Validation has a pretty clear definition. You're basically making sure something works. If it's at the airport, your passport is validated to make sure you are who you say you are. With some jobs, your uni transcripts are validated to ensure that you’ve got the results you needed. However, in the tech world, it’s a term which can be easily used and abused. Sure everyone wants to validate that their great idea is useful and people will use it, but often the unanswered question is, will they pay money for it?
The idea of monetisation is an assumption that is often an afterthought and a case of ‘well if we get enough people onboard using and liking the platform for free, then they’ll be happy to pay for eventually’. Whilst in some cases, this has worked where businesses have been able to provide a basic service for free and then paid business services, this isn’t always the case. It's like running a café for free. You get to have as much coffee as you like, but if you want to have food with that, then you pay. I’d have tons of customers, but I'd be broke very quickly, unless I raised capital, but I won't go into that again.
Many tech startups gather users as their method of validation, which is one measure. You can have a bunch of users that like or love your product, but if they're not going to pay for it, your business isn't going to be around for very long. As always, there's exceptions to the rule on this, but the harsh reality for the majority of tech businesses is that they need paying customers, without which you’ll need to be finding yourself another job.
This is why you need to validate your idea on both a user level and a commercial level. If you can't answer the question, ‘How do you make money with this?’ then don't waste your time and money building it. My first experience in the tech world was like this. My brother had a great idea to make livestock markets more transparent and efficient. It was an awesome logical idea which hadn't been done before. Validation testing showed that farmers wanted a better way to get and compare prices. Meat processors were keen to modernise practices. The problem for me however, remained … How was this going to make money? Having run another business, I was well aware of the need for paying customers. I wouldn't have had the business for six years before selling it, if I hadn’t had great regular customers coming in each day and paying for the products and services we provided.
With this livestock idea, I sat in meeting after meeting being told, “Don't worry. This is how you can eventually charge users for your service.” The grand sweeping statements of yeah, we can do this and that and charge this customer for this and then you'll gather so many users and market data. The valuation of your business will be X. I unfortunately sat there silently, listening to this crap and thinking, ‘This is so stupid,’ these people have no idea. However, I wanted to support my brother in his venture. I stupidly assumed because he knew the industry far better than I did, it would work. In hindsight, I should have said something at the time. That nagging thought in my mind that nobody would want to pay for this, proved to be correct.
Whilst the idea was great and people liked it, it was the sort of platform that should've been done as an internal project for livestock companies or meat processors to create value thorough increased efficiencies, not as a third party project. The cost to implement this with the geographically diverse customers and tailor it for their systems, proved also to be prohibitively expensive.
However, despite this being an expensive lesson, it was worth it because from this I've been able to claw away a lot of the fantasy tech industry crap to ensure anything we do now has a paying customer business base from the very start. I've had countless good ideas before and after this project, but since I couldn't work out how to make money from them, they were all archived into the business ideas folder of my laptop as a reminder. You can have a great idea, but turning it into a business is a whole other thing.
So for your next tech idea, or any business idea, when you're developing your business plan, the most important thing to focus on is who is going to pay for this and how much will they be willing to pay? Once you have this locked down, you’ll be able to see if this is going to be a total waste of time, or an amazing viable business!
Often in life, we find ourselves in situations where you get asked something by a friend and in hindsight you probably should've said no. I found myself in one such situation a few years ago. I was doing some volunteer work in my hometown of Tamworth when one of the committee members who owns a chicken farm, asked me if I'd like to come and help move some chickens. ‘How hard could that be?’ I thought. Move a few chickens from one shed to another, easy! At the time, I'd been doing a few casual jobs, as well as the volunteer work so a few more dollars and the offer of pizza for dinner was a tempting offer I didn't want to knock back.
“Sure, be happy to help out!” I replied, not knowing what exactly I was getting myself into. But hey, let’s not forget the aforementioned pizza! That evening I drove out to the property, which was about 20 minutes out of town. Now it's funny what goes through your mind when you're not sure what you're getting yourself into. I had visions of picking up nice soft little chickens and placing them in little tubs and carrying them a short distance into another shed. I’m not entirely sure why I thought that, but that was my impression of the job. Sadly, this was not the case…
On arrival, I saw a scruffy looking crew of chicken movers and I immediately felt overdressed in my jeans and T-Shirt. I did wear old jeans, just not old enough. My induction was swift and to the point. Grab six chickens with each hand and load them in the crate.
“Ok… How many are there?” I asked
“5000!” was the reply.
“Oh crap,” I thought as I walked into the shed to see thousands of chickens before me. Well it was too late to turn this down and this was certainly a new challenge for me! So I jumped right in and started grabbing chickens by the legs. The whole thing was really well co-ordinated. There were the catchers, who would catch the chickens and then hand them on to the collectors. The collectors would ‘collect’ the six chickens in each hand, then carry them over and load them into the crates. The crates would then be loaded and stacked onto the back of a truck.
This was hard work! It was summer and the evening air was hot. Add to this, the dust in the shed that'd been kicked up by the commotion, the smell, the noise, the pecking, the scratching and the chicken poo all made this the weirdest and hardest night of physical work is ever done. Everyone kept changing roles of catching, collecting and loading crates. After a couple of hours of work, the job was completed. The shed was empty and the huge truck was fully laden with 5000 enormously noisy chickens. My work here was done! Well… not quite. Now it was time to unload them all.
We drove the truck to the other side of the farm to another shed where we proceeded to unload the crates, stack them onto trollies and then take all the chickens out. Crate after crate I lifted, getting covered with more and more chicken crap. Another couple of hours later, the truck was empty and I was trashed.
I was so tired I'd forgotten about the pizza! But when it arrived, I sparked back to life! It was so worth it. Although I couldn't even look at the chicken pizza without cringing, I hungrily munched several pieces. Looking down, my hands were scratched to pieces, my clothes covered in blood and chicken crap and I couldn't even begin to describe the smell.
I needed to get home for a shower! Just as I was leaving, my friend said, “Thanks for helping out tonight. That's a good start. We've only got another 15,000 to move. So, same time tomorrow?”
Exhausted, I stared back blankly… and with a smile replied, “Sure, same time tomorrow!”
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