Over the last three years at the Transcend Network, we’ve talked to, interviewed, and reviewed applications from roughly 1,000 early-stage founders in education and future of work.
There is one pattern that I’ve kept thinking about for years: a huge number of these founders are stuck in full-time jobs, and can’t figure out how to jump into building their startups. They needed support to actually become a founder.
Here is how it usually goes:
- You work at a company/startup.
- You notice a problem in your team. For example: you identify that the way your manager shares feedback is not really helpful to employees. You can say it: Feedback is broken.
- You’ve now identified a startup idea: to teach managers how to give better feedback to employees.
But is this enough to give up your cushy job and launch your startup? Here is where we see hundreds of ambitious smart people get stuck.
The survival rate from idea to startup is abysmal.
Why? Because even though you may think you have an incredible solution to a critical problem, you have not validated it yet. In other words, you don’t know who the customer is, if they are facing this problem too, and if someone is willing to pay for it!
Finding early validation is what allows founders the confidence to move out of their previous commitments and jump into building mode – consider it Stage 0 to building a startup. Without validation, the conversion from idea to startup is extremely unlikely.
I’ve come to believe that helping more teachers, engineers, and individuals find that initial validation can enable a new generation of founders to solve the most important problems in education and work.
But it can be an intimidating and lonely process – so how do we solve this problem? My ultimate conclusion after 2+ years of research is this: most individuals skip one crucial step in the process of becoming a founder.
The exploration stage.
It’s Time to Explore
It’s time we embrace the process of exploring.
In the exploration stage, a founder is looking for validation signs of problems that need to be solved, instead of coming up with an idea and jumping in full-time to build it.
In our previous startup example, that validation could mean identifying one person within a company that is willing to pay for a feedback tool or making a small prototype that a user loves. You don’t need to hear from a lot of people, but you need to find few people who really resonate with your solution to their problem.
This is a step that founders often skip, because it’s easy to get distracted with other vanity metrics, like Twitter noise or fundraising. Our friend and Transcend Fellow Wes Wagner shared his experience jumping into building mode without the proper customer validation in the post-mortem of his startup Pactero.
How do I find customer validation?
Your only focus during the exploration phase should be to validate a customer’s need, instead of getting distracted by vanity signals.
There are so many vanity signals these days: building in a hyped-up market, getting a lot of interest from Twitter/LinkedIn, fundraising announcements, building flashy visuals and website before building a product, and other signals that don’t actually correlate with better customer validation.
Many founders write about customer validation, but one model has resonated over all others in helping founders: John Danner’s Product-Market Fit Playbook.
John Danner is a serial entrepreneur and investor. He has founded NetGravity (and took it public), Rocketship Education and Zeal Learning, and has invested in Outschool, Maven, and many more. He’s also an investor in our fund, and a great friend of Transcend.
His view on finding product-market fit is pretty unique: John believes you should find a magic moment from your users where their eyes “light up” by experimenting every single week, before you really jump into building mode.
Here’s how you can use John’s Playbook to find customer validation:
- Define your customer and pain point: A lot of founders start with an idea – we challenge you to instead start with a problem you believe should be solved. Write down that problem + the customer persona in a document that you can update with every iteration.
- Experiment weekly with low-cost prototypes: Set up time to run experiments every single week, in the form of low cost-prototypes that address the customer pain point (you can build this with no technology or no-code!). Finding your first users is much more effective when you do it by running a low-cost solution rather than an expensive fully built product.
- Assess your magic: Your goal is to get a very small number of users to be very excited by your product. We measure this through magic – the moment when the customer’s eyes light up! You don’t need more than just a handful of people, but they must feel the magic.
- Iterate until you find magic: 90% of experiments won’t work. You take what you learn with every experiment and use that to update your customer + pain point document and come up with new experiments. Eventually, you’ll strike gold with some magic moment! Once you have the magic, you’ve found the initial validation you were looking for.
We’ve seen this model work before our eyes. Raj and Aditya, the founders of Stoa (two OG Transcend Fellows) found their new market niche using this method, as have dozens of John’s other investments like GetSetUp, Outschool, Lambda School and many more.
We’ve seen this model work before our eyes. Raj and Aditya, the founders of Stoa (two OG Transcend Fellows) found their new market niche using this method, as have dozens of John’s other investments like GetSetUp, Outschool, Lambda School and many more.
There are too many big hairy problems in education and work, and we want to give you the accountability + community so you can become the founders who solve them.
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Alberto Arenaza is the co-founder of Transcend Network. He has supported hundreds of early-stage founders through the Transcend Fellowship and, along with John Danner, is one of the instructors of the Exploration Bootcamp, a program to help aspiring founders run experiments and validate their startup ideas in education & the future of work. The application deadline for the Exploration Bootcamp closes on Friday, 19th August. So if a bootcamp like this interests you, please apply latest by tomorrow!
