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If you get one paying customer does it mean your idea is validated?

If you get one paying customer does it mean your idea is validated?
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Ye! It’s an awesome feeling when we get our first customer to sign up. It’s really a motivator to slog out to get more.

But, when you are a new startup project, you are still trying to discover what kind of target audience and pain point does your product resonate and creates a significant value.  So, does one customer signing-up holds significance to this process?

Well, the answer is – yes and no!

Let’s just dive into this from the basics.

What is a startup project?

Startup project is a type stage of business…

Stage what? Yes, is a stage in the process* of turning a business idea into an established (and highly profitable) real company.

A Startup is a temporary organization searching for a scalable and repeatable business model

What does that mean? It simply means that Startups have no business model that works. Yet.

“A ‘startup’ is a company that is confused about –What its product is. Who its customers are. How to make money. As soon as it figures out all 3 things, it ceases being a startup and becomes a real business. Except most times, that doesn’t happen.”

– Dave McClure

We start with assumptions or hunches about most if everything, to begin with. More early you start to get a sense for theories against reality, the safer you are.

What does one customer signing up mean in this context?

You get some early signs that something about your product seems to be valuable to at least one person, if that someone paid for it.

Do you know what value really did your product create for this customer?  Is he or she using it actively?  How happy is he or she with your product?  Is he or she talking to others about how great is your product?

If you do not know this, initiate conversation with the customer through email skype phone. You have to understand this value in his or her perspective.

Value hypothesis

A value hypothesis is an attempt to articulate the key assumption that underlies why a customer is likely to use your product.

Identifying a compelling value hypothesis is what I call finding product/market fit. A value hypothesis addresses both the features and business model required to entice a customer to buy your product.

A new idea is validated when you discover a value hypothesis while working towards Product-Market fit.

Product-market fit

Marc Andreessen, who originally coined ‘Product/Market Fit’ describes that Product-market fit means being in a good market with a product that can satisfy that market.

This is a rather vague definition, and Andreesen gives us a more vivid illustration of what Product/market fit really feels like:

You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close.

Product market fit is a funny term, but here’s a concrete way to think about it. When people understand and use your product enough to recognize it’s value that’s a huge win. But when they begin to share their positive experience with others, and when you can replicate the experience with every new user who your existing users tell, then you have product-market fit in your hands. And when this occurs something magical happens.

Where do you go after signing up one customer?

To validate your product idea, you need to work towards product-market fit.

What work does this involve?

Get insights on your first customer’s experience with your product.

Tweak your offering, if needed, to make your users so super happy that they start talking about your product to others.

When you discover a pattern among these users and among what seems to make them super happy, there you find a potential path to a repeatable business model.

And, that’s what is a validation of a product idea.

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