Start-Well.com Review:

Rob Adams' latest book, If You Build It Will They Come? Three Steps to Test and Validate Any Market Opportunity (2010) builds on his earlier work, A Good Hard Kick in the Ass (2002). Both are well written, straightforward, and offer loads of practical advice for entrepreneurs. While A Good Hard Kick… covers many facets of launching a technology startup, If You Build It… focuses more narrowly on the task of validating the demand for a new product or service offering. Adams' central thesis is that confirming end user demand can be done quickly and inexpensively for most products following the steps described in the book. Furthermore, by committing sixty days and ten percent of your development budget to the Market Validation process, you greatly improve the odds of a successful product launch and mitigate the likelihood of an expensive failure (and the loss of reputation and personal savings that accompany it). As Dr. Adams gamely observes, "I would rather have my name on a $25K hole in the ground than a $1 million hole in the ground."

The central task of any business is to find and cultivate paying customers, which is exactly what the Market Validation process helps you do. Why, then, do many businesses continue to follow the "Ready, Fire, Fire, Fire Aim" approach? Other than incompetence, one of the biggest reasons is that entrepreneurs often mistakenly believe they already know what the market wants. If they don't skip the validation process altogether, they do it half-heartedly with the aim of confirming preconceived notions instead of really testing them. Others complain that delaying the launch of their businesses would let competitors get the jump on them, or that their market is evolving too quickly. Adams responds that such fleeting opportunities are probably not worth pursuing in the first place.

He also points out that many business people are afflicted with an "output" mentality. That is, they exhibit a bias for activities that generate tangible deliverables, irrespective of whether such activities generate real value for the business. Market Validation is hard work, and employees in startups are often under intense pressure from investors and managers to ship product. So what do they do? They stop interviewing potential customers to understand their needs and get back to shipping product. Once it ships, it's Sales and Marketing's job to get orders, and we can always raise another round, right?

Obviously, each startup is unique, so Dr. Adams' admonition to devote sixty days and ten percent of your product development budget to Market Validation should be taken with a grain of salt. Entrepreneurs will have to use their best judgment when deciding on the level of effort to devote to Market Validation. However, I don't recommend allocating less time or money to this process than he recommends, given how modest the demands are and how crucial it is to the success of your new offering.

There are many parallels between Adams' Market Validation and Steve Blank's Customer Development model (described in his book Four Steps to the Epiphany). Both authors favor an iterative approach to launching startups involving lots of customer interaction and feedback before committing significant capital to the venture. The key difference is that Customer Development begins with a concrete product vision that is tested and refined against the market. If necessary, you explore different sets of customers until you find a good match for your product. Market Validation, on the other hand, begins by exploring the market, finding the submarket(s) with the greatest pain, and only later developing the product specs once you really understand what customers value and are willing to pay for. Both approaches end up in the same place, so the choice of method may depend on whether your new venture starts with a product idea or a hunch about the market.