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How to (In)validate Your Startup Idea (wepay.com)
115 points by sophmonroe on Dec 17, 2010 | hide | past | web | favorite | 63 comments

If anybody responds, tell them that the offer is oversubscribed and that it is no longer available.


A company built to handle other people's money that recommends deception. What's wrong with this picture?

I think you are being a little melodramatic. This is to vet an idea, not a sustainable way to build a business. I even said that it could/should be more of a thought experiment. And besides, I'm not recommending that you maliciously and deleteriously deceive people.

pg on naughtiness: "Though the most successful founders are usually good people, they tend to have a piratical gleam in their eye. They're not goody-two-shoes good. Morally they care about getting the big questions right but not about observing proprieties. That's why I'd use the word "naughty" rather than evil. They delight in breaking rules--but not rules that matter. This quality may be redundant, though; it may be implied by imagination."

Sorry to say, Rich, that was not the response I expected.

AFAIC, there is no gray area here. I have argued (yes, many have disagreed with me) the same for years here.

A little background...

I have seen more deals than you can imagine ruined because someone lost trust. As simple as that. The salesman fibbing to his wife on the phone in front of the customer. The contractor paying the 3rd party vendor a little extra to get his customer's deal. I even saw someone lose a million dollar deal because he took his customer for a ride in his leased car with the speedometer disconnected.

And the reasoning was always the same: "If he could do this little thing to someone else, what will he do with my big deal?"

It's not a matter of what is effective. It's a matter of what's right and wrong. For many people (me included, of course), there is no gray area.

I realize that jaywalking != murder, but deception in business tactics is always a big deal. When one has little more than your reputation to judge, all data that affects that reputation is fair game.

I was disappointed with the original post. Calling deception "a little melodramatic" and citing a pg naughtiness quote as an excuse leaves me more disappointed than ever.

>I have seen more deals than you can imagine ruined because someone lost trust.

If you found that (in general) more business deals were lost as a result of being completely honest and outwardly truthful than being deceptive, would you still be involved in business? Completely hypothetical and probably untrue, but I'm curious how strong your ethics are.

I'm curious how strong your ethics are

AFAIC, "ethics" is not a scalar, but a switchable bit, so it's not a matter of strength, but binaryness.

would you still be involved in business?

It sounds like you're asking, "Would I ever sacrifice my personal standards for money?" Then answer is, "No, it's just not worth it."

If I had to compromise my ethics (or any other part of myself) just to improve my chances of making a deal or be more effective in business, I wouldn't even bother. I'd probably just go off and drink beer or write poetry or something like that. You may not like or understand my answer, but that's just the way it is.

Life is just too short to live it any way other than how you choose.

I think there's an important distinction to be made between lying to potential users and lying to friends, family, or business partners.

Morality is ultimately about results. I mean, it would be ok to lie in order to prevent the apocalypse, right?

Lying to users could be justified as a means to an end, if the end is sufficiently worthwhile. Lying to someone close to you has a much greater cost due to its potential to ruin your relationship, create lots of emotional pain, and end up causing a lot of collateral damage.

Things should work out as long as everybody is clear about where the line is: white lies to potential users -- maybe ok; white lies to somebody close to you -- not ok.

> Morality is ultimately about results.

Or it's not. See deontological vs. consequentialist conceptions of morality.

"Nothing in the world—indeed nothing even beyond the world—can possibly be conceived which could be called good without qualification except a good will."

And if you have a good will then you seek good results, so both philosphies end up in the same place, right?

No, not really. The question can be summed up as "do the ends justify the means?".

Are you saying that you believe that nobody should attempt to do smoke tests to measure product demand because you regard that as deceiving consumers? Its one thing to lie to make a sale, a completely different thing to not actually be able to deliver a product nobody ever paid for. The point of view you present seems extremely pedantic.

But, it's not that hard to do a smoke test that doesn't deceive consumers.

What's odd though is the company that everyone looks to as getting consumers the best doesn't appear to do any of this sort of validating.

How would you recommend doing it? Which company are you referring to?

The company I was thinking of was Apple.

I think interviewing people is a good idea. The fact of the matter is at the "idea" stage you don't have enough information to present to people to really give them a feel for if your specific product is viable. But by interviewing a fair number of people, you can understand what their legitimate needs are and what they're willing to pay for it.

Of course it's not foolproof, but I think it will actually be better than the approach given in this blog.

You can still test ad copy and landing page copy that promises a future product in exchange for an email address.

I'm not recommending that companies do this to figure out how to acquire customers.

I'm saying a person should do this to help determine whether an idea is worth pursuing.

So if they said that "We are waiting for more customer response before offering this service" would that be fine?

did you expect a profuse apology?

If I had more time, I'd go through all your previous HN comments disparaging WePay for different reasons. Somehow I doubt your motivation for doing so is a sterling commitment to morality. If it was, I doubt you would introduce your criticism with: "A company built to handle other people's money...", and instead, just focus your criticism on the point you are attacking.

No need for you to waste any time. Here they are:




The first was meant as a compliment. I think you have a great idea and appear to be doing a great job with that idea. I have recommended you to quite a few people as the perfect solution to their problem. I wish you nothing but great success.

The other two were in response to a rant about airline customer service on your corporate blog. I thought this was a bad idea and tried my best to explain why. I think the main reason I responded like that was because I saw a young company I cared about potentially making a mistake and I wanted to point it out.

To be honest, I didn't ever remember the 3 previous comments when I responded to this thread. I would have never put 2 & 2 together if you hadn't pointed it out. Thinking that someone giving you feedback because they "have it in for you" can be a dangerous assumption.

I realize that hn is much bigger than it once was, but it's still a great sandbox to try stuff out and fix problems before the rest of the world finds out. Thus the feedback.

Somehow I doubt your motivation for doing so is a sterling commitment to morality.

Do you respond to others who provide you feedback like this? I sure hope not.

No, that's really what Ed's like. He's also _really_ not OK with you smoking up to relax ("You have trouble reading and writing and 'rithmetic, so you need a little chemical help. You pussy."); I'm pretty sure he also once posted he'd never work with you if you pirated software. I've been surprised by many things he's said. I think he's coming from a principled place.

That doesn't mean I agree with him totally... but I don't think he's gunning for you.

If Ed's disappointed with you, someone else in the real world who could be vital to your business is going to be similarly disappointed. Why not figure out how to fix it? You're going to be successful either way, we all know it, but for the most part nobody in the real world is going to give enough of a shit about you to get past the first negative reaction they have to you. Might as well use Ed as a scientific curiosity.

Thanks for the memories, Thomas (I think).

I remember that drug post from a few years ago. If was about an English PhD who posted that he needed drugs to cope and I really ripped into him. I wasn't upset so much that he "smoked to relax" but that it ended up here, where it could have easily been misunderstood by someone impressionable (and young). I got shredded by my fellow hn'ers that day. Amazing that you remembered it.

You're right, I won't work with anyone whose ethics I suspect. Pretty simple, I think.

For the record, I'm certainly not a saint. Once you get to know me irl (hopefully that will come about some day), you'll see. It's just that I have never found any substitute for pristine business ethics, and I occasionally point that out here. The feedback, both kinds, is usually quick and predictable.

I'm not disappointed, just concerned, that's all.

For what it's worth:

I winced at the "tell them we're oversubscribed" recommendation, but didn't think less of them for it.

I am in exactly the same point with a product right now and wish I could find better advice than "make stuff up and throw it out there to see if it sticks". Credibility is expensive. I can't burn it on cold emails. You may not think I'm a liar for pulling that stunt... but you're not going to jump on the next email I send out, and I can't have that.

But, I sell to F500's, and WePay sells to neighborhood soccer teams. It probably worked peachy for them.

I think you're deeply naive about how human ethics work. You really cannot easily judge someone else until you have walked a mile in their shoes. I see it a lot: people thinking that character is more important than circumstance, when the reverse is true the vast majority of the time. Character really counts for very little, and in any case you cannot reliably infer much from the ethics of decisions in one circumstance to predict behaviour in another circumstance, unless the circumstances are similar in ways that match the causal reasoning of the agent making the ethical choices - and that reasoning is a hidden model, requiring you to read minds to figure it out, or saving that, hanging around that person for months and years.

For example, things like jaywalking - did you know that jaywalking is statistically safer than crossing the road at a pedestrian crossing in the US, on a per-crossing basis? If you knew that, would it change your opinion of the "ethics" of someone who broke that law? Some people put staying alive at a higher premium than obeying the law. But someone who didn't know that may just think they're a jackass.

It's also easily gamed. When people have such a simplistic and naive view of ethics / morality / character, their adversaries can put on little morality plays to fool them into a false sense of trust.

You're equating ethics with the law. They are not the same. In some circumstances, it may be seen as ethical to break the law. One that comes off the top of my head would be... what if you're wife is going into labor and you need to speed to get to the hospital? Obviously the scenario presented has its own set of circumstances, but at face value it could be seen as ethical to do so. Or, how about to speed-up and pass someone?

No, I'm not. I'm criticizing a particular mindset which has rules in mind (which may or may not be the law) and judges people by how closely they follow those rules, on the basis that people who break rules in one area may break rules in other areas, simply because rules are rules.

upvoted and appreciated. thanks for the insight.

Personally, I'm inclined to agree that companies handling money need to be extra careful not to give the appearance of dishonesty.

That said, I can see why you might think it odd to object. All these people have done to respond to your offer is hit Reply, typed a couple words, and hit Send. It's not like you have some of their money.

On the other hand, why not make good on your offer? Tell them you haven't actually built it yet, but if and when you do, the offer is still open... and then keep your word.

"Do you respond to others who provide you feedback like this? I sure hope not."

I don't, no. But most people that are genuine in their feedback about a blog post on a very specific topic don't preface it (every time) with "how can a company that handles your money do such a thing!"

I actually think your feedback is poignant and helpful, but the way you frame it is disingenuous.

I actually think your feedback is poignant and helpful, but the way you frame it is disingenuous.

Fair enough.

Someday someone will invent a compiler for forum comments, so I can get an error/warning listing right away. Until then, I'll just keep trying to improve the process of putting my thoughts into words.

COLD email 20 of them and offer to pay THEM to use your product if they are willing to offer some feedback.

If anybody responds, tell them that the offer is oversubscribed and that it is no longer available.

I wonder what is wrong with saying just "Hi, I would like to get feedback about project X.". Would that way have the same affect?

I'm asking that just becasue I try to follow an old proverb (not sure if translation to English is correct): if you have a smallest doubt about whether to lie or not, don't lie.

(no, I'm not good with the above rule, but at least helped me while dating and now in marriage)

I think it's especially telling that he defaults to deception in a case where the more honest, transparent, and honorable action is both obvious and more personally beneficial to everyone involved.

Using advertising and pre sales contacts to determine demand and design a product is quite reasonable (and standard; the innovation is that self-service AdWords makes it a command-line process vs. a formal effort), but the respondents are your first, best, and potentially most loyal customers, so screwing them even a little right off the bat is bad for a lot of reasons.

When the game theoretic amoral behavior and the "conventional, moral" behavior tend to converge, it's probably the correct choice.

In addition, I don't think that it is as effective as telling them that it isn't ready yet and asking them for an email to let them know when it comes out.

If they risk providing their email for a product that isn't even ready yet, it shows stronger interest than for a product that they think that they will be able to use right away.

I somehow knew this would touch off a firestorm.

Come on, lots of people measure people's interest in ways where they go to some page or do an action and nothing is there.

True, after that, those people probably won't trust you unless they have a good reason to. But in the end of the day, you didn't really harm them and there are many more people.

Look I'm not saying it's not lying. I'm saying that there are worse things in the world than sending 20 people to a page to gage their interest.

If these recommendations are too extreme, treat them as a thought experiment. Just don’t lie to yourself.

I'm not sure I'd want to take any advice that suggests starting off a business relationship by lying to the potential customer.

(Re: "Identify your target customer. COLD email 20 of them and offer to pay THEM to use your product if they are willing to offer some feedback. See how many respond. If anybody responds, tell them that the offer is oversubscribed and that it is no longer available. See how many of those people still ask about the product.")

Dry testing has always been controversial, it seems.

I'd imagine that merely asking the potential users if they'd buy now, if it were available, would serve the same purpose.

No, it wouldn't. "Would you buy know?" doesn't select the same people as "Click here to buy now".

From firsthand experience: no, it doesn't.

I fully agree with the article, however, when I think of most the big successes of the last 10 years, they all fall in the exception category.

What does that tell me? Would that have worked for twitter? No. For Google search? Barely. For Facebook? Probably not. GroupOn? Probably.

Perhaps you shouldn't just implement ideas, you should implement technologies. And carefully map out your user flows. And then you should make sure that each conversion step actually converts in the real world.

You probably could have done this with Google search.

Would you love to replace the super slow inaccurate search you are using now with one that delivered accurate results in 1/10th of the time?

[1999] Sure, but I'll believe it when I see it. Look, I've already tried about 10 different search engines, and even with the best of them (altavista) you count on having to click through a few results pages to find what you want. Web servers aren't psychic, you know. You get out what you put into it. There are already a lot of smart, well-funded companies working on this, so good luck.

People who Knew Search back then knew that tedium was part of the bargain, just like people who Know photo sharing today know that tedious sorting/tagging is inevitable if you shoot a lot.

A shot in the dark will sometimes hit something. This doesn't make shooting in the dark a viable strategy.

No thanks. Lies are a bad business model and a worse life model. Makes one think wepay.com's sense of ethics all boil down to whether it makes them money or not.

um, the business model I recommend is building products that solve real problems and charging people a fair price to use it.

Testing ideas has nothing to do with determining a business model. Not sure how this relates to WePay's ethics or whether it makes us money or not. Bizarre.

> Testing ideas has nothing to do with determining a business model

Your business model includes how you're going to cover the costs of market research. This answer boils down to "we're going to trick people into doing it involuntarily for no compensation, throwing chaff into the marketplace as a negative externality", whether or not they think of it that way. Dry testing is just a step short of fraud, and I for one won't deal with anyone who has ever been caught doing it.

Lying to potential customers is cheap in terms of development time, but costly in terms of reputation.

This is exactly what mark zuckerberg did. [sarcasm]

IMHO, you invalidate an idea after you implement it and see the user's reactions. Before then, you cannot know if it will succeed or not.

I named fb as a counterexample. I think you can definitely succeed without validating or invalidating your idea first, but it's a much bigger risk, and you are building a very specific kind of company. How many facebooks and twitters are there in the world?

Which is great if you can implement the idea in a weekend. Much harder if it'll take 2 years to build before you can see if the time was worth spending.

This piece succeeds because it spells the steps out clearly and tells you there are three very big counter-examples. So if you're trying to change the way people spend time and/or communicate, how do you get validation?

You guys should work on formatting your posts, bold list titles or italicize or underline - I am too lazy to read everything, I want to skim before I decide to read.

That's a great idea and a nice tool. However, I personally found the resulting summary not very useful.

I agree. I need to be more disciplined about that...

Instead of saying "the solution to problem X will actually be available TONIGHT at www.[startupname]ly.com" couldn't you say "the solution to problem X will be available SOON/LATER/NEXT YEAR at www.[startupname]ly.com. Pre-register so we can let you know when it is" ? First, you wouldn't be deceiving anyone. Second, wouldn't it be an even better indication of interest if people are willing to wait for the product?

To everyone who has a problem with tell them that the offer is oversubscribed, you do not have to take one sentence and turn it into a huge deal. If that is what the author wants to say, then so be it, just suggest something better and that may work.

regarding the lying:

didn't bill gates lie to ibm when they were looking for an OS and say he had one (and then bought qdos and hacked it into dos)?

think of what a boon microsoft has been to the world (i'm only half facetious)

from a utilitarian - the only nonreligious, rational morality? - perspective...

Utilitarianism isn't the only nonreligious, rational perspective on morality.

Actually, there aren't any purely rational perspectives on morality, as they all seem to hinge on preserving some intuition or another. But in terms of logically consistent, secular ethical frameworks which produce results most of us are comfortable with, utilitarianism isn't the only one on the list. And there are actually points where utilitarianism might end up producing results people aren't comfortable with (such as kidnapping people and killing them for their organs).

point taken

These are interesting ideas. I'd like to hear from any founders who have used any of these methods, and to what extent they were beneficial in gauging the eventual level of success of an idea.

I agree. And on that topic, what are some hair on fire problems that you have or have thought others might have?

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