Why 1000s of Startups Fail and How to Make Sure Yours Doesn´t with Nick McEvily

Here's the question: Why are so many startups pouring thousands, tens of thousands, hundreds of thousands into product development only to watch their ideas fail? The brutal reality is that most products aren't failing because they are bad. They are failing because they weren't tested early enough. Welcome back to Mastering Tech Growth, where we interview industry leaders to bring you actionable insights and inspiring stories. I'm your host, Mike, and today we're diving into why product testing and startup validation can save your venture from disaster. Imagine building something your customers don't even want. How do you avoid this? How can you— how can founders use lean validation methods and presale strategies to predict success before writing a single line of code. Stay tuned because this could change the way you approach your next big idea. Joining us today is Nick McEvilly, a product leader and a startup advisor who raised over $40 million for tech ventures. Nick is an expert at rapid product testing, human-centered design, and helping founders de-risk ventures through smart validation strategies. Before we jump into, into an episode, A quick reminder to our listeners, if you find the value in the show, we would love a subscribe, a comment on Apple Podcasts, Spotify, CastBox, or wherever you're getting your pods from. Welcome, Nick. Thank you for joining us today.

It's good to be here, Mike. Let's talk validation.

Let's do that. So before we go into an actual validation strategies, Nick, we have this question which we ask every single guest. When I say mastering tech growth what comes to mind?

Um, I don't know if you can master it. Feels like something maybe to pursue, uh, where the, you know, the journey is, is better than the destination. Um, as we're seeing different types of technology grow and those technologies become more complex, uh, and, and grow faster, get adoption from the market, I think it seems like a, almost an impossible task to master tech growth, but I've certainly been trying, and I'm happy to share a little bit of what I've learned over the last decade or so.

I love how you put it. You can't master it. It's a lifetime journey, isn't it? You can, you can try to get better at it. You can learn new things, new ways of doing it, of scaling the tech ventures, but eventually it's a never-ending journey, isn't it? I love that. Don't give it like this, Nick. That's a unique view. All right. So why do I care about validating my ideas before I write a single line of code? Like why this should be the very first step tech founders do?

You'll waste 3 things. You'll waste your time. You'll waste your money and you'll waste your reputation. And those things, except for time, you can get back. Uh, but I think validation is, is really about reducing risk and, and spending your time, money, and reputation wisely, or as best as you can. The other part I think that is more important for companies that are a little bit more established is it increases your believability. There's a large share of CEOs and founders who are making decisions on product based on their intuition, their up. And that's important. I think that's really an essential quality of a leader. But in order to convince, you know, a dozen, two dozen, hundreds of people to follow you, you also need some data involved, something more objective that folks can follow along with, with you. Uh, and so that's, that's what I like to talk about, is how you can combine your intuition and data to, to feel really confident in product strategies and future product goals.

Okay, so, um, time we can get back. So we go after it, it doesn't work, that's fine, we just wasted the time. I mean, high-performing people would actually go like, such a bad idea. You don't want to waste time like at all, you know. They, they all about buying more time. So money, yes, we're gonna lose this, but again, you know, we can earn money back or we can make money back. So validation, which is effectively de-risking the whole process. So if we do this part well, we're effectively saying that we're not gonna waste the money and we're not gonna waste the time. We have the intuition and we have data-driven validation. Can we talk what the intuition is like? Uh, is that something some of us have, or would you say that if any of us have a product idea and we all feel excited about it, that's intuition, we should follow that?

I think it's a mix of both. Um, I think we all have a little bit of intuition. It's inescapable if you choose to label yourself as an entrepreneur.

Okay.

I would say that the ironic thing about intuition is you need a track record of success in order for people to follow it. You need to have been right in the past with your intuition. And so in fact, intuition is really just another data point for people to understand. And if you are telling a group of people who are, you know, assumingly really intelligent, that they should follow you just on your gut, and you have a bad track record of that, it's gonna be hard to lead, or at least there's gonna be a lot of disagreement and internal conflict and resentment, all that stuff. Because what happens is developers who spend their time mostly coding, and that's hard work, will build things that no one uses, like you were saying at the top of the segment. And that's, you know, you can only do that a few times before a developer starts to be like, why am I making anything that this person is telling me to do? 'Can you tell me why we're going in this direction?' Hopefully a product manager, some sort of buffer between the visionary and the developer, is helping articulate and prioritize that vision. Um, but it can lead to, to some real issues within the team as well. And so then you have more turnover, maybe the high-quality talent doesn't really want to work with someone that has that type of disposition. And so everything can suffer. And I found that good validation is at the cornerstone of good leadership as well as just smart products. Product development and capital allocation.

What's your favorite validation techniques, if we talk about that? I mean, you mentioned as well— maybe I'm rushing over there, Nick— so you mentioned as well the intuition and data. So is the data coming from validation methods then?

Yeah, yeah, definitely. My favorite validation method is interviewing. Um, I think a lot of people will do surveys, and surveys are nice, but they're similar to the analytics tools that we rely on as well. They're very faceless. You get feedback in, in two dimensions. But when you're doing interviews, and especially if you're doing them well, you're getting really great feedback. You're reading facial expressions, you're reading pauses, nonverbal communication, um, you're understanding— if you're doing a screen share, you're understanding where their mouse is going, and stuff that you can do with, you know, modern analytics tools as well. But you get to ask questions about those, like, why did you pause there? What did you expect to happen? Right? You were going to navigate there. And so I think we're just on, um, we're on a— we all benefit, entrepreneurs today, product managers, product designers, all benefit from the technology that we have, these analytics platforms and finding, you know, interviewees and participants through, uh, respondent.io and all these other— usertesting.com. Like, it's easier to build and validate a product now than it ever has been, especially with meta you know, AdStack, you can throw an ad out there that leads to nothing really easily and cheaply. So there's, there's a lot of tools, but there's nothing that can replace talking to someone. And so as a designer and a founder myself, I'll never outsource talking to my customers. Now I would also recommend that other founders don't outsource that as well, at least for the, the early term. Because you short-circuit the synthesis process by interviewing the 6 to 10 customers for a specific feature set or area of inquiry yourself. You're able to synthesize a lot of that stuff live. You don't have to like go back, watch videos. You're like absorbing all of that intelligence immediately, and you can turn it into product features and ideas right away. And so oftentimes after I'm done with an interview, you know, close my notes or something and I'll start, you know, designing or writing some requirements or, you know, sketching out some new interface. And I'm addicted to that moment where I feel like I've had an aha just because I was listening to a customer really well.

6 to 10, Nick, is that enough?

Yeah, there's a research study that was done by Nielsen Norman, an organization that was started by two user experience HCI juggernauts, and they say that the— there's a diminishing return on time spent after like 5 to 8 participants. So you'll spend more time learning less. And for startups who are very budget conscious, I always recommend 6 to 8. We learn the bulk of lessons within that amount of time. Usually I can do those within a week or two depending on the calendars and schedules of the participants. And then we start the whole process over again. So it's not like you won't talk to more customers in the future. It's just the right amount, the economical quantity of users, I feel like, for folks to talk to.

Okay. So when I'm on a call, we're talking for an hour, and this is me guessing, correct me if it's actually longer. During that hour, I'm just asking question. The person joined probably has the context what we're going to be talking about. Maybe I'm having some demo. What if I'm validating an idea which doesn't exist? Do I want to come to this call with some, again, like an interface or almost like a pitch, you know, like a value proposition, you know, sometimes? So, so I, so I can ask the question. And another would be like, where do you find these people?

Yeah. So the first one is, is, you know, what do you come to the interview with? And I would recommend at least two things. An interview script. Be really smart about what you're writing and what questions you want to be asking of your participants. And you, if you've got other people involved, ask, ask those teammates and stakeholders about how, about what questions they want to get answered, what, what issues they're concerned about, critical failure points in the, in the business as it scales. And the second is to bring a visual of some sort. You mentioned like a prototype or, you know, a mockup or something, maybe that would be great. Not everyone has, you know, the skills to put that together quickly. So what I might recommend is using a competitor or using a feature in a competitor set that you're interested in exploring. They don't know if that's your website or not, most likely. There's no dis— you know, there's no illusion that's really broken in this, in this moment, but it will give you a higher quality feedback, I think, in that moment. Um, and of course, if it's a mock-up or something that, that you're personally testing or have designed, that's ideal. But in the absence of that, I would recommend a competitor tool or a feature in a, in another product that you can kind of examine a little bit more closely.

Okay, and we're talking for, for like an hour. We wouldn't be chasing people for more time, I would imagine. No one would agree?

No, an hour is great. I wouldn't go less than an hour though. I think if you're gonna work hard to find these people, um, doing something like 30 minutes, it, it, it curtails and shortchanges all the effort you put in to find that person. Yeah, and it takes me to your second question. Where do you find Good participants. Um, I've found that this is one of the first litmus tests for a founder in finding their product-market fit. Do you know the user personally? Can you go and talk to them? If you can find them and get them to talk to you, there's a chance that you might find some product-market fit, or at least you have a good network for that validation process. If you need to find them through, let's say, marketing ads, I've done, I've done, I've surfaced, you know, participants in a bunch of different ways. Maybe it's a fake advertisement for our product that leads to a landing page for signups, and we take our participants from the signups. Sometimes it's just a blatant advertisement for research, like, we want to talk to you, do you have, you know, an hour to talk with us, we'll pay. And we go through a vetting process to make sure those folks are qualified. I've even put up a fake job post because sometimes, like, we needed to talk to nurses, and nurses are not necessarily the easiest people to get to reach. And so we put up a job post for a nursing position in the city that we were interested in, and then after, you know, we got a couple of applications, we responded, let them know the position had been filled, but we have another opportunity that we can compensate them for. Which is the interview. So you have to get crafty. Like, the, the easiest place is Respondent.io and usertesting.com. They've created a marketplace for, for people. There is a bias inherently in folks who are willing to talk to you for money, but you got to talk to them. It saves you a lot of time. I think the bias is kind of acceptable in that moment, and the, uh, the constraints that startups are working under: time and money. So there's a lot of different ways. I'm happy to kind of share others, but it is one of the hardest parts. It's where the user interview process bloats the most is recruiting and sourcing participants, unfortunately. So if you can, if you can find those people quickly, then you're more likely to find product-market fit later. If you cannot find them, you should sit down and think about why that is. If you're putting up these, these advertisements asking for people's opinion and you're not getting those eyes or that attention or interest, how are you supposed to sell your product to those same exact people? So that's why it's the first litmus test for me. Um, it, it sheds a lot of light on the accessibility of that, of that customer.

I love that. How will you sell it if you cannot find people to talk about what you're planning to sell. That's, that's exactly right. It's just so simple, but it's so simple. It's not rocket science, isn't it? But anytime I talk with like a, a coding tech founder, so people who come from a coding background, they have some ideas, you know, they want to build maybe a mobile app or some APIs or whatnot, and they say, you know, they never validate anything. They just go coding because that's where their comfort zone is. I know I can code up, you know, I have this vision, I want to solve my my own problems. I read it somewhere online, if you want to build a startup, solve your own problems. I'm just going to go after it. Then they build something, and then you meet in some type of like networking event, then you're like, well, okay, well, do a mom test on me, you know, explain to me what is this about in like, you know, 3 sentences. Why should I pay for it? And they go on this tangent for like 5 minutes, and I'm still like, I have no idea what you're saying, like what you actually have built. Yeah, so simple, so simple.

I don't blame them, right? Like, that's what a developer does, they develop, and that's their comfort zone. But you've noticed that on the entrepreneur profile profile has diversified over the last decade or two decades from the engineer to others. And I, as a designer, am really proud to start filling those ranks, and I'm excited for more designers to start companies. Ryan Chesky, Scott Felske, all these, you know, celebrities in my mind, um, because they're putting the human at the center of this whole process. And when you do that, you understand what the most pressing problems are and how to solve them. So without understanding that human component, if you're just building technology, you're just building a solution and trying to sell it, you're going to reach a limited road ahead of you, I think.

Oh, 100%. I mean, there's going to be gaps you will need to fill. You'll need to either hire or get partners, just do some joint ventures because alone you'll have you know, blinders. You don't know what you don't know, and it's just going to be a very hard journey. I do, I do, I do love the trio, Nick. I do love, you know, if you think about like triangle, you have product, tech, and sales. I got— I love—

that's what I had for my first company, and it was— I think it was most successful because of that trio. Yeah, I couldn't agree with you more, man.

Yeah, I love when people come together and it's not solo— I mean, I'm not saying you cannot be a solopreneur, you know, that's very Plenty of good examples where people take it to, you know, worldwide domination being alone.

And then this very good duo, uh, where I don't know if there is though, you know, like there's stories that are told, right? Like, you know, people think Elon Musk started Tesla. He did not. He came in as a CEO.

Yeah, that's all PayPal mafia with you.

There's like, yeah, it's like, I think there's a lot of stories like that where a founder might grow in their success and then kind of cut other people out of their story, but I really don't see how it's possible for someone, especially like you were just saying, with the trajectory of tech growth, um, how you could do it alone. There's the human mind, just like kind of can't handle all that. Maybe with some AI agents you could, you could progress a little bit faster, but ultimately you need, uh, skill sets and compartmentalized departments that all have their own specialties in order to move this thing forward. And that's the beauty of tech. And in my opinion, it's very human, and we need to be a team in order to make it come to life, or else it'll— the quality of it will suffer for sure.

Wise words, Nick. Wise words. Okay, let's bring it back. Let's bring it back to the topic. So how much I'm gonna spend on this, Nick? Like, what should I be willing to pay Does it depend on the person I'm interviewing? Should I be targeting potentially, you know, a high-ticket salespeople for these interviews? Do I take anybody I can find? You know, what budget am I allocating for the 6, 10 interviews? $1,000, $2,000, $10,000?

Let's keep it below $10,000 for sure. I'd like to start at zero. Hmm. You have to consider who your target audience is. If it's a B2B sales company and you're looking to sell to a a head of sales department, that person's time is worth, you know, at least $100 or $200 an hour. So you might have to pay them for that allotment of time. There's different ways that you can kind of structure your incentives. You can do it in gift cards, because when you spend a certain amount for a certain person, you have to declare that. And then like you're annoying the executive, 'cause you're asking them to declare like $600, 'cause they did 2 or 3 interviews with you. So that's annoying. So you can get by that by, you know, or avoid that by doing gift cards. You can also do donations. I've seen a couple of folks choose to take their compensation and donation to a nonprofit of their choice, which I think is nice. And then there's non-monetary stuff as well. So you can just get them a gift like coffee for a week or something along those lines, like a t-shirt with your logo. Sure, sure. I don't know who would really accept that as, as a proper incentive, but, um, and so most of it is just, you know, for their time. And you want to create good rapport because you want to be talking to that person over the course of a few, few months as the product develops. You have more to show, more to share, and more to gather feedback on.

Can you—

so incentives is, is a big part of the cost structure. The second part is the, uh, the tools and, you know, getting, getting a visual together. So if you, if you need to pay a prototyper or designer to, to make you something, that'll cost you a few thousand dollars, probably a few hundred dollars at least. Um, that has become a lot easier because of AI. So you can take maybe a competitor's UI, put it through, uh, Wizard and some other UI, you know, uh, what was the other one I was looking at? ZeroX, uh, or something. Um, and make an interface pretty quickly and just have someone kind of click through that. But the biggest cost here, like I was saying, is your time. And if you're interested in learning how to do interviews well, which I think is the most valuable skill that you can get as a founder, um, then, then you're not losing your time really. You're just getting better at the, at the skill. Um, so I think it's really important to go in there with like a few hours of your own time, ready to learn, ready to mess up. Maybe watch your, your videos, the recordings of your interviews afterwards, so that you can, you know, kind of like gameplay footage, you can improve how you're asking questions. You can, um, you know, understand where to take a pause properly and give them room to elaborate, uh, and just generally improve the, the process so that you're getting the most out of that hour spent. But for the most part, you can do user testing today at either $0 or a few hundred bucks.

Yeah, I would agree. I mean, people tend to like— effectively, when you're inviting in that conversation, you're starting to build a relationship with your potential customer. So, you know, that beginning information, of course, you know, they're giving you their time, you know, be aware that if it's not paid, you're effectively taking a favor, and it would be great if you, you know, repay that favor eventually, you know, maybe with— once the product goes live, maybe you just give them, you know, free license for a year or, you know, or whatever, right?

Exactly. Yeah.

So, okay, so we find the people, we chit-chatted with them, and we realized that we do have something, you know, there is an interest, you know, people giving good feedback, you know, they're saying they will buy it if we're gonna build it. So, so we sort of validated, you know, the idea. So we wanna We want to now take it to this next level. We want to see if people would actually buy it before we actually build it. So we want to do some pre-sales, right? So what's Nick's approach in getting pre-sales running?

It depends on the consumer. If the B2B product, I would launch a LinkedIn outreach campaign, choose 3 paragraphs that are different. So you're going to like A/B test your outbound language. And message 30 to 50 people and gauge the response rates based on the language that you use. So you'll be able to surface, um, some, some language that really works. So it's like, okay, 15 people responded to this paragraph, 10 people responded to this, 0 responded to this. It seems like this is the language that we're looking for. Um, and if it's a B2C product, you'll do the same kind of language testing, but with more campaigns and, you know, slogans in an advertisement. So a lot of times I'll go to Meta, YouTube, X to launch some ads that have a visual and use the same visual but change the copy so that you're focusing the variable in your test and let that run for a week or two. And see how many clicks, impressions, etc. you get on that advertisement. And so those, those will do a decent job of evaluating your cost of acquisition and give you a range. Obviously those people didn't purchase, so you can't understand their intention to buy, but you will be able to get the top of funnel. So if, if I'm getting a 50% or a 20% conversion on my B2B, it seems like it's worth it. If I'm getting a you know, a dollar or less CPC on a B2C campaign, then it's worth pursuing. But if you're spending, you know, you sent out 50 messages and no one responded, and you ran a, you know, an advertising campaign for 2 weeks and you got no clicks, then you, you've learned a lot in that amount of time and probably saved yourself a whole lot of trouble and money in the process of building something. You can always tweak You can always adjust, right? This whole process is about testing, but you only have so much patience, time, and budget to go through those processes. So it's at some point you have to just, you know, either hang it up or go in a different direction.

Okay. How likely is that my copywriting is so bad that I got no clicks, no one responded to my LinkedIn messages, but the idea is still good?

Likely that could be the case. And if that's how you're feeling and that's the suspicion you have, maybe that's where you can pull in a copywriter or someone who has a little bit more creativity in advertising. And, you know, don't throw down the towel so quickly if that's your suspicion.

Well, I'm just sort of trying to take it there and go like, if people do this and they still get no traction or the traction is very, very low, You know, should they be seeing through their blinders and, you know, realizing that if the idea is good, you know, your copywriting can be quite poor. The people still will engage with the idea if it's actually good. Like, you will get some traction or not.

You know, that depends on how bad this copywriting is in your mind.

Like, so what's a bad—

you're like way off base.

What's up?

Like, you know, if you're selling a coffee mug and you're talking about you know, drowsy, or yeah, I guess that would be if you're, you know, talking about, uh, real estate prices, something relevant, you know, that, that, that makes sense. But I think for the most part, you know, we're all intelligent enough, especially if we're trying to start a company, we should be intelligent enough to find some subject matter and some language to describe that, articulate that well. Another thing that you can do is, um, if you can get those interviews and do the kind of first test with your customer, they'll use language to describe your product. And all you need to do is take that language and throw it right back at 'em. So it's like a mirror. I take customer-facing language and reflect that back in interviews. And that usually does the best copywriting because it's the language that's most familiar to your consumer.

I love that. So we going talking with people, we recording the session 'cause we wanna come back to it. We're taking a transcript of this, of that session, and if we're really bad at copywriting, we just shove it in an AI and we go, give us, give us a reach out campaign email or something like that. And that's probably going to do better in some cases, right?

Yeah. Or just, you know, avoid the AI completely. Just use the words that they used exactly because it was from their mouth, you know, like that's the most reliable. Source creative that you can have as the person who's listening to it.

I love that. Okay, so we— B2B is LinkedIn and it's effectively, it's an outreach campaign. B2C, we're running ads. Why you have such a segregate— not such a, but why this segregation exists in Nick's strategy? Like, is there a reason why, you know, B2B is LinkedIn and B2C is ads?

We have to remember we're at the beginning here. We don't really know much about our user, where they're spending a lot of time. So those are just kind of like traditional conventional vectors for us to explore. Okay. But once you learn more about your customer, you'll know, oh, it's not YouTube that they're spending a lot of time on, it's Reddit. Or, you know, they, a lot of people are getting, you know, their information from podcasts for another outlet on the internet. And so it's through listening that your marketing channels will surface.

Okay.

I'm not saying that those are the best ones to use for the length of the product, but it's a reliable place to start.

So we wanna broadcast that message in all the social medias or the biggest ones. So we wanna go in like X, Facebook, YouTube, Reddit. I mean, there's so many of them. Yeah. Do we wanna touch base with all of them or do you wanna just maybe concentrate on the bigger ones Then how, well, actually that goes back to understanding your potential buyer's persona, isn't it? So you should have done some homework to actually have a pretty narrow marketing campaign, right?

Yeah, I think it's important to really make this decision based on, sorry, based on your budget and the largest marketing, the largest platforms usually have the lowest CPCs CPIs. So that's where I would start because we're also budget constrained as founders.

Okay, I want to take it back a little bit actually in the very beginning when you mentioned people like surveys, but they were actually fairly non-personal and you know, you don't see the body language and that nonverbal communication. Do you think there's still space for surveys? Like, do we want to maybe combine surveys plus interviews and get even more data points?

Yes, absolutely, absolutely. I was just talking to my old CTO and he has set up a funnel from an NPS survey. So Net Promoter Score, super simple, everybody's seen them, is familiar with those. And what ends up happening is, based on— in his strategy, based on the, the ranking or the, the score of their NPS response, they get brought into a different funnel. So if it's like 4 or less— I think NPS is out of 7— so if it's 4 or less, they get brought into a a link to schedule time with the team so that they can have kind of a conversation with the person and learn about them. Um, and that's been able to— if he shows the NPS survey to, let's say, 50-60% of his users, um, in a given month, new users, he's able to get like, you know, a dozen or so responses that are interested in talking. And that's a really solid funnel. So like, you know, that company is lucky to have, you know, hundreds of thousands of users, tens of thousands of users monthly at least. And so that they can create that funnel. But not everybody does. So it's hard for sometimes surveys to lead to interviews just based on volume. But it's, it's a great comparison, or it's a great combination of tools for sure.

Okay, right. So, so we did chat, you know, we started, we started doing that. We, we're doing the reach on LinkedIn. All of these are leading towards our landing page. That's how I imagine, right? So we have maybe different landing pages, so we're trying different angles, but people come there and effectively, what is that landing page telling? It has the same continuity of the same message, but How do we actually trying to get those presales happening? Is there any strategy which you like, like maybe lifetime license, like anything you think would actually add more power to that presale to actually happening?

That's a good question. I think this is where the strategy becomes a lot more bespoke depending on what it is that you're selling. But if it's that B2B, I bring them to a book a demo button or a call us button, a contact us form, something along those lines. So they're just eliciting some feedback from you and contact from you. If it's a B2C product, there's potentially a buy button for folks to click on. And so I would also monitor the analytics to that button itself. But this is where analytics come into play. So you need your Google Search Console and, and Google Analytics plugged into your, your map, your landing, your, your, your landing page so that you can analyze where that traffic's coming from, how long people are spending, where they're clicking, um, and combine that with user tests, um, so that you can draw, start drawing conclusions on where the product should go next. But it's not a one-size-fits-all as much when it comes to the website design That's a point where you'll probably either need a decent designer to get involved or some templates that you feel like are really well designed and fit and suit your market and your needs. But people spend a lot of time optimizing webpages and that's kind of an ongoing pursuit as markets shift and your product shifts, features get added, et cetera. The words you're using on your marketing page and how you're directing traffic through it will also change. So it's something that kind of constantly needs to be revised.

Mm-hmm. Okay. I, yeah, I can absolutely see that. Let's say we were successful. I mean, actually, before we say we were successful, let's say we aren't successful with that presale. Do you think that's an indication of, of a weak idea if no one willing to pay before it actually is, you know, created as a product or a service?

Absolutely. Yeah. I mean, you're, you're, you're, you're putting these things out there. Let's call them lines in the water. You're putting lines in the water out there to see if anybody is tugging on, on them and you can't ignore them, but you also can't, you know, use them as gospel. You can't imagine that that is telling you everything you need to know. And that's why I really advocate for different types of research techniques. Right, like so far in, in, in this journey, we've been able to get people to accept interviews. So there's a little bit of a litmus test there. They're interested in talking about their problem. We're able to find them on the internet. Then we've got some analytics and data points coming in from the web page. Uh, then we've got the interview results themselves. Then you've got a survey that you've done. You've done some competitive landscape analysis. Maybe you've interviewed some stakeholders and and experts in the space. So you've got this constellation of 4 or 5 separate research and data points, um, that you can start to, to feel confident or, or a lack of confidence. Um, and I wouldn't ever choose one, um, to focus on or just do alone. It's, it's a— it's through this group of different factors that— and, and channels that you're, you're drawing a conclusion of whether or not you should proceed. Because this isn't life or death usually, it's just, should I take the next step? Should I spend the, you know, next $1,000 on that thing or $5,000 on that contractor? And, um, you're making these decisions based on, uh, the results of the, of the past work. And hopefully they'll build on top of each other to get to a point where you're like, hey investors, or hey potential business partner, you should join me in this because I've got all this data that's, that's that's, uh, that's our leading indicators that this thing could be a success. So do you want to take this next step with me? But ultimately, we're in the startup game and everything is high risk, so let's not forget about that.

Yep. Okay, I love that. We don't take next step before we, we get the pre-sales. Is that what we're saying, Nick? Like, you should not—

you could take the next step without the pre-sales. Like, I mean, I've certainly done that because of just personal conviction or other data points. That have shown themselves. Presales are tough because the person that says yes to a presale isn't always the same person that says yes to the real sale. Oftentimes you'll have some, you know, like a favor that they owe you, or it's a personal friend or a connection through someone that's saying, you know, they'll give you the LOI, And I think that those are helpful for you to demonstrate traction to folks, and it's helpful for you to, to get your initial learnings. But I, I hesitate to say, uh, that that's the only thing, you know, that would lead to— lead you to go to the next step. I think you could, you could move to the next step without pre-sales, um, but not without all the other things I had mentioned, I feel like, because those are, those are more, those are more secure.

Okay.

It depends also, like, it's easier to pre-sell a consumer product because you're, you have a larger pool of people than it is to pre-sell a B2B product. Um, so maybe you get some LOIs from a friend of a friend, and then they try your product for a month or two, and then they, they let it go, or it's like it's not a good fit. You have to start all over again and kind of find out why they weren't interested in the product. You have to go out and search for a new early adopter, and those qualities and needs might be different than the original. And that's again why I think that this is the most important muscle for a founder to have, is because this is like almost, almost a purgatory that we are— we sit in for months or years before we find something that really works. And, and, and then when you find something that really works, you know it. And everybody around you feels it and you guys can start building and kind of incrementally grow as you need to.

So let's say, yeah, I mean, my experience is very similar when it comes to B2B as well. It's very hard to make any pre-sales with B2B in general, at least, or maybe services, products I engage with. But B2C is definitely possible and I personally love if like if someone actually buys before it exists, you know, it's very popular approach nowadays. So let's say, let's say we were successful with it, let's say we got some pre-sales, so that, you know, ultimately creates real momentum, you know, we very excited, we think we have something over here. So we start building this thing. Is it where, is it where we, you know, at that point in time we can say like, okay, our validation phase is done? And we sort of validated that there is something potentially great which needs to be built, or is there something else which founders should be aware before they actually start writing that code and start building that MVP?

Maybe validation cycle one is done, but it is a cycle and you need to kind of keep it going. And that's, that's one of the bigger misconceptions I found is that people think product market fit is something you find. But in reality, product-market fit is something you do on a consistent basis. And if you're doing it right, it's running in the background with very little energy needed to, to put into it, and it's generating incredible insights for you. Um, okay, as soon as you think you found a fit or you found your validation, the market is going to shift, the new technology is going to come in, a competitor is going to come in, or maybe a political issue or regulation changes, and that changes. So you're always going to need to be doing this process. And the faster you're doing it, the more effortless you're doing it, the more likely you are to stay on top of the needs of the, the population you're serving, and the more likely you are to beat the slower, more sluggish large companies, uh, who are oftentimes the ones we're competing with.

Okay, so we did— so what we did here is we finished Phase 1 But what we're saying is that the market product fit is never, it's never finished. Like we always, we always have this process happening in the background. So we're building MVP and we still can, you know, doing that loop of feedback, right? We talking with the customers, we're showing what we just built, we're asking what is happening, what they like, what they don't like. We're taking that feedback, we put it back in the product, we're doing that again. So, so effectively we're just throwing away that, that presale element, or maybe even not, and we're just redoing everything we just talked about again. And it's just always on rotation.

It's a cycle. Exactly. That's, that's the product hygiene that I look for in product teams. Excuse me, that I look for in product teams that I'm working with. And I think, and I think Sam Altman would agree that that's the best indicator for, uh, for the success of a company early on is their rate of iteration.

Okay, so what's the, what's the gap between those interviews then? So, uh, let's come back to our example, which is did phase 1, and then we went into this phase of actually building that MVP, which, you know, we, we talked about and we got the pre-sales on. Yeah, we build it, we, we finished it, and then we do another cycle, or actually we just kick off the cycle in while we're building it, like, uh, so We build it, then we do the cycle.

Yeah.

Okay.

Yeah, yeah. Well, it depends on the configuration of the product team, but if you can separate the people building from the people testing, please do. But if those are the same people, then usually it happens asynchronously or kind of in a cycle where you build, then test, build, then test. So yeah.

Okay. And they're giving us feedback. So we're injecting that feedback into the product. And again, we're iterating and it's just always going on. And then effectively what it does, it allows us to continuously look for that market fit, or if we believe we have it, effectively to not lose it and to readjust to the market changes. Yeah, which is all—

yeah, beautiful thing can happen. Uh, like development teams inherently move slower than design and research teams for the most part. And so I can do 3 or 4 research programs in 4 months, and that'll get me ahead of the development team by a few months usually. And so then in that amount of time, I've validated the product roadmap for, let's say, 2 quarters. And I, as a product researcher and product designer, have a little bit of space to think big and think, you know, blue ocean type stuff. Like, what if we were to integrate, you know, NLP here? Or like, what would it be like if we were to automate these two processes? And lift my head out from the forest or, you know, the weeds to start thinking about more groundbreaking features instead of more of the incremental improvements that can come from user research.

Is there a place for crowdfunding in all of this, Nick?

Yeah, absolutely. Crowdfunding is a great way to extend your runway, a great way to gauge market interest, because people who invest often will either suffer from that problem or want the product themselves. Um, and so there's a little bit of market validation in this. Um, why do you ask? Is, is, is, have you seen times in the past where crowdfunding was used as a market test or an indicator of market fit.

Yeah, that's what I was going with. This is like, you know, when we're doing this presale campaigns to validate the idea, is the crowdfunding an equivalent of that? You know, can it actually work as idea validation where, you know, you don't really have this product or maybe you have just a, you know, very vision of it or maybe very little of it and you do this crowdfunding and you go like, you know, I'm going to put this campaign out. And see what the people are actually saying and just, you know, yeah, a similar way like a presales.

Yes, if you're doing, um, like a Kickstarter or, or something along those lines, like a presale platform, um, that's a great, that's a great technique. If you're doing something like Republic and it's just equity, um, then it might be a little bit less validating. But again, these things are meant to be included in a group of, you know, validation tactics. You don't want to just do one and then say, okay, then that means it's working. We want to diversify the ways we're eliciting feedback from our audience, otherwise the risk profile is a little too high.

Okay, define risk profile too high.

The risk profile is too high when your cost of acquisition is really high and doesn't seem to be coming down. Your risk profile is too high when you have to invest, uh, you know, 5, 6 figures into a product before you can get it to market.

Yep.

Um, your risk profile is too high if you don't have the expertise in this field and you need to kind of get them as you're building. The risk profile is too high if, uh, it takes a long time to find the talent you need. I think in this particular market If you look at some of these job boards, everyone's looking for like 5 to 10 years of AI experience, and I can guarantee that those people have already been hired and they just don't exist anymore. So like there's a delusion in, in the, in the hiring world here. So sometimes, you know, you just, you fall behind in certain ways where it'll take you time to, to, to rebound and to get, to get back in at the forefront of whatever it is that you're building.

So I want to go to market with, with this theoretical idea we, we have been discussing. You know, we did everything, everything was successful. We did the phase 1, we validated, had interviews, you know, people responded well, we got a little bit of pre-sales, we went and actually built MVP. And let's say we built it like a no-code MVP, so we, you know, we took some like a budget approach. So we were like, okay, well, let's just you know, not build all the shebang, you know, let's just build the minimal viable product. We got this. And now we would just want to take everything we learned along the way, you know, all the data points we have and construct this go-to-market campaign to make sure that the launch is successful. We're actually getting good traction and, you know, and then we effectively can just continuously iterate. Is there any examples of failure when it comes to go-to-market from your experience, Nick, where you've seen people doing it and you go like, oh 'Oh my God, you did everything fine at this point. The whole thing going to market was just disaster. You could have done so much better. As a result, you know, the whole idea is now questionable.' Absolutely, absolutely.

A couple of times. One that comes to mind is a game that I built almost 10 years ago, and it featured Donald Trump and Hillary Clinton right before the last election. It was like a fighting game. With a couple of other Vine and YouTube stars, and we, um, got really great validation from their audiences because this is an influencer launch strategy. So we partnered with influencers who were characters in the game to do our promotion for us. So we really reduced the marketing costs, um, catered to their audience, gave them a novel way, um, of, of improving their brand And after we launched the product, we had, I think it was like 300,000 downloads in a weekend. The product was doing really well. We had YouTube videos going up from gamers instructing other gamers on how to play the game and how to beat it. And that's— those are the kind of things that you look for. You're like, that's product-market fit.

Hmm.

What ended up happening was that we didn't spend enough time in the validation phase for the, the revenue model. Of how we would monetize the gameplay, and we felt strongly that it was actually just going to be through, like, power-ups and, like, special moves. But there was a novelty that wasn't as appealing as we had hoped to, to the customers. And in fact, we probably should have done, like, blocked, uh, uh, progression. So you have to, like, pay or accomplish something to get to the next level or to play another character. And you can pay in order to, for, you know, to skip that block, whatever it might be. There are a couple of ideas that we had experimented with, but we ended up choosing the wrong one. And so we weren't able to make that a really profitable product. And that's a great example of someplace where we found the user, we found the marketing strategy, we validated so much, but it was the revenue, the monetization strategy that we hadn't spent enough time validating. And that's something that we could have done if we had a little bit more budget and time to improve the product. But being a startup, we ran out of some cash and we needed to pivot to another idea.

So did that game just go shut down and never seen another iteration?

It was up for another couple of years, I think, just not maintained very well. And was able to maybe pay back half of its cost ultimately, but it didn't get into the range of profitability at all.

Okay. Good example of how a simple one, if in the beginning you might think that monetization is actually a good problem to have and you might even brush it off and go like, oh, it doesn't matter. You know, once we—

We'll figure that out.

Yeah, we'll figure that out once we add that bridge, you know, because it's a good problem to have, you know, people want to pay money, it's great. But then if you don't really think through it, you know, it might be actually quite, quite poor. And you mentioned you made some bad decisions, um, when it comes to, you know, while being in that step. Do you recall like what, what these decisions were and why you chose exactly that decision?

A lot of it was like deadlines that we needed to meet. Uh, we had made commitments to these influencers about when the game would be released. We had our own internal constraints with budget that we needed to work under. And so it was, you know, being a startup, it was just a combination of these, these vectors. What I wish we had done is at least validated the monetization strategy enough to get us to a break-even point so that we weren't losing money on development and improvements. We could at least continue to improve the game.

Well, if you would go back now into that situation, how would you validate that?

I think more observational tests. So I would put the prototype or maybe just a single level, a single character in front of some folks and watch them play and see where they stopped, what friction points there were, their willingness to pay. I also think that the App Store is a really hard ecosystem to play in. In-app purchases are usually the better way to go. You know, you start with a freemium. I'm curious if we could have gone with a paid game where it was like $4 or $5 or something for the game for its life, but we ended up going freemium because we wanted to get the download numbers, and then we thought that we'd be able to iterate based on the feedback from the freemium players. They get tens of thousands, hundreds of thousands of people playing the game. You can watch the analytics and have a much better picture of what's going on, um, because you have the volume. So if we had gone out with just a pay-to-play model, then we would have had a lower number of players in the first few weeks, and then we would have been able to learn a little bit less, uh, quickly. So they're trade-offs. There's always trade-offs. And I think if I were if I would have gone back and done differently, I would have done some more observational tests on actual gameplay.

That's a good shout. Yeah, so these are not simple things, right? And it's, um, retrospectively you think, ah, you know, we could have done that. But while you're in the moment, you're making a decision which feels the best decision you can make, and you know, there you go, and you made that decision, and then It's outcomes, pivots and whatnot, and tough game startups, right? Tough game.

It is.

I want to talk about these influencers because you mentioned, you know, we made these commitments and we needed to hit the deadlines for them. How did that go-to-market campaign was structured with the influencers in the first place? You know, did you went to some type of like influencer indexing ecosystem and you find your influencers?

No, it was before all of that. No, it was so much easier to do this now than it was in the past. But there was a really brilliant guy on our team named Michael Israel who was in charge of all of the influencer partnerships, and he did an amazing job. It was something that I was separated from, but we were able to use those influencer relationships before that game and after that game. And so I think of the things that came from that product and that release, it was the relationships that ended up mattering the most.

Yeah, I do agree. So you, you had, um, almost like a cold reach out, or like a maybe warm reach out from his perspective. That was like his network.

Yeah, there's some— he, he knew some folks in, I think, some talent, um, management firms. And we had an interesting pitch. I think it was modeled after the MTV show called Celebrity Deathmatch. I don't know if you remember that from back in the day, but it was like a claymation animated show where celebrities would beat each other up. And so we had anchored on a concept that had been successful and played well. Years before, and a lot of these influencers didn't have games made after them. And so I think there was a little bit of social credibility that someone would want to make a game after your likeness and after your character. And so it ended up benefiting them as well. I think it was just a good offer, and also Michael Israel is a great salesman, so I think that had a lot to do with it.

Was there a lot of influencers, just like 1, 2, 10, 5?

Yeah, it was like 20. I think it was like 15 or 20 characters. Yeah.

Do you know some we got permission from, some we didn't?

Miley Cyrus was in the game, Hillary Clinton, Donald Trump. We didn't get permission from any of those folks and we were covered, okay, legally under, um, under fair use. So we didn't have to worry about that too much. We weren't asking them to promote the product on our behalf.

Do you know what was the combined reach of these influencers? Just, just for interest of how many eyes?

Millions. Tens of millions.

Tens of millions. So you got— so in theory, you got like tens of millions impression on the game when it went live with your go-to-market campaign. And then you got like, what, like tens of thousands downloads?

Hundreds of thousands. Hundreds of thousands in the first week or so.

Okay. So it is a good strategy when it comes to go-to-market to go through influencers.

Absolutely. Yeah. You just have to make sure you monetize that well.

Yeah, that's the lesson. Think about what you're going to do with all the success with your amazing go-to-market campaign. All right, so, um, Nick, it's been fantastic conversation. Thank you for that. I think we, we gave the listeners good actionable steps people should do. It's not advice, you know, it's a, it's a blueprint, you know, which comes in the form of advice. Make sure you do that before your next big idea, before you start writing that code and and effectively burning your time and probably money if you're hiring, you know, some freelancers. Make sure you validate your ideas first. So if our listeners want to learn more about you, Nick, and about, you know, things you do and potentially ask you questions, how would they get in contact with you?

You could check, check out my website, nickmcevely.com, and I'm on LinkedIn as well, Nick McEvilly, M-C-E-V-I-L-L-Y.

I butchered your name, isn't it, Nick, when I was introducing you?

I was like, man, it happens all the time. Don't worry, don't worry.

All right, so, uh, scroll down as well if you're watching this or listening, check the show notes in a resource section. You'll have the links to reach out to Nick. Before we wrap up, a final reminder: if you find value in this episode, in all of our other episodes in general within the show, please do subscribe, leave us a comment, with the question to our guests. We'll make sure to get you the answers. And as always, stay safe. Until next time, see you online.