Oh, you ride motorcycles.” Okay, I do. I do ride motorcycles.
But they think you jump off cliffs and you do all these crazy stuff, but I actually don’t start businesses until I know they’re already working. I didn’t quit Mint.com until I already knew that my next business was going, and I didn’t leave that to do AppSumo until I already saw that people were wanting what I was working on.

Tim: So people think of me as this crazy risk taker. I’m actually not. I don’t view myself as a risk taker. When I started my first business, same thing. Before I left, well, actually our whole entire sales division was fired, but before that happened…

Noah: Before you let go.

Tim: Before they dismantled and then imploded, I had it up and running and prototyped it. That’s something I’ve been really impressed with when I watch everything that you’ve done is these prototyping, testing, iteration, validation, all of that.

Noah: Yeah.

Tim: So maybe you could talk a little bit about what you mean by “I only start businesses that I know are working or will work.”

Noah: Exactly.

Tim: That’s a foreign concept to a lot of people.

Noah: Yeah, so I think maybe I’ll say a little bit of the counter of it where I’ve spent, I was calculating it last night, I’ve spent 12 months of my life and over $100,000 on things that have not worked. So I keep doing all these things that are not working. I’m like, “Well, what actually will work?”
With AppSumo specifically, I was like, “I want to spend as little money as possible and I want to spend as little time as possible to know if it works. Then if it doesn’t work, okay, fine. I’ll accept that and move on to something else.

Tim: Right.

Noah: With AppSumo, you make a hypothesis. That’s all your businesses are. It’s a hypothesis. “I think people are fat, and I want to help them through this method.” Or with AppSumo, I said, “I want to promote digital products that I think are just really great for startups.”
What you try to do is, how do I minimize the amount of time and money to do that? So with AppSumo, it took me $60 and about a week, give or take, to actually understand if that was a viable business. My hypothesis was, “Could I get 200 people to buy a digital product online for startups?
What most people do in business, this is very common, I actually call it an engineering disease. If you’re an engineer, you guys are smart. Is anybody here an engineer? Anybody? No? Yeah? It’s okay. Have some pride. You’re smarter than everybody else here, right? Anybody, engineers who watch, you guys know you’re smarter. It’s fine. I’ve accepted that.
But engineer, what you do is you love to build really cool shit, right? It’s really great to build something. Then you go out with it and you’re like, “Anybody want this? Anybody want this?” Right? Yeah. The audience. I’m sure the people online know that as well.
So I like working backwards. I like going to the customer and trying to understand, “All right. What are the problems you’re having?” Maybe in message boards or forums, like what people are already talking about. Go to a message board. Go to, like, I think it’s BigBoards.com. You can find message boards on any topic.

Tim: BigBoards?

Noah: BigBoards, yeah. Then you can see people complaining about things. Then you can actually go and solve that problem. So with my hypothesis for AppSumo, how I did it in a week and with $60 is I went to reddit.com. I said, “All right. Well, what are they really talking about? What products are they using?” and they’re using Imgur, which is photo hosting.

Tim: Yeah.

Noah: A lot of you know the memes. You probably see all these weird memes online. A lot of them are Imgur. I know in our office I’ve certainly passed them around. Anyway, so for $60 I basically was like, “Well, they’re talking about Imgur on Reddit, so I know where my customers are. I know what the product they actually want is.”
I went to Imgur and said, “Let me sell this for you. I will promote this online.” I contacted a guy in Pakistan. His name is Mohammed. You could email me, HiNoah@AppSumo. I’ll give you his contact info. He’s $12 an hour. So I had him build the PayPal button. Then I went on Google and searched “how to build a site.” I really did. I went to Google. So I took that code.

Tim: That must have pulled up a lot of legitimate websites.

Noah: Yeah, how to build a website. That’s totally valid.

Tim: I’m giving you a hard time.

Noah: No, but I basically searched on Google, like “how to build a registration page.” Even now I could do it more ghetto. Now you don’t even need to do that. Now you literally just need your PayPal email. They’re like, “Hey, what do you want?”
So people in the beginning, I posted on Reddit, because that’s where the customers as, as we talked about, and then people would start buying it. I didn’t build any really complicated back end. I literally manually emailed everyone who bought it. Once they bought, I got an email, and I was like, “All right. Let me go send you the product.” Send.
What happens with a lot of people as they’re building these businesses are like, “Well, I need all this back end complexity and I need to send them these things.” It’s like, “Do you actually need that or can you really just do it manually for the time being and seeing if people want it?”

Tim: Yeah. I need to scale. It’s like, well why don’t you make sure one person is going to buy it first?

Noah: Please don’t say the S word. We’re live.

Tim: I know. I’m sorry.

Noah: That’s funny, because so many people have, you know, we’re going to talk with some people today that have these fantasies about, “Oh, I’m going to have all these COOs and CEOs and CTOs. How am I going to get a million customers?” and all these things. It’s really like, I call it the velocity to one dollar. How can you really just break to your first dollar? Once you can start getting in that mindset, it really changes your perspective about how am I going to get this business really working versus all of the playing business.

Tim: I think one of the points that you made is really…Well, they’re all important points. For what it’s worth, in everything that I’ve done, we are 100% on the exact same page. Now, there are different ways to skin the business cat, but this is the risk- averse cost minimal way.
One thing I did, I haven’t actually said this before, when I wrote The 4-Hour Chef, I polled all my readers for their favorite cookbooks of all time. If you could only choose one or two, which would the two be that you would choose? You could never buy another book. Then I had an assistant help me, and you could do this yourself certainly, narrow that down to only books that had an average of 4.5 stars or higher on Amazon.
Then I looked at the 3-star most helpful reviews or most critical, most helpful, and looked for the things that they identified as missing in those best books. Then I made a running list of all the things that were missing from even the best books. Like in barbecue, they neglect brisket a lot.
I was like, “Okay, great. We’re going to do short ribs, brisket. It’s going to be my book.” I made like a hit list, because I knew the market was there.

Noah: That’s a really…I don’t know if you guys got that. You should almost, like, just to repeat what you’re saying. I’m not plus- one-ing you. I’m plus-zeroing you. These customers on Amazon have already bought something. They’re already telling you what’s missing. Now you can go serve them.
That’s not just on Amazon. That’s on message boards. That’s on Twitter. That’s on Facebook. People are already telling you what they want solved. That’s awesome.

Tim: Yeah, like knife skills. Solved. Problem, problem, problem. Okay, solved. They’re already spending $100 on two, three books to try to figure it out. We could jump straight into, we’re going to do the case studies, but what are some of their common mistakes or rules of thumb that are your pros, like your go to rules?

Noah: Yeah. I wrote them down. I put them in the 10 commandments. I put them in my little black book. A lot of these are from…Let me show some of the stories of what I’ve gone through to help you guys understand. I’ll relate them to some of the things. I call it the totem pole problem. What the totem pole is that, Tim, would you pay me $50 to take off your shoes every night?

Tim: No. $50 to massage my feet after the shoes come off maybe.

Noah: Okay, that [inaudible 09:02] right there. That’s what’s interesting. So in the totem pole effect, there’s on the bottom of the totem pole is shit, right? You’re like, “I’m not going to pay you $50 to take of my shoes,” but what did you say afterwards?

Tim: I said, if you took them off and massaged my feet.

Noah: Right? So now as we move up, people on the totem pole, it’s like, well, that’s actually a higher-value proposition. That’s a higher problem I’m solving for you. What you really need to consider is where are you on the totem pole with your customer?
What happened with me in the past is that I did credit card processing. So we powered Zynga’s payments and Tagged and Airi Games. None of them woke up and said, “Man, I really can’t wait for Noah to do our credit card processing today,” right? Because I would call them, be like, “Hey, guys. It’s Noah.” They’re like, “Noah who?” Right?
Then I said, “Well, tell me what are your bigger problems? What do you actually want?” They’re like, “Well, we really want customers.” Right? I was like, “All right. That’s higher on the totem pole.” So realize where you are on the totem pole with your business.
A second key, key thing that I’ve sort of been noticing, it’s a really big trend with wantrepreneurs that we’re trying to kill. We want these people to all be entrepreneurs and successful.

Tim: Get the term, right? Wantrepreneurs.

Noah: Yeah, yeah, is that they need time limitations. You actually talked about this in your first book. I believe it’s Parkinson’s law.

Tim: Yeah.

Noah: What happens is people extend time, and it allows them to just keep going and going. But the creativity comes when you reduce the money. So with AppSumo, we were spending almost over a quarter million dollars a month in advertising. When we cut that down to now about $10,000 a month, you actually have to be, “Shit, I want the same results or more. How do I be creative?”
So with the wantrepreneur, instead of you have three months to validate your business and see if people want it, spend a week, spend a weekend, spend tonight. Literally, after the show tonight, I think it ends all at 9:00, go and finish the validation that you’ve been having on your checklist. The fact that you only have three hours to do it, like we’re going to do today with some of them, will shift your mindsets.
One major, major thing…Two other things I really want to highlight is accountability. I’ll tell a depressing story kind of. Two weeks ago we brought in five entrepreneurs to the AppSumo office in Austin. We walked them through the office. We made sure it was what they wanted to be doing. We literally mapped out what they were going to be doing, their due dates, their commitments.
Then two days ago we emailed them and said, “All right, guys. We gave you everything you need. We gave you the blueprints. We walked you through it. You kicked ass, right?” We feel really good. This is what makes us feel good as well, seeing you guys get the results. Can anybody guess? Can you guys guess what happened after two weeks?

Tim: Nothing.

Noah: Can we all do it at the same time? One, two three.

Audience: Nothing.

Man: They failed.

Noah: That was weak. You guys were like, “Nothing.” Wasn’t that weak as shit. One, two, three.

Audience: Nothing.

Tim: That was like happy birthday at a restaurant. They’re like, “Happy birthday.”

Noah: Yes. Next time notice that at restaurants, the birthday song. But nothing happened. Nothing happened, and it was really disappointing. What I’ve noticed that’s a key thing for people that will break through the inflection point or when there’s a little bit of hardship is accountability. Real accountability. Not like, “Oh, you didn’t do it? Whatevs.” Someone who’s like, “Hey, what happened today? Hey, maybe you need a punishment.”

Tim: How have you seen that done for entrepreneurs?

Noah: Yes.

Tim: What’s a good way to set that up, besides having Noah Kagan kick you in the ass?

Noah: I’d love to kick someone in the ass.

Tim: He’s an ass kicker.

Noah: That would be kind of funny. I’ve never kicked anyone’s ass on air. I think there’s two ways. Each person has different ways of being…

Tim: Checklist.

Noah: Dude. I have my list. Noah’s dream done.

Tim: I’m all about fulfilling dreams today.

Noah: Thanks, bud. I think there’s two ways of accountability. There’s a positive and a negative, and it depends on the person. I swing both ways. I can do it either positive or negative. I’ve read some books recently. I think one of them is Drop Dead Healthy, where he was talking…

Tim: Yeah, A. J. Jacobs.

Noah: Yeah. For him, he actually said that he had a check for $1,000 for the Nazi party if he ate dried mango.

Tim: Sound familiar, guys? Yeah.

Noah: You guys talk about this?

Tim: No. So stikK.com with two Ks at the end allows you to choose an anti- charity.

Noah: Yeah. So that’s the negative motivation, and it has to be painful. That’s the real thing, because if it’s like $10, then I’m like, “Fine, $10.” It doesn’t really bother me, but it’s something that I would think about.
There’s also Lift App, Lift.do, which is a positive reinforcement. That’s a really great one. You can use it every day. You just check in. Like, I’ve been doing motivation for 45 days. I stopped now, but for 45 days I did it, and now I don’t need Lift.
The negative one is the consequences. Positive is Lift, or I say small wins for accountability. What I do every morning is I do a GEBY. Do you know what a GEBY is?

Tim: No.

Noah: So I have a health coach.

Tim: It sounds profane.

Noah: It’s evolved over time. So I work with Adam from MyBuddyTutor.com. Every morning like clockwork he emails GEBY. Gratitude, exercise, breakfast, you. I’m a positive reinforcement person. What that means is every morning I write three gratitude things. One of my gratitudes was I’m excited to be on this show.

Tim: Cool.

Noah: Right? Yeah, I am excited.

Tim: Thank you for coming. Thank you. I’m excited to have you here, man.

Noah: Yeah. Then my exercise today is weights. So I’m pre-committing to whites. We can, yeah. We have a gym back here. My breakfast was an egg white omelet with one piece of dry wheat toast. Then my you today was making this a great segment for making everybody watching, for yourself and for…

Tim: Your you?

Noah: You. So how am I doing me today?

Tim: Ah, cool.

Noah: Right? I found the GEBY to be, I’ve been working with Adam, and I’ve found that to be a small win each morning where I say, “Here’s the one thing for me today that I’m going to do.” That pushed me forward.

Tim: I love it. Why is it GEBY if it’s GEBU?

Noah: GEBY. Gratitude, exercise, breakfast, you.

Tim: Oh yeah. I can’t spell.

Noah: Yeah.

Tim: The language guy.

Noah: Yeah.

Man: Just a heads up. We have about five minutes.

Noah: Yeah. Well let me…

Tim: Total or to get to the case studies?

Man: Oh yeah. Exactly, exactly, until we get to…

Tim: Okay, we’re good. We’re good. We’re good.

Man: Just to let you know.

Tim: Can I make one point real quick?

Noah: Yeah, yeah. Please do.

Tim: One thing that I did that really helped me when I was building my businesses and still to this day when I’m working with startups is I keep a swipe file. It’s an old term for copy editors. They would find an ad that convinced them to buy something, and they would take it and they’d analyze it and figure out why it got them to buy.
Another way to go about that, I’m kind of a sucker for good infomercials. I love them. They’re so split tested. Or like 90- second spots. The ones that you see running all the time are working, because those are expensive. The ones that run for a really long time, like Bowflex, P90X, whatever.
I would buy these products not because I cared about the products at all necessarily. I wanted to know the script they used on the phone, the upsells, the cross-sells, when it got to me, who it got shipped by, the follow-up. I would track all that stuff. For that reason alone, this guy knows his stuff. You should definitely sign up for AppSumo, go to AppSumo.com and sign up, just to see what they send you, how they pitch it. Anyway.

Noah: Yeah.

Tim: Emulate. You do not have to reinvent the wheel. Anyway.

Noah: One thing to be considered to that is just don’t be absolute. What works for us might not work for you. Be willing to be open minded. Try things out.
Let me just run through a few other wantrepreneur issues. In terms of GEBY, what I wanted to re-encourage for you is small wins. I have a friend, Austin, who I was hanging out with in New York. He just gets overwhelmed where he has his fantasy out here but he’s so hard on today.
So just pick one small thing today. That’s it. Make it really small. Every morning I wake up and I say, “What is one thing today to make today great?” It could literally be having a latte. It could be something at trivial as like, “I want to be able to high-five four people.” Get some small wins.
Fear of failure. This is a huge one for wantrepreneurs where they’re very afraid. What they do is they actually put their afraidness in a co-founder I need or the designer in this country.

Tim: Yes. That’s a really good point.

Noah: I don’t have the money.

Tim: The solution. The panacea.

Noah: Yeah. It’s fascinating, because once it fails, it’s not them. It’s that other thing. The one thing I’d encourage anybody starting a business or if you’re on the chat room, take it on yourself, the failure, and know that it’s going to happen. The fact that you know it’s going to happen reduces that anxiety or the fear of it.
What I wanted to do is I want everyone on air, in chat room in the Internet world to fail. I want you to get one failure. Here’s what I was thinking of this morning. I want you to email me. It’s HiNoah@AppSumo.com. Email me and I’m not going to respond to you. I’m not going to respond to anybody, right?

Tim: HiNoah?

Noah: @AppSumo.com.

Tim: Okay.

Noah: If you can get me to respond to you, I’ll give you $100 cash. Right? No one’s going to do it, because you’re all going to fail. But can anyone get through? Can anyone actually get through and want me to respond to your email?

Tim: I like that. You’re getting an auto-response with 50 AppSumo products.

Noah: No, no, no.

Tim: I’m kidding.

Noah: The thing I want you to do, if it’s not me, or there’s a site called Rejection Therapy, what you need to do today is go get rejected. Go realize that you get rejected. I’ve had a lot of failure. It’s like my specialty.

Tim: Okay. I have a good one.

Noah: Yeah.

Tim: There are actually, I put some of them in The 4-Hour Chef actually, there are phone numbers called rejection phone numbers that you can dispense to people at bars you don’t want to talk to ever again. You’re like, “Here’s my number,” and then they call and it’s like, “You’ve been rejected. Sorry.” You should find one of those online and give it to one of your friends.

Noah: Done. Even try something rejection small. You have to push your comfort zone. It’s when your heart beats a little bit faster and then you get through it. It’s like the gym, that last rep. You get through it, and you’re like, “Oh, that’s where the muscle grows.”
That’s where you’re able to persevere and have your business start. You can actually be like, “All right. This business sucks and I need to kill it or I need to move on to something else.”

Tim: What I found, and we’re going to move on to Seth in just a minute, but for inoculating yourself against that fear of loss, failure, especially if the thing’s out of your control, I always talk about it, but I’ll talk about it again, is Letters from a Stoic by Seneca. Training yourself. I’ve given hundreds of copies of this book away.
Seneca shows up a lot in 4-Hour Chef actually, but the ability to inoculate yourself against fear by training. For instance, like spending four or five days, not even that much, two days a month where you eat the cheapest food, wear the cheapest clothing, don’t use transportation. Then you ask yourself, “All along, is this the condition I so feared?”

Noah: Totally.

Tim: Then your fear of failure, like, “This isn’t so bad. I can do fine.”

Noah: Yeah.

Tim: Let’s on that note, the condition perhaps…Seth has so feared coming up here. Just kidding. You look fearless. So let’s jump into it. Come on up and we’ll segue to looking at some companies.

Seth: Thanks for inviting me.

Tim: Yeah.

Seth: Appreciate it.

Tim: Thanks for coming. You kidding?

Seth: Thank you.

Noah: So what business are we trying to start today?

Seth: Well, the business that I’m starting is a biodegradable toothbrush business.

Noah: How does the audience feel about that? What’s your first impression? What’s your first feeling? Nothing. Okay, so they didn’t do anything.

Seth: Okay.

Noah: No, that’s something. Okay. What’s the problem? Is it that people don’t have toothbrushes? The electric toothbrush isn’t good enough?

Seth: The problem we’re solving is that we want to give toothbrushes to families in the developing world.

Noah: Okay. So we talked about this yesterday a little bit.

Seth: Yeah.

Noah: How much is a toothbrush?

Seth: How much is a toothbrush?

Noah: Like the cheapest of toothbrush.

Seth: $2.

Noah: A toothbrush? Like, I get them free at the dentist.

Seth: Okay, then it’s free.

Noah: Well, no. You said it was 28 cents, right?

Seth: To manufacture a toothbrush is 28 cents.

Noah: Yes. You said yesterday, how many people did you want to give toothbrushes to?

Seth: 100,000.

Noah: Okay, so 28 cents times 100,000 is?

Seth: 28,000.

Noah: Okay. This is what I think what’s really interesting in that, when you were trying to start the business, what’s the real problem? Because your problem is not that you want people to have healthy teeth here. You actually just want to get $28,000 to help people abroad.

Seth: Sure.

Noah: So this is actually a key thing. What is it you actually want to accomplish? Is there a problem here of you…

Seth: I want to accomplish creating an incredible company that contributes to the world.

Noah: Now we’re getting somewhere, right? With the toothbrushes, tell me how many have you sold so far? I know you’ve been working on it for about how long?

Seth: About nine months and we’ve sold zero toothbrushes.

Noah: How much have you spent working on or starting this business?

Seth: About $5,000.

Noah: $5,000 in almost a year?

Seth: $5,000. Yeah.

Noah: How many people in the audience or online can relate to this? I know I have. I’ve spent way more and way more time. Way more money and time. Yeah? Really? I wasn’t expecting that many hands here. The problem with the toothbrush is, what specifically with the toothbrush are you trying to do?

Seth: Well, basically the problem I’ve been having is I’ve gone through the whole process of raising capital and saying, “Oh, I’ve got to order this big amount of toothbrushes. I’ve got to order 40,000 toothbrushes, and that’s going to cost me 20 grand to start up in creating this kind of dream about what I need to start the company.”

Noah: So what have you been doing for nine months? What’s been going on? Maybe just a highlight reel.

Seth: Actually, it was research, design, development, and creating the best toothbrush in the world. Then I actually partnered with a dentist and got to have a deeper knowledge of the problem of oral healthcare. Yeah. That’s what I’ve been working on.

Noah: And we’re still after nine months in all this…

Seth: After nine months, I still have no toothbrushes.

Noah: Okay.

Tim: Just to add one thing here. You’re in the hot seat. This is a tough place to be.

Seth: Yeah, yeah. Definitely.

Tim: I just want to give you credit for sitting here.

Seth: Yeah, yeah. No. Yeah, this is hard.

Tim: This is hard.

Seth: And he jumped right into it.

Tim: This is hard.

Seth: First of all, just, yeah. I like to loosen up a little bit.

Tim: Noah doesn’t put on kid gloves. No, no, no. This is a good thing though. I just want to point out the obvious for people at home, because this is not easy.

Seth: Yeah, it’s not easy. These guys are amazing. I just feel like…

Tim: No, no, no.

Seth: I just want to say I’m really happy to be here going through this process, even though I’m tense right now.

Tim: We just made a lot of mistakes in a very narrative…

Seth: We just jumped into it. I’m like, “Uh.”

Tim: Let’s do this. “I am going to get up and kick you in the head, so please move your face closer.” No, no.

Seth: I don’t think so.

Noah: Do you need a hug just to slow it down?

Seth: Okay.

Noah: Come here. All right. I didn’t know. I thought, because we only have 15 minutes.

Tim: No, no.

Seth: These guys are intense.

Tim: No, no, no. This is like a 30-second aside. I just wanted to point it out.

Seth: It was perfect, yeah. Thank you for doing that.

Noah: Yeah, man. That was good. The key thing is my only goal is if you’re successful.

Seth: Right.

Noah: If you prove me wrong and go make a lot of money and it works, that’s great. But for me, what I want to encourage you and anybody watching in the audience is like, how do you validate so you’re not wasting another nine months?

Seth: Exactly.

Noah: Insanity’s doing that same thing over and over and over. Some of the things we talked about is that maybe we’ll identify some of the issues that have been going on. One of them is just we’re doing all the other stuff, playing business…

Seth: Exactly.

Noah: …instead of actually seeing if people want the product. What can we do right now? This is something we talked about. I’d love to explore it. You want to sell biodegradable toothbrushes. Who’s the customer? What’s the problem is the toothbrush that helps people that’s a little more environmentally friendly. Who’s the person that wants to buy that?

Seth: Well, I believe the customer is someone that really cares about helping other people and that also has kind of a higher ethics or just wants to make a purchase that’s a sustainable purchase.

Noah: [Inaudible 23:35] I know, but…

Seth: I kind of thought my customer’s like 18 to 30 years old, female, Whole Foods shopper. That’s who I thought my customer was.

Noah: Okay, so that’s too broad. You can go to Facebook ads and then look up how many people are in this category. The really key thing is that the smaller the audience, the better.

Tim: Yep.

Noah: My favorite analogy of that is that if you had a knee problem, would you want to go to a doctor or a knee doctor?

Seth: Knee doctor.

Noah: Okay. Someone said a doctor once, and I was like, “Really?” I was like, “Just go to the knee doctor.” You want to go to the specialist, right?

Seth: Oh my god. Yeah, yeah.

Noah: So if you’re selling a biodegradable toothbrush, I don’t see many college kids really giving a shit. Maybe a few hippies from Berkeley, where I went to school. Yeah.

Woman: Yes.

Noah: Yeah, exactly. But the perfect customer is my aunt Rhonda. My aunt Rhonda lives in Berkeley Hills. She has Tom’s toothpaste. They’ve had organic for years now before it was cool to be organic.
So what I’m trying to encourage you to say, you need to be specific as possible. Woman, two children, lives in San Francisco, makes $60-90,000. My aunt’s a child mediator. So the more specific it is, the actually more specifically you can communicate them and the more specifically you can understand them and sell to them to buy your product.

Tim: And the more inexpensively you can test once you know exactly who you’re targeting.

Seth: Yeah.

Tim: Like hitting People magazine. That’s expensive.

Noah: Exactly.

Tim: Reaching that target through finding, let’s say fans who are fans of this, this, and this page, much less expensive.

Noah: Exactly. So you can find them on Facebook. You can find them in different places. We can talk about that. Let’s do a time limitation. That’s something that you’ve been struggling with. How could you validate right now if people want this or not? I know you did something earlier today, but what can you do right now to see if people actually want this as a business?

Seth: To basically ask people in the online audience if they believe in my product to buy it.

Noah: What does that mean?

Seth: What that means is the idea in my head about the business model I want is that for $20 you sign up. You get four toothbrushes. We mail one toothbrush to your best friend to kind of spread the message about the company. So that’s five toothbrushes for America, and then we also donate five toothbrushes to a family in the developing world. That’s the offer.

Noah: Okay. So why would I want to spend $20? What’s special about your toothbrush, just to give me…

Seth: In my toothbrush, I worked with dentists and did tons of research and really created incredible ergonomics. Feel this toothbrush.

Noah: Well, this is not the biodegradable one though, right?

Seth: This was the model that I started with that’s actually I hand carved this out of wood to find the perfect shape. Then with my design team, we 3D modeled and created the actual toothbrush.

Noah: Sorry. Well, I’m going to catch you. I’m not sorry.

Seth: No, that’s fine. Don’t worry.

Noah: The point is that it’s biodegradable, right?

Seth: Okay. Yeah, so it’s a biodegradable brush.

Noah: Like you’re driving. You brush your teeth. You throw out the window. It’s good.

Seth: Okay. The main features of the toothbrush. It’s biodegradable. Also, we found these bristles which are called nano-bristles. They’re really fine and they’re tapered.

Noah: Can I see that other one for a second?

Tim: Yeah.

Noah: Okay. Hold on.

Seth: They actually feel like you’re flossing.

Tim: I know. Okay.

Seth: Sorry.

Noah: Tim, I want you to…How does that one feel?

Tim: This is maybe not germane. I think it is germane. I think you should test a few things.

Seth: Okay.

Tim: I love how this one feels. Now, all right. Where I’m going with this is you could use something like unbalanced.com or whatever to do some landing pages and test different offers, different whatever. You could use Facebook, Google Ads, etc. to test, or click-throughs. I love this thing. Maybe your product, I can’t tell you because you’d have to test it, but maybe it’s a $40 hand-carved toothbrush.

Noah: Tim, do you have your wallet with you right now?

Tim: No, I don’t, but…

Noah: Do you have your wallet in the building?

Tim: I have my wallet in the building.

Noah: This is where instead of waiting to go home, waiting to make ads, waiting to make even the landing page or wait for anything else…

Tim: I would buy a beautiful hand-carved toothbrush with replaceable bristles.

Noah: How much would you be willing to pay?

Tim: $30-50.

Noah: Would you give him the money today?

Tim: Sure.

Noah: You ask. Why am I asking? I don’t get the money. You ask him.

Tim: Noah will take his customer at 15% cushion, right.

Seth: I mean, I think that’s an interesting concept, and I love the fact that Tim…

Noah: He’s right here. He’s voicing…

Seth: …he’s saying, like, boom. He wants to buy that. The reason, my rebuttal to that is that I don’t want to create limited edition hand-carved fancy toothbrushes for, like, the super elite.

Tim: Well, hold on. Hold on. You could still…What I would encourage you, because I know the guys at TOMS shoes, right? I know people who have similar models. You don’t have to make it one for one. You can make it one for 50, right? So I think that the point being though, I don’t want to jump.

Seth: I do like that, because that makes me 50 times better.

Tim: No, no. Just think. One for one, you have a lot of competition from mind share. You’re competing against a lot of people. One for 50.

Seth: Boom.

Tim: Different story. Anyway, I don’t want to jump in.

Noah: No, I think that’s the exact point. I think the key thing to know, people, everyone watching, is if you’re selling something like the biodegradable toothbrush and you’re taking nine months to manufacture it and it’s all these other things, did you notice how you’re talking about all of that, you let Tim…Yes.

Tim: Okay. What was that?

Noah: Well, let’s do the money in a second. That’s the really interesting thing. You’ve done all this nine months of work. This is what happened yesterday. He brought me this toothbrush. I felt it. Do you want to give it to the audience to feel as well?

Tim: Yeah. It’s beautiful, yeah.

Noah: You feel that toothbrush, and you’re just like, “This is different.”

Seth: So hold it like this like you’re actually brushing your teeth, because then you can kind of feel what it feels like.

Noah: It’s like nothing I’ve ever felt. You can even put “Limited edition number” whatever. Right? Number one, one for 50. Then the thing is that people want that. You’re trying to do the hard one, but you have something that people are responding to.

Man: Seth, I’ll jump in and point out that a bunch of people online, before Noah or Tim even started saying anything about the wooden toothbrush, there were multiple people who jumped in like, “Oh my gosh. I want one of those. I would pay money for that wooden toothbrush. That’s amazing.”

Seth: Awesome.

Noah: Let’s take advantage of this.

Seth: Okay.

Noah: One, you need to ask Tim for the money. Don’t say, “Tim, how much would you like to pay?” That’s, like, one of the worst questions ever. Right? So tell him, like, “Tim…”

Seth: Yeah. Sure, sure. Tim, okay. Would you buy this…

Noah: No, no, no. Would you buy? You’re selling him the product.

Seth: Okay. My toothbrush is $50. Would you buy it?

Tim: Yes.

Seth: Awesome.

Tim: Here.

Seth: Thank you.

Tim: You’re welcome.

Seth: My first customer, Tim Ferriss.

Noah: Let’s keep it going.

Man: How about $75?

Tim: Yeah.

Noah: No, actually…Hold on. Keep it going. So one for 50. Is there anyone online? Let’s sell the toothbrush. The point being is not to just go sell a lot of things that you haven’t made or any of that stuff. It’s to prove that validation that you want and being honest.

Tim: Can I add something?

Noah: Yeah, please.

Tim: Do you have an email address that you’re comfortable giving out?

Seth: Sure.

Tim: Okay, what is it?

Seth: SethBrooklyn2@gmail.com.

Tim: How do you spell that?

Seth: S-E-T-H Brooklyn2.

Tim: Brooklyn like the town, like the city?

Seth: Like the city in New York.

Tim: Okay, yeah.

Seth: Brooklyn2@gmail.com.

Tim: Number 2?

Seth: Yes.

Tim: Sorry, the 4-Hour guy is sensitive to numbers. Okay.

Seth: Yeah, yeah.

Tim: So SethBrooklyn, like the city, 2, the number 2, @gmail.com. All right. Anybody who wants to buy that for, let’s just say $50 emails you.

Seth: Okay. Yeah, that would be great.

Noah: Can we even go further than that?

Tim: Yeah, let’s go further.

Noah: What’s your PayPal? What’s your PayPal name?

Seth: It’s the same thing.

Noah: So don’t email him.

Tim: Okay.

Noah: PayPal him $50?

Seth: Sure.

Noah: Then you figure out how many you could donate…

Seth: Okay.

Noah: …for that $50 after your profit.

Seth: Okay, yeah.

Noah: So PayPal him $50. SethBrooklyn2@gmail.com. You need it…Basically, the validation is a hypothesis. If I can sell 10 toothbrushes, I will make these toothbrushes. I will donate them. Then you can actually start thinking about, how do I scale this out? You don’t need to worry about any of that other stuff.

Seth: Yeah, that sounds great.

Noah: So PayPal SethBrooklyn2.

Tim: And we can make it like Kickstarter thing, just so you don’t get into trouble with, like, dry testing and stuff like that.

Noah: That was a question we asked yesterday. You can’t do Kickstarter with stuff in your mouth or stuff you inject.

Tim: No, no, no. No, what I mean by that is, let’s just say how much money do you need to actually build a bunch of those or carve those, I guess, whether it’s labor or otherwise? How many toothbrushes at $50 would you need to sell? Point being I just don’t want to get him in trouble with dry testing if he takes money and then it takes a long time to ship, if he doesn’t have the legal protection with Kickstarter.

Seth: 100.

Tim: 100, okay.

Seth: Okay.

Tim: So if he gets 100 orders…

Seth: Right.

Tim: …at $50 a piece…

Seth: Right.

Tim: …it’s going to go into production. If he doesn’t, he’s going to return the money.

Seth: Sure.

Tim: Cool. That sounds good.

Tim: All right.

Noah: Done. What are they called? I’m excited.

Tim: Yeah.

Seth: It’s called Mola, and that’s Latin for molar.

Noah: Nice.

Tim: I like it. Simple.

Noah: So he got his first customer today. Hopefully a few other customers online, and you got started.

Seth: Awesome.

Noah: I think that maybe we should just recap some of the takeaways here in that did you see how Tim wanted it? When did you feel that?

Tim: As soon as I touched it. I just want to point out another thing that’s really common. This is not unique to you.

Seth: Yeah, totally.

Tim: People will aggressively say no to what their customers want because they have a fixed idea of what they’re going to build.

Noah: Yeah.

Tim: Yeah, as soon as I touched it, I was just like, “Oh, god.” There is a lack of that tactile experience. Most people use their thumb for, like, the space bar and that’s it. You get something that’s handmade and wooden. It’s a very visceral thing.

Noah: What do you think you could teach someone else who’s in the chat room that’s maybe going through something similar where they’re trying to work on their business? They’ve spent months and time and it’s not happening. What’s the difference between that and maybe this experience that you just felt with Tim or the toothbrushes?

Seth: Well, I definitely wanted to mention to everybody who’s online who’s an entrepreneur and especially a designer entrepreneur is the breakthrough that I had talking with Noah, because he’s an amazing brilliant guy, is that last night we had a short discussion, and I really got held back because I just love my design so much that I want to sell this. I made it too precious, and the reality is if I really want to just sell biodegradable toothbrushes, I can get these for whole sale at Alibaba and just sell them. If that’s the goal, it’s…So it’s letting go of your baby and just moving forward with the business and making a profit.

Tim: Yeah.

Noah: Yeah.

Tim: To do good, like I said, I think in a way it’s actually better if you’re not stuck in a one for one model. Like, make a bunch of money. You can do whatever you want with the money.

Noah: Exactly. Maybe something to add though is if you want to just stick with just the biodegradable toothbrush, as even a hypothesis, if you want to validate, literally go to the dentist. Get free toothbrushes. Doesn’t cost you anything. Spray paint them or paint them with nail polish. Go to Whole Foods where you think your customer is. Stand by the toothpaste aisle and sell your biodegradable toothbrushes.

Tim: Yeah. So you can do it in person, which is actually really underrated. It’s super underrated, because people will ask questions. The other way is if you created a mockup page and take them through all the steps. You just don’t necessarily collect the money.

Noah: That’s a lot of work.

Tim: It is a lot.

Noah: I wouldn’t want to say…One of the things we talked about yesterday was maybe, like, on your Facebook page you have how many friends?

Seth: 500.

Noah: You guys have friends? Right?

Tim: At least 10 or 11.

Noah: You guys have Facebook?

Tim: Yeah.

Noah: Yeah. The mockup is good. I’m not hating on it. I think that’s good for, like, an iPhone app.

Tim: Yeah, sure.

Noah: But with a toothbrush, you could literally put out, “I’m making a custom made biodegradable toothbrush, friends. If you shop at Whole Foods, PayPal me the money. I’m trying this out.” Just be as honest as possible and say, “Hey, if I don’t sell 10, I’m going to return the money and we’re not going to do it.” Literally in a day you have your validation versus the nine months and $5,000.

Tim: Never ask people if they would buy. It’s not the same, because your friends, it will be like the mom response. They’ll be like, “Oh, that’s such a great idea. I would totally buy it.” Then you’re like, “Good news, I have one here,” and they’re like, “Times are tight. I’ve got lentils to buy.” All right. We are going to make, I think, a transition here. You have a hand up.

Woman: We are going to make a transition, but we just want to let you know, Seth, you have some additional orders coming in. We’ve got Ralph. Ralph just said, “I’ve just sent 40 euros. I love the toothbrush. Greetings from Germany.”

Seth: Awesome.

Noah: Cool.

Tim: First order and first international. You’re a global corporation.

Seth: I’m like, “Awesome.”

Tim: Cool. All right, cool.

Woman: So we’re going to move, yes. Right.

Tim: Yeah, we’re going to move on to round two.

Seth: Thank you, guys. Thank you, guys.

Tim: Yeah. Don’t forget those bad boys.

Seth: I just have to say something really quick. Can I say something?

Woman: Please, yeah.

Seth: Basically, I got to look at the book. I think it should be called The 4-Hour Life. But no, seriously, I’m a visual learner, and that’s what’s…You keep on saying it’s so beautiful. It’s got 1,000 images. But it’s incredible for learning because it’s visual.

Tim: Cool, awesome.

Seth: So I just wanted to say that.

Tim: Thank you.

Seth: Yeah.

Tim: Thank you, yeah.

Woman: There’s more coming in too, Seth.

Tim: Thanks to Jesse, the main designer behind it. She’s amazing. Cool. Well, we’re going to move to victim number two. Come on down.

Noah: I’m going to be friendlier this time.

Tim: No, no, no, no. Don’t be. Don’t be.

Corey: What’s up?

Tim: This is the good cop/bad cop thing. It’s working. It’s working. All right.

Noah: Okay. How are you, Corey?

Corey: Oh god. It’s like when you approach a girl and you wait 30 minutes before you do it. That’s how I feel right now, because I knew I was coming up.

Tim: He is a sexy man.

Noah: Thank you.

Corey: He is a sexy man.

Noah: I’m wearing my green shirt today, my sexy green. So what are we up to today? What are we talking about?

Corey: Okay. I developed an app. Well, I outsourced the development, but I came up with the idea. It’s a scary prank app. The problem I’m solving is people want to prank their friends and an iPhone’s a good way to do it.

Noah: Okay, and then why did you want to do this business?

Corey: To retire my mom, the most basic form.

Noah: What’s that about?

Corey: So we grew up pretty poor. Slept on a futon with my mom until I was…

Noah: This is the aww part, where you guys all aww.

Audience: Aww.

Tim: You’ve got to go online too.

Corey: I slept on a futon with my mom until I was 14. My whole family are like coal miners from Nova Scotia. My mom and dad had like an education of grade seven, grade eight. I’ve never started a business before.

I just had that Harry Jacques moment where it was like, “Enough is enough. I’ve got to do something,” because my mom’s 50 and no retirement plan. So I set out on a 24-month challenge to do that. I spent 10 months doing what I’m good at, which is door-to-door sales. I’ll sell anything. I’m not afraid to do the boiler room style.

Noah: What were you selling?

Corey: Holes in the ground.

Noah: What’s the hole?

Corey: Aeration.

Noah: Oh, aeration.

Corey: Aeration, where the machine pokes holes in the grass, and coffee. I was on your webinar back in the time and I was like, “Do you know what cordyceps are?” I was selling tea with cordyceps and coffee with reishi. Yeah, those two things. So I earned $61,000 in 10 months doing that.

The whole time I was just researching like crazy. I read, like, 33 books, including all the ones you recommended, like Venture Deals, Founder Stories, 22 Immutable Laws of Marketing, Letters from a Stoic, and your books, of course. I started off, and I’ve been self-documenting the process. I reached out to my former boss, who is a 10 time world kickboxing champion. That was kind of cool.

Tim: Yeah, I’ll pass sparring with that guy.

Corey: He recommended two books, and one was yours, and that’s…

Tim: Oh, cool.

Corey: …kind of what got me into it.

Noah: How did you pick this as the problem to solve or how did you say, like…

Corey: What, the app business in general?

Noah: Yeah.

Corey: Your posts on Chad Mureta.

Noah: [Inaudible 38:42], yeah.

Corey: I was looking for something that I would enjoy doing waking up every morning, but also something that I find fun, because I’m a geek at heart.

Noah: Okay, so we talked a little bit about it yesterday. How did you validate and figure out what to build, like which app to build and what thing to build?

Corey: I was looking at different categories that I could make quickly and also for a low amount of money to start up. Entertainment seemed like the proper way to do it. There was so many different apps from small different companies and quick, and a lot of downloads too. So I was looking and trying to find an app that was already in existence, already in the top category, so there’s a proven market for it, and then find a way to innovate an app, and whether I could do it for low cost and quick.

So I saw these scary prank apps in the top category, and they were really terrible. Just really, really bad. They weren’t scary at all. I tested them out on friends, and they’re like “Dude, take your phone back. What are you doing? This is terrible. Pay me for that loss of life and time.” So I came up with ways to innovate the app and make it better for the user experience. I don’t know. Do you want me to show you?

Noah: You said something yesterday. How did you figure out what to build, right? Because you said that you read these, you were talking about the reviews.

Corey: Yes, so I looked at customer reviews similar to how you did and pinpointed things that people were having trouble points, that they didn’t like about the app. It’s really crazy how unresponsive some of these app companies are to their customers. They’re getting all their feedback via the App Store, and they’re saying, like, “Change this. Change this.” They just don’t do it, which is good for people like me, because now I can make better apps.

Oh, there’s my website. Sweet. That’s a mockup. Anyway. So I was looking at user comments and finding out how to do that.

Noah: That’s a really key thing I want to highlight is that your customer’s already out there. Somebody else’s customers that you want are already out there telling you what they want. You just have to actually go look. It could be on Amazon. It could be searching Facebook, searching Twitter, looking for the word “sucks.” Like, when we did marketing at Mint. When I looked at marketing at Mint…

Tim: That’s smart.

Noah: …we looked “Quicken sucks,” and then we went and did marketing with all of those blogs that were commenting about Quicken.

Tim: That’s smart.

Noah: I think that’s a really key takeaway for everyone listening.

Tim: Just to add to that, I’m not sure how many people out there are familiar with Y Combinator, YC, Paul Graham, that funded 400+ startups at this point, helped them nurture and build them. One of the questions they ask when they’re interviewing co-founders a lot of the time is, what are your prospective customers currently cobbling together as makeshift solutions to your problem? So people are trying to solve a problem, but doing this MacGyver, taking this MacGyver approach. What is it? In any case.

Noah: It was pretty amazing. How long have you been working on this and how much has it cost you so far?

Corey: Three and a half weeks, and it costs $3,500 when it’s all said and done.

Noah: Okay, and then how much longer until it’s actually out?

Corey: Three days just to fix a couple bugs. Then we submit it to the App Store. There’s a website that tells you the average review time, which is nine days. So if it gets approved, which I’ve read all the guidelines. I believe it will and there’s apps already out there like it that have been approved. I would say within two weeks. 12 to 14 days.

Noah: Ideally two weeks. How do you know that people are going to want this?

Corey: Because there’s already apps that are similar that people are paying for that have made it to the top 50. If you make it in the top 50 in the App Store, that’s really big, considering there’s over 700,000 apps in the App Store now.

Noah: Okay. I wanted to just highlight a few examples of when you’re trying to do your validation or get your business started and you’re uncertain if it’s going to work for sure. Number one, look for comparables, and maybe even comparables in a separate sector. What I mean is that is you can go to the App Store. People will be like, “Well, that one’s not as scary.” But you know what? It’s out there and people are using it.

Corey: True.

Noah: And they can always improve it. If you guys remember the first iPhone, it looked like shit, or the first iPod. Remember the scroll wheel? It was thick. It was like 40 pounds. Then now you have these iPhones that are clean and light. The fact is they got it out, and then they can now innovate on it. That’s number one.

Number two, look at YouTube. Look at another vertical, another comparable industry and see if people are actually wanting it. On YouTube for AppSumo for Halloween, we put a YouTube video up which is a really funny one, and then all of a sudden it scares you.

Tim: Okay.

Noah: Did you? Yeah.

Tim: It’s a similar one with the maze. They’re like…

Corey: That’s the original.

Tim: …follow the maze. Follow the maze. You see people, like back flipping out of their chairs.

Corey: Yeah, yeah.

Tim: Oh my god. It’s terrible.

Corey: It’s so funny.

Noah: The app is actually…I want to show the app, but how would you now in retrospect, how can we validate it right now instead of waiting? Because right now it’s going to take you $3,500. Then two months, which is two months for your mom. How could you have cut that down to today, the time limitation concept?

Corey: That was a tough thing for me, because apps, there’s development time. There’s not really a way with my expertise where I can just make a prototype in a day that just is really bare bones and give it to someone and say, “Hey, are you scared?” or something like that.

Noah: Maybe let me, let me show it. Can I show you?

Corey: Yeah.

Noah: Instead of worried of building an app or doing any stuff, there’s a site called, well, there’s one that’s called 520or90.com. It’s actually a Seattle based company. They basically help you tell you which freeway to take, the 520 or 90. They just drew it up. Then they just showed that as an image on their phone. They didn’t build anything out. So Corey’s app, I’ll just show you. Basically, it’s…Well, I’m going to validate for you.

Corey: Oh, cool.

Noah: I’m just going to make it up.

Corey: All right.

Noah: So Corey’s app, instead of building out an app, waiting for the store, paying $3,500, it scares you when you’re doing something. What you could do that would be fun is, so Tim, can you add in actually…I don’t know if I have your phone number, so do you think you could actually…Can you just add that in real quick? Sorry. Ahh.

Corey: Is that validation?

Tim: That was scary. That was scary.

Corey: Is that validation?

Tim: Yeah, it was good.

Noah: I was like scared to do it. I was like…

Tim: Well, I was expecting something to come out of the phone. Then it came thing way, so I was just like…It’s kind of like the Kelly Starrett[SP] wake up call.

Noah: You good?

Tim: I’m good. I’m good.

Noah: Namaste, everyone. Breathe. Let’s all breathe. Chat room, breathe. Okay, we’re back. So the key thing there is that it’s not…What? That was funny as hell. Today was a good day, check. Yeah, I scared Tim Ferriss.

Tim: That’s my you.

Noah: Yeah.

Tim: Scare the shit out of Tim Ferriss.

Noah: Yeah. You is accomplished. So I think the key thing is that it’s okay to do two months. It’s okay to spend $3,500. That’s fine. But that was 10 seconds. Right? Then we know that…It’s like, so Tim, do you…Does Tim want to scare someone else? Hell yes. He wants to do that now to someone else.

Tim: You could do that and be like, “Would you like to do that if you could automate it and send it to someone?”

Noah: So Corey built an app. It’s got 14 days. I’ve read a lot of stories where it takes longer. It’s like months or weeks, forget the app live.

So what I want to highlight for the viewers and the audience and talk with you as well is how do you guarantee that when it comes out, it’s successful, so that you’re guaranteed to be able to help your mom? This is what we highlighted yesterday. What could we do now or what could we do in those 14 days to make sure that it’s guaranteed?

Corey: Collect people’s emails that would be interested in purchasing it and message them when it’s out?

Noah: This is a key thing that we did at Mint.com, we’ve done at AppSumo, and I think what Corey needs to be doing with his phone. What he told me yesterday though is that he’s working on his next app already.

Tim: Yep.

Noah: So instead of putting in any oxygen, he’s kind of like, “Oh, this app will be out there. Let’s hope it does well. Let’s put our finger up to the wind, and then I’m moving on to the next thing,” instead of really putting in oxygen time. He’s gotten like, what, 4,000 on Twitter and 5,000 on Facebook?

Corey: 6,000 on Twitter and 4,000 on Facebook, yeah.

Noah: Okay. When people put out tweets or Facebook posts, it’s always depressing how few people actually click or respond.

Corey: Yeah.

Noah: Right? So how many people do you need to make it a top 10 app? This is the key takeaway, is that one, guarantee your success. Two, you need to work backwards from a specific objective.

Tim: Yep.

Noah: So many people are like, “I want my app to be popular.”

Tim: What does that mean?

Noah: That’s exactly right, right? What does popular mean? I would go look for stories on…Search Google, “top apps.” What does it take? Look at those apps. See if you can figure out any articles they’ve shared about a number for top apps. Then you work backwards. All right. Well, I need 50,000 downloads.

Corey: That was my goal.

Noah: So it’s 50,000. All right. Now, instead of working on your next app, how do you plan on getting 50,000 downloads?

Corey: Well, my original plan was when there’s the nine days of submission process, I was going to start releasing marketing material. Do you want me to tell you what stuff I was going to do?

Noah: Yeah. Tell. Sure, there’s other people online. I’d like to know.

Corey: Sure. So we were going to release an actual video similar to the game that was on the computer. There would be a scare in the middle of it. Then I would pass it through my channels and hope it goes viral.

Noah: All right. Let’s fix that.

Corey: That’s one.

Noah: Are you guys on the computer?

Woman: Yes.

Noah: Can you go to Google Docs?

Woman: Yes.

Noah: All right, so let’s just do it right now. Instead of waiting, let’s say Corey needs 50,000 downloads, which is probably 100,000 emails. That’s obviously a little bigger, assuming half of the people get the product. Instead of waiting all this time, hoping it goes live, doing viral, a lot of people now are like, “I want to do viral marketing.” It’s hard.

Man: Yeah.

Noah: Or you could go to Google Forms. Literally go to Google Forms and say create a form. It’s literally, “What’s your email?” in a box, right?

Tim: I’m saying they can put it out on the creativeLIVE Twitter.

Noah: Yeah. So creativeLIVE Twitter, they’ll do it. But literally go to Google Docs. It’s completely free. You put out a form that says, “What’s your email?” Submit your email. Goes to Google Spreadsheet. Free. If it takes you longer than a minute, you probably should not be running a business, right? Right after this, what’s your Twitter handle?

Corey: @millionaireby25.

Noah: @millionaireby25.com. Twitter.com/@millionaireby25. So there will be a Google Form link there, and say, “Just give me your email. Hey, everyone. We’re launching soon.” Put it on Facebook. Put it on Twitter. That took you a minute, and you’re getting it started.
The big key thing with the breakthrough here is momentum around that. Have your objective, guarantee your success, and start that momentum where you’re not, like, putting it out. Then you start building everything out.

Corey: How would you determine whether it’s validated by that? Let’s say I put it out there and I haven’t spent any money on the app yet. The idea seems there. How many would it take to be validated? How many emails would I have to get?

Noah: There’s two separate things. The email part…Oh, they have it up on the screen. The email collection part is that once you validate that people want it, which we’ve kind of done with Tim…

Tim: Talk amongst yourselves. I’ll be right back.

Noah: Do your thing, Tim.

Tim: Yep. I have to go take a phone call. No, I’m kidding. I’m kidding.

Noah: No, so the key thing here is that there’s two separate pieces. I don’t want to get those confused. One is, is it validated? So we’ve done it with Tim. You’ve seen it on YouTube. You’ve seen it on other apps out there, but they suck. So we have enough pieces, and you want it. That’s a key thing I hope you can all take away as well.
If it’s something like, “I want to cure cancer,” like, “For one day in my life I want to start a taco stand,” or with AppSumo, I love promoting great products on AppSumo, that’s what I really want. Ideally, you want to do validation so you don’t waste time and money, but once you’ve validated, then it’s like, “All right. Let me go build it with as minimal time and money as possible.”
I think $3,500 for a month of building is reasonable. If you were going on nine months and $5,000-plus, that’s something to be concerned with. The second part of the equation now is how do you guarantee that when you finally finish building that you have the customers’ intel? You’re not like, “Oh, I hope I have them?”

Corey: The app’s going to be free. I had enough purchases, so I could get more downloads that way.

Noah: Okay. I think the thing for the audience and for you, the other thing that would be interesting is collecting emails from putting on Facebook on Twitter. One of the things we discussed yesterday is there’s already videos that Tim mentioned that are on YouTube. You could go to those people and start building the relationship and say, “Hey, I’m going to have a free app that does this too, and I’ll put your name in the app,” so that they get some of the credit, which is ego for them. But you’re not doing it…So many times what people do is they don’t plant their garden.

Tim: Yeah, exactly.

Noah: They’re just like, “Oh, I want to eat now. I’m hungry.” But it’s like, “Did you plant anything? Did you start that relationship?” So start going out and exploring. Since you validated, now let me get the guaranteed success of customers.

Corey: Okay.

Tim: Cool. I just did a bunch of pushups. I’m feeling a lot better.

Noah: Better? You back?

Tim: We are going to jump into some questions. We’re going to take questions. I just wanted to reiterate something that Noah said, really important. You have to dig your wells before you’re dry, right?

Noah: Totally.

Tim: Just to use more and more metaphors. But one of the reasons, for instance, my books, I think, one of the several or many reasons that I think the last two books have done well is that I would reach out to people 6, 9, 12 months before the book ever comes out.

Corey: Wow.

Tim: And focus on relationships that I would have for years, not transactions. In any case, conferences in person, the least crowded channel. Email, phone, hard. Meeting people in person, not as hard. Let’s go to some questions. Where should we go first?

Woman: First we would just love to…Well, first of all thank you, Corey.

Man: Yes. Thank you, Corey.

Tim: Yes.

Woman: Let’s repeat what Noah said for our audience to do, just so we get that in there one more time with regard to the Google Form and so that we get Corey some followers.

Noah: Yeah. Do you want me to just tell people?

Woman: Yeah, please. Yeah.

Noah: Well, so the key thing I wanted to highlight is that don’t build your product and then go be like, “Oh, I hope people will come to this.” It’s like having a house party and not sending out any invites, right? You’re just like, “Oh, please come to my…” It’s like no one’s going to come.
I’ve come home to my place, my apartment, and there’s never a hot girl waiting outside my door. It never happens. I have to go out and find hot girls so eventually they come knock on the door.
The point being is that with Corey, he’s got the product. He’s waiting around. Instead of moving to the next thing, spend the time to build the audience. So the email thing, we literally, they just did it right now. That’s a 10 second thing. He’s already done stuff on Twitter and Facebook.
He has 4,000, which is like, how did you do it? Yesterday he was mentioning he just shared how he was building an app. He was just very candid. You guys all have friends on Facebook. Those are the easiest. If you can’t get them and they’re interested in what you’re doing…If you can’t get them, you should definitely quit. Right? If your own friends and family don’t like it.
So you have friends and family. You have putting out stuff free. You have collecting emails, going through the people on YouTube. There’s a lot of…Message boards are a good thing. I love Reddit. There’s tons of sub-Reddits, like scaring people. I’m sure that’s a sub-writer category. I’m sure there’s blogs in scaring people. I’m sure there’s Halloween stuff. There’s Facebook pages about Halloween and maybe scary movies.
A lot of it is just building up that audience so that when you finally do launch…Tim did an exceptional job at this. I met Tim a year before his first book came out. He went out. He didn’t hope his book did well. He guaranteed that certain blogs on certain days are going to cover it.

Tim: And I knew what my target was in terms of books per week for two consecutive weeks. It was all very methodical so I worked backwards. Yeah.

Noah: The key thing I’m suggesting for the email is I don’t think email is best. I think it’s whatever will accomplish your goal. If your objective is, “I need to be in the top 10 of 50,000,” being on Twitter and Facebook, not everyone’s going to click when you post an update. How do you ensure? If I could get 50,000 phone numbers and it’s that important to making sure your mom retires, would you call 50,000 people?

Corey: 100%.

Tim: Yeah. So here it’s just going to be “What is your email?” Then people are going to add in their email address, hit submit, and that’s it.

Noah: Can I give one? I’ll give one tip. I actually wanted to share this one. Instead of “What’s your email?” if you’re putting and collecting people’s emails, you could ask, “Which friend do you normally get scared by?” Instead of moving down the chain for like, “Give me one friend to refer,” which is the generic question, go up the chain.
Be like, “Who’s your creepiest friend?” So you actually find this, as Seth Godin would say, the sneezer. So you can ask that question of people and say, “Hey, your friend, Jim, said I should reach out to you. Here’s a free app that he would want you to know about.” Now you have two people for the price of one.

Corey: Referral, it’s good.

Tim: Cool.

Corey: I like it.

Noah: Yeah.

Man: Okay. Let’s go ahead and take some questions if we’re…

Noah: Can I just add one other thing?

Woman: Yeah.

Noah: So all the ones that are already there, the ones that are already in this category, they’ve been covered on other blogs, right? They’d be covered somewhere probably. If you search Google for them, maybe one.

Corey: It’s weird.

Noah: Work with me here.

Corey: Okay. Sure. Sure, sure, sure. Sorry.

Noah: Help me out. Let’s say your competition, they’re already covered somewhere else. Go start connecting with those writers before you need them.

Corey: Okay.

Noah: Before you want to work. So they’ve already been covered. Be like, “Hey, this app sucked. Here’s this other one.” You started when you need them but before you need them.

Tim: And as you know, you have more of a story, obviously. [inaudible 54:59] stories.

Corey: Very cool.

Tim: All right.

Corey: Thank you.

Tim: Yeah.

Corey: Really appreciate that.

Tim: Oh, of course. Very cool.

Noah: All right, questions.

Man: All right. We have about eight minutes for questions. I know Christina has one here, and then we’ll take some from the Internet. Let’s go rapid fire.

Noah: Rapid fire, yeah. Let’s do it.

Christina: Okay, I’ll be fast. Hi, Noah. My name’s Christina, and I have a company called Home for the Honeymoon. Basically, we help engaged couples register for the down payment on a house rather than things like toasters and blenders. The idea is to kind of revolutionize the traditional wedding registry, because people have everything they need, they’re getting married later, and demographics have shifted.
My question is, how do you decide when your business is validated? It’s a bit of a new industry. We’re the first of our kind in Canada. There’s maybe one other example in the States. We’ve had lots of positive feedback. We’ve had some customers, but we haven’t had that kind of breakthrough.

Noah: Yeah.

Christina: What’s the litmus test, I guess?

Noah: It’s simply, have you helped one couple get a down payment?

Christina: Yep. Oh yeah.

Noah: How long did that take you to do?

Christina: The sale cycle is long, because finding a house takes oftentimes six months, and then you have six months to kind of help them raise the down payment. So it’s a year cycle.

Noah: That sounds long.

Christina: Yeah, I know. It is.

Noah: It sounds like you already know the answer to this. So the validation is that if that’s already taking you a year, and I’m guessing you’re not making that much per transaction, or are you guys?

Christina: Well, it’s about $2,000 per transaction. Basically, the realtor that we refer out to pays us a payment of the commission they earn.

Noah: Okay, I’m confused. So you guys help people get money for their down payments?

Christina: Yep.

Noah: Why don’t people just send them money directly?

Christina: Because we shelter them from the uncomfortable conversation of asking for money. Basically, that’s our pitch. You don’t want to ask your friends and family for cash, but this is the one time in life where you can do it.

Noah: All right. How many people have you helped?

Christina: Well, we have about 200 registrants, but we’ve had about five people who’ve purchased houses through us.

Noah: How long have you been working on it?

Christina: About a year and a half that it’s been up and running.

Noah: Yeah, I would stop.

Christina: Yep, yeah. You would stop already?

Noah: I would stop.

Christina: Yeah.

Noah: Obviously there’s more to it. The thing is you already are committed to it sometimes, so no matter what I say, you’re going to have to go experience it. That’s a big thing I realize, that people need to fail or succeed on their own no matter what I tell you. What I think is interesting is that if you think the real core issue is that people don’t want to have the awkward conversation, and how many people get married a day in Canada? A lot.

Christina: Yeah.

Noah: They get married in Canada. Does that happen up there?

Christina: Pardon me?

Noah: It happens up there, right?

Christina: Yeah, it does. Yeah, it’s true. Yup.

Noah: If I were you, you could easily, you can go find 10 people getting married today or people going that are registering and then going and seeing if you help them manually. If you’re having a lot of difficulty in that, it’s kind of going back to what happened with Seth, is that “I had this biodegradable toothbrush and I need to find a manufacturer and all these things, but I’ve kind of got this wooden thing that everyone really wants.”
So there’s probably some anomaly in with what you’re doing with weddings that people are like, “You know, I don’t really have as much a problem telling them I want money, but I might have this other problem,” which there isn’t a two-year cycle or it doesn’t take so much work.
Coming back to your original question. Validation is, I would almost say when it’s simple, when it’s like, “Wow.” It doesn’t mean it’s going to be easy or it’s not going to be some work, but it’s that it’s easy for you to repeat what you’re already doing. It sounds like that’s where you’re actually struggling with.

Christina: And it’s not about getting the word out there, like just not proper marketing?

Noah: No. The problem with marketing, marketing to me, it’s like Whole Foods. When you have a product that people want, marketing accelerates that, but you need to make sure it’s something that they want to eat, like a great taco.

Christina: Right, okay. Thank you.

Noah: Okay.

Tim: If you ever want to get a meeting with Noah, tacos and burritos. I’m not kidding.

Noah: Tacodeli, I swear…

Tim: Don’t take him out to, like, a fancy restaurant.

Noah: No, no. Yeah. Someone sent me a Tacodeli gift card. It’s my favorite tacos in the world, and that’s a great way for me to remember your name. Todd Stratford. Blake Garrett. They send them to me, and now it actually helps separate the people out.

Tim: Yeah, awesome.

Man: Nice. All right. So we have a question from Kariuke online who asks, “Most tests need small increments to become successful. What mindset do you need to know when to tweak and when to abandon?”

Noah: That’s a good question. He probably knows the answer. He probably knows the answer, I would say. It depends on what he’s doing. I would say part of it is like you working on something that you actually want for yourself, it makes it easier to keep going with it and keep trying to experiment what is it that’s going to make other people want this as well.
I put on a conference back in the day. I think the key thing that I took away was, in this conference, one, how do I break even? That’s it. As long as I don’t lose money, cool. Two, how do I make this a conference that I want to go to? As long as I’m there and attending it and having a great time, I don’t really care if anyone else came.
Subsequently, I made $50,000 putting on that event. I think if you make something that you want and you’re not spending more than two months or maybe $5,000, that’s at a point where you need to probably stop and reevaluate what you’re doing.

Tim: Yeah, I would also just add to that that many people make the mistake of thinking they have to test sequentially, when you can test in parallel. You don’t have to test one landing page, wait two weeks, then test another landing page. You can test 10 landing pages at once, and there are very easy ways to do that.

Noah: Really ensure that you’re not playing business, because a lot of people, what they do is they maybe read the article on Tim’s site that I was writing, and then they’re like, “Well, I put up a thing on Craigslist and I bought ads.” It’s like, “What’s your actual business?”

Tim: Right.

Noah: What’s your actual thing you’re trying to accomplish? Are you trying to teach basketball like Rick who’s going to come on today. Have you taught one person? All right. Have you taught the second person? “But I need scale.” Don’t say the S word.
“But it has to be an iPhone app.” Why does it have to be an iPhone app? What are you actually solving, and making sure that you validate that enough people want it and will pay for it for you to then expand it beyond that.

Woman: Okay. We just have a couple more minutes for questions, but another one is, “How do you know what metrics to measure when testing a business idea?” What are the top five metrics or how do you develop what they are?

Noah: That’s been an evolution. One, there’s none. There are none. I met the people from Whole Foods and I asked them. I said, “Tell me. How do you guys do your marketing in your store? Do you do psychology? Are you guys like Vegas? Do you have lights and smells and you put all the things in different places?” They’re like, “No, we just kind of make the store the way we want to shop.” I was like, “What? No, no, no. But, like, don’t you put things on shelves and different things?”
I think metrics, they can trick you, where you can look at a metric and it looks good, but, and we’ve done this at AppSumo where the metric looked great, but six months later overall metrics are down. We’re like, “What happened?” Ultimately, it’s really saying, “All right. Am I making a profit? Am I enjoying this?”

Tim: Yeah. To give, just to suggest further reading, Eric Ries has written about vanity metrics versus, like, practical metrics. I’m not sure what he calls the second set. So misleading metrics versus helpful metrics, effectively. Just search “vanity metrics Eric Ries,” R-I-E-S. Mutual friend and startup guy. He’s written about it. That’s a good place to…

Noah: Totally. The key thing is you’ve lofted your one dollar. Make sure that people actually want to give you money for what you’re creating. Then you can go explore other things. But I would say limit it. One thing I took from Zuckerberg at Facebook is limit it to one metric and have one thing that you’re really trying to accomplish.

Tim: Yeah. For instance, just to add one more thing, at Google and many other places too, they have like five or seven-day active users’ uniques over that period of time. Even at YC, Y Combinator, they’re kind of like, “It doesn’t matter what you measure, but pick one thing so you’re trying to improve each week.” You have a weekly number. It doesn’t really even matter what it is. Just something so that you are able to focus and not run around like a chicken with its head cut off.

Noah: I would say, yeah, that’s a really great point that Tim made, is that one, you have to have…One thing we’ve struggled with AppSumo is you have to feel progress. Do pick. If you’re going to pick one metric, like maybe it is just revenue, make it something that’s realistic that suits you.
Have a progress that makes you feel you’re going forward, and have something really tiny each day that you can indicate whether you’re on it or not. Like, okay, good. This is my small win for the day, as we talked about earlier.

Tim: Yeah.

Man: Okay. I think we’ve got maybe time for one more question. Richard Brownsdon from the UK says, “What’s the difference between validating and running a pilot?”

Noah: I don’t know.

Man: Okay.

Tim: I don’t either.

Man: We’ll take one more.

Tim: Right. I’m not sure. Yeah, I’m not sure. You want to? Yeah. I’m not sure.

Man: Yeah, we’ll get one more from that. Paychen…

Tim: Running a pilot sounds a lot cooler.

Noah: Yeah, it does. I want to be a pilot.

Man: Paychen is saying, “How do you prevent someone from taking your idea? A survey or testing reveals a lot about it.”

Tim: I have thoughts on that.

Noah: Oh, man. I’ll rip this guy.

Tim: Yeah, go for it.

Noah: You want to do it first? Please.

Tim: I’m sure we have the same opinion on this. Just go for it.

Noah: Yeah. That’s symptom number nine of being a wantrepreneur, that you want an NDA or you’re afraid that someone else is going to do it. What I’ve actually realized is that all business is a copy of a business. Someone’s saying Groupon invented…No, people have been selling online for a long time, and people have been selling in stores for a long time. Whatever you already thought of, someone smarter has already thought of it.
I would say the biggest thing is to go do it. One of the realizations I had is I went to a conference, a startup conference, and I said, “We’re AppSumo. We promote tech products for startups.” I was like, “How many people have heard of us?” and half the room raised their hand. I was like, “Half the room? This is what we do. Where’s the rest of the people?”
It was actually a really big epiphany for me that there’s a lot of people out there. Don’t worry about the other people that are already doing it. Don’t worry about sharing your secrets. Just get it started. That’s the best way that you can go for it, unless you’re doing maybe biotech, which he’s not.

Tim: Probably not. Just to add to that also, to reiterate it, number one is as an entrepreneur, as a good chef, as a good athlete, as a good fill in the blank, you need to be very confident in your ability to generate ideas and opportunity. If you only have one idea, don’t start a business. You’re going to have to change that.
If you only have one sort of thing that you need to cling to, you shouldn’t start the business. You need to be confident in your ability to improvise and compete, because even if you launch your business, you protect it until you launch, as soon as it’s successful, you’re going to have 10 people trying to copy it. That would be number one. Then, no, that’s number two as well.

Noah: Don’t worry about someone else stealing your idea. If that’s the case, then you probably shouldn’t be starting anyway.

Tim: Oh, no. What I was going to say also, just in…

Noah: Yeah, yeah. Please.

Tim: …in the BC game when people invest, if you have no competition, venture capitalists get really worried. It’s like they always assume, if somebody comes in and has a great idea, they’re like, “Okay. Five other smart teams are working on this right now even if they don’t know it. Why should be invest in this team?” You should ask yourself the same question, even if you’re not in the BC game.

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6 responses to “How to Validate Your Business”

Crystal Foth
August 10, 2014 at 1:24 am

Great video Noah – I really enjoyed it. Staring a business can be overwhelming and I love your basic, yet fundamental approach before so much effort and time is wasted. Awesome perspective… I need to watch some of your other videos too!

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Aaron
January 29, 2015 at 5:12 pm

Really some great information in this video, and thank you for the transcription as well. Noah, you and Tim are definitely modern day hero’s of mine and enjoyed your talks today. I feel like i actually know how to really validate what I think my customers want and I’m actually going to do it right now. Thanks again.

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Ray Burton
February 2, 2015 at 8:34 am

This is such awesome info. I can’t believe there is only one comment here so far. Listening to you and Tim actually go over how to validate a business idea is soooo useful. Thank you. Time is precious, too precious to waste on crappy ideas that won’t get you where you want to go.

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Sanket
March 4, 2015 at 8:55 pm

Some of the best ideas I have heard on validating ideas for new companies! Very open, genuine, hands-on approach. Truly awesome!

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Casey LaRue
November 19, 2015 at 9:44 pm

This is basically an ebook. Take action, ask prospects questions, ask them to buy it for $x, build out notifications “a list”, ask for referrals. Don’t waste resources on non-validated business ideas! Thank you, thank you for posting!

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Caroline Gadd
November 20, 2016 at 12:23 pm

You are amazing! I’m so happy to have found this is Validation process sins in starting up a new business in Scandinavia, selling textile design stuff. As a educated digital marketer, I know how to drive the traffic but not how to organize myself into a great online company. If you ever come to Sweden I would love to invite you for lunch! Best regards & thanks once more, you are great- Keep up the good work! Caroline Gadd

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