I believe Tim Ferris wrote that for his business ideas he would first create the actual site to sell it and then spend a few hundred dollars on adwords. When the user clicked to purchase, they would be shown a page saying "Sorry, this product is still in development page. Please enter your email to find out when it will be available."
That would let him know exactly how many people were willing to buy.
It's a pretty clever idea. For only a few hundred dollars and a little bit of time building the website, you will be able to find out what your conversion rate would be. I may do this for an idea that I am just starting work on.
Do it politely. I saw a massive banner on the side of an industrial building advertising loft condominiums. I called, only to be told, "Sorry, we're just gauging market interest." That was a major turn-off and when they did get around to selling the units for real, I wasn't interested.
The other advantage to this (at least from what I've read, I have yet to try this) is that since they've basically already declared intent, they're also much more likely to enter that email. I mean, if it's interesting, why wouldn't you want to hear about it when it's released?
> I mean, if it's interesting, why wouldn't you want to hear about it when it's released?
(a) Because I no longer give any e-mail address to a business unless I'm starting to deal with it Right Now. Insisting on one is a good way to make sure I never deal with you again.
(b) Because I wouldn't trust a company anyway after I discovered that it was advertising a product or service as though it were real but actually it was just messing me around and wasting my time.
There are always exceptions to every rule. This also relates to a big point in the article, you are not your customer. What matters is if _enough_ people are willing to do this, not if all of them are.
This kind of thing won't work for every business, but it's a hard lesson to learn: most people are not you. I was reminded of this the other day when there was an IAMA Netflix Employee, and they mentioned that they get a fair number of phone calls asking about how to return their DVDs 'to that box outside of the gas station.' Yep, people think Redbox is run by Netflix because they both use red, and both sell movies...
if you are going to do this, make the checkout form look completely functional(credit card, email, address etc). Why? Because there is something like a 90% cart abandonment rate...and this way you get the real numbers.
If you set up a fake web site, took credit card numbers, and then said "Sorry, we're fake", then I think you would rapidly have other concerns, starting with whether you would even be legally permitted to run a business any more by the time several different groups of lawyers had finished chewing you over and you'd served your time for the fraud and identity theft convictions.
who said anything about taking credit card numbers?
1. You don't save credit card numbers...in fact you don't transmit anything from the form...just clear it out without saving.
2. You don't tell them "sorry we are fake"...you tell them "This product is no longer available for sale...your credit card will not be charged".
3. You have to remember this is a limited run. At most you'll have 10-15 buyers before you realize that you are onto something and would stop your test. So the chance of someone bitching at you for "taking" their credit card number is slim.
So there is no fraud, no identity theft...the only unethical thing you are doing...is making someone read a description of a product that's not available for sale.
And in return you get your REAL numbers...not the inflated ones that can send you chasing the wrong idea. I'll give you an actual example...156(order form impressoins) = 18(order form submits) = 13(actual sales)
frankly screw being fair...this is business...you have to want it.
It's simple market research. Would you rather spend 6 months hacking together a product just so you don't offend 10 people?
if you always play by the rules you'll never make it. While you spend 6 months to try one idea, and another 6 months for another. Your competitor is going to run 10 tests in 1 week to find the idea that is the most profitable for him.
So by the time you get done with your 2nd test, the other guy has already been in a profitable business for a year.
> if you always play by the rules you'll never make it.
I suspect many people reading this very forum are living proof that you are wrong. Indeed, two of the most popular themes in the experience of successful founders seem to be building mutually beneficial relationships with business contacts and building a trustworthy brand in your market.
In any case, "this is business" is not an excuse for antisocial or unethical behaviour, and a cheap throwaway line is not justification for deliberately messing other people around.
And I'll bet every single one of these bootstrapped entrepreneurs stretched the truth a little to get customers, coverage or funding. Or maybe they spammed a little to get ranked in Google, or maybe they scraped another website for info.
1. where you stretch the rules a little, break the whole "please respect our TOS" thing. Might include spamming a few blogs to get backlinks. Might include posting on HN with 2 accounts. Might include creating a back story to make your startup a lot more interesting. "No really...we wanted to save the world...we didn't even think about the money"
2. white collar crime...telling investors that you have 50,000 users...when in reality you only have 5,000
3. killing people.
If you want to get a bootstrapped startup off the ground...somewhere in the early days...you'll have to break #1.
Frankly I feel like the whole make them fill out an order form to see how many actually want to buy, falls under 0 or .5. Yes it's a dick move...but that's the only way you'll get real market research, instead of getting 100 people to say "yes I'd buy it"...only to find out a year later that when the time comes to pulling out their credit card all of them say "no thanks"
"If you want to get a bootstrapped startup off the ground...somewhere in the early days...you'll have to break #1."
This is baloney and has a higher chance of making great cofounders and hackers (like, for example, Marc Andreessen: http://pmarca-archive.posterous.com/how-to-hire-the-best-peo...) run for the hills rather than work with you. If investors or business partners catch you seriously lying once you are basically permanently blacklisted. You might be able to eke out some kind of business from that black hole, but it is not easy.
"Third and final criterion: ethics.
Ethics are hard to test for.
But watch for any whiff of less than stellar ethics in any candidate's background or references.
is this the same Marc Andreessen that has invested in Digg, where Kevin Rose reported on a site without saying that he actually owns it?
Or maybe it's the same Marc Andreessen that sits on the board of Facebook which did a ton of unethical things to get off the ground?
The bottom line is that if you can think of a successful business...somewhere in it's early days they've done something that would be considered unethical in order to gain traction. The guys who played by the rules when they had nothing are no longer around.
Granted there are probably a few companies that actually survived...but chances are they got extremely lucky.
"Would you rather spend 6 months hacking together a product just so you don't offend 10 people?"
Probably not, if by "offend" you mean "market research", but that is not what I'm talking about. I'm specifically talking about the method you proposed, which I don't find to be fair.
In your question, you seem to imply that "market research" as a whole is offensive, which is not what it seems to me. Look at the Dry Test (the method Tim Ferris wrote about) mentioned up in this thread. It seems fair enough to me, and you still get the email of the people who are interested in your product.
"if you always play by the rules you'll never make it."
I simply don't buy that. Do you really mean never?
I'd rather be not fair to 10 people, than waste 6 months chasing an idea that doesn't work.
Except the dry test won't tell you anything. Cart abandonment rate means that the numbers you get don't mean anything. Your actual sales maybe 10 times less.
If you are bootstrapping then yes...I do mean never. Well there are probably a few exceptions...but that's just pure luck.
Comments
I believe Tim Ferris wrote that for his business ideas he would first create the actual site to sell it and then spend a few hundred dollars on adwords. When the user clicked to purchase, they would be shown a page saying "Sorry, this product is still in development page. Please enter your email to find out when it will be available."
That would let him know exactly how many people were willing to buy.
It's a pretty clever idea. For only a few hundred dollars and a little bit of time building the website, you will be able to find out what your conversion rate would be. I may do this for an idea that I am just starting work on.
Do it politely. I saw a massive banner on the side of an industrial building advertising loft condominiums. I called, only to be told, "Sorry, we're just gauging market interest." That was a major turn-off and when they did get around to selling the units for real, I wasn't interested.
That's called a Dry Test. It's not original with Tim; there are quite a number of sources on the subject.
Fair enough. It just happened to be where I learned of the concept.
The other advantage to this (at least from what I've read, I have yet to try this) is that since they've basically already declared intent, they're also much more likely to enter that email. I mean, if it's interesting, why wouldn't you want to hear about it when it's released?
> I mean, if it's interesting, why wouldn't you want to hear about it when it's released?
(a) Because I no longer give any e-mail address to a business unless I'm starting to deal with it Right Now. Insisting on one is a good way to make sure I never deal with you again.
(b) Because I wouldn't trust a company anyway after I discovered that it was advertising a product or service as though it were real but actually it was just messing me around and wasting my time.
There are always exceptions to every rule. This also relates to a big point in the article, you are not your customer. What matters is if _enough_ people are willing to do this, not if all of them are.
This kind of thing won't work for every business, but it's a hard lesson to learn: most people are not you. I was reminded of this the other day when there was an IAMA Netflix Employee, and they mentioned that they get a fair number of phone calls asking about how to return their DVDs 'to that box outside of the gas station.' Yep, people think Redbox is run by Netflix because they both use red, and both sell movies...
if you are going to do this, make the checkout form look completely functional(credit card, email, address etc). Why? Because there is something like a 90% cart abandonment rate...and this way you get the real numbers.
If you set up a fake web site, took credit card numbers, and then said "Sorry, we're fake", then I think you would rapidly have other concerns, starting with whether you would even be legally permitted to run a business any more by the time several different groups of lawyers had finished chewing you over and you'd served your time for the fraud and identity theft convictions.
who said anything about taking credit card numbers?
1. You don't save credit card numbers...in fact you don't transmit anything from the form...just clear it out without saving.
2. You don't tell them "sorry we are fake"...you tell them "This product is no longer available for sale...your credit card will not be charged".
3. You have to remember this is a limited run. At most you'll have 10-15 buyers before you realize that you are onto something and would stop your test. So the chance of someone bitching at you for "taking" their credit card number is slim.
So there is no fraud, no identity theft...the only unethical thing you are doing...is making someone read a description of a product that's not available for sale.
And in return you get your REAL numbers...not the inflated ones that can send you chasing the wrong idea. I'll give you an actual example...156(order form impressoins) = 18(order form submits) = 13(actual sales)
I find this would not be a fair approach, even if you do not really collect any data from the form.
Would you tell them "This product is no longer available for sale" when it never was? In fact it doesn't even exist.
Would it be fair to make people spend their time filling a form that won't result in anything?
Who can guarantee you did not collect the data submitted by the form?
frankly screw being fair...this is business...you have to want it.
It's simple market research. Would you rather spend 6 months hacking together a product just so you don't offend 10 people?
if you always play by the rules you'll never make it. While you spend 6 months to try one idea, and another 6 months for another. Your competitor is going to run 10 tests in 1 week to find the idea that is the most profitable for him.
So by the time you get done with your 2nd test, the other guy has already been in a profitable business for a year.
> if you always play by the rules you'll never make it.
I suspect many people reading this very forum are living proof that you are wrong. Indeed, two of the most popular themes in the experience of successful founders seem to be building mutually beneficial relationships with business contacts and building a trustworthy brand in your market.
In any case, "this is business" is not an excuse for antisocial or unethical behaviour, and a cheap throwaway line is not justification for deliberately messing other people around.
And I'll bet every single one of these bootstrapped entrepreneurs stretched the truth a little to get customers, coverage or funding. Or maybe they spammed a little to get ranked in Google, or maybe they scraped another website for info.
Unethical is unethical.
Saying "I can't succeed with X ethically" is no excuse. Then you ditch X.
there are different levels of being unethical.
1. where you stretch the rules a little, break the whole "please respect our TOS" thing. Might include spamming a few blogs to get backlinks. Might include posting on HN with 2 accounts. Might include creating a back story to make your startup a lot more interesting. "No really...we wanted to save the world...we didn't even think about the money"
2. white collar crime...telling investors that you have 50,000 users...when in reality you only have 5,000
3. killing people.
If you want to get a bootstrapped startup off the ground...somewhere in the early days...you'll have to break #1.
Frankly I feel like the whole make them fill out an order form to see how many actually want to buy, falls under 0 or .5. Yes it's a dick move...but that's the only way you'll get real market research, instead of getting 100 people to say "yes I'd buy it"...only to find out a year later that when the time comes to pulling out their credit card all of them say "no thanks"
"If you want to get a bootstrapped startup off the ground...somewhere in the early days...you'll have to break #1."
This is baloney and has a higher chance of making great cofounders and hackers (like, for example, Marc Andreessen: http://pmarca-archive.posterous.com/how-to-hire-the-best-peo...) run for the hills rather than work with you. If investors or business partners catch you seriously lying once you are basically permanently blacklisted. You might be able to eke out some kind of business from that black hole, but it is not easy.
"Third and final criterion: ethics.
Ethics are hard to test for.
But watch for any whiff of less than stellar ethics in any candidate's background or references.
And avoid, avoid, avoid." - pmarca
is this the same Marc Andreessen that has invested in Digg, where Kevin Rose reported on a site without saying that he actually owns it?
Or maybe it's the same Marc Andreessen that sits on the board of Facebook which did a ton of unethical things to get off the ground?
The bottom line is that if you can think of a successful business...somewhere in it's early days they've done something that would be considered unethical in order to gain traction. The guys who played by the rules when they had nothing are no longer around.
Granted there are probably a few companies that actually survived...but chances are they got extremely lucky.
"Would you rather spend 6 months hacking together a product just so you don't offend 10 people?"
Probably not, if by "offend" you mean "market research", but that is not what I'm talking about. I'm specifically talking about the method you proposed, which I don't find to be fair.
In your question, you seem to imply that "market research" as a whole is offensive, which is not what it seems to me. Look at the Dry Test (the method Tim Ferris wrote about) mentioned up in this thread. It seems fair enough to me, and you still get the email of the people who are interested in your product.
"if you always play by the rules you'll never make it."
I simply don't buy that. Do you really mean never?
I'd rather be not fair to 10 people, than waste 6 months chasing an idea that doesn't work.
Except the dry test won't tell you anything. Cart abandonment rate means that the numbers you get don't mean anything. Your actual sales maybe 10 times less.
If you are bootstrapping then yes...I do mean never. Well there are probably a few exceptions...but that's just pure luck.