Why is it important to test ideas in the marketplace?
July 25th, 2008
Evan Williams on evaluating new product ideas:
The key question for evaluating an idea [on the topic of obviousness] is number one: Is it obvious why people should use it? In most cases, obviousness in this regard is inversely proportional to tractability. The cost of [xxx] and [xxx2]’s high tractability was the fact that they were defining a new type of behavior. The number one response to [xxx2], still, is Why would anyone do that? Once people try it, they tend to like it. But communicating its benefits is difficult. We’re heartened by the fact that Why would anyone do that? was the default response by the mainstream to blogging for years, as well, and eventually tens of millions of people came around. *
While we all understand that changing behavior is a tough proposition for any new product, establishing a new behavior is an entirely different beast with a different response mechanism and value proposition. Taking somebody from 0 to 1 (no to yes, or free to spending $1) is much different than taking someone from 1 to 2 (yes to a little more, or spending $1 to $2), since the decisions being made are fundamentally different.
Usually we can fall back on the “better, faster, cheaper” framework to evaluate an idea, but sometimes we can hit on idea that captures none of the three because the range of true substitute behaviors is so limited.
Therefore there is value in testing ideas in the marketplace. Not every idea needs to have a “proven business model” before it is launched or funded; for many industries and products this simply isn’t possible. The key is for the entrepreneur and the investor to understand the situation and structure their decisions appropriately.
There might be a lot of froth in the early-stage startup world right now: technologies masquerading as businesses, features mistaken as products, adoption and growth misunderstood as fanboy testing. But as long as the entrepreneur and the investor understand this, and stage their expectations, decisions and funding appropriately, what is wrong with testing?
Let the ideas and the intellect hit the marketplace: learn, test, refine, redirect, stop, redeploy. Let the creative cycle of creation and destruction flow…
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* [xxx] and [xxx2] are Blogger and Twitter, respectively, both of which were started by Evan Williams. I removed the company names so that we could focus on the idea and not the products. Fact is we still don’t know the “right” business model for these products…
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