Welcome back
In the previous session, we have done in consumer discovery
Then now, we will go to consumer validation process
Consumer validation
Consumer validation is also a very important step
for your entrepreneurship
Are you ready? Let's go
Before we go into the main topic of the consumer validation,
I want to introduce very interesting startup case
Look at these two guys
They are working at the Google
And they met together over there
Then in 2017,
they came up with great idea
And then they look at the problem of the Bodega
Have you heard about the Bodega?
Bodega is a kind of a small grocery store
Located in urban area,
which is New York City
Urban area
And also, they especially located in a neighborhood
with a large Hispanic population
In the Spanish term, the Bodega means
kind of a storerooms or a wine cabinet
Basically, this is kind of a small grocery stores
that sell some kind of essentials or snacks
or eggs or sandwiches to the neighbors
This is a concept of the Bodega
And then, what's wrong?
What's wrong with the Bodega?
And then they thought that Bodega is not structured
Because it's a mom and pop store
And also, it's not operating 24 hours
So if the people who live in urban area,
they need some essentials at night
And there's no way, nowhere, no way to purchase
those kind of essentials, such as
the laundry detergents or sodas or snacks
And also, going outside to purchase those items,
it's kind of dangerous
So think about New York City, a little bit dangerous
And they came up with a solution based on those problems
What if we place,
we place kind of innovative vending machines?
Innovative vending machine
And then place those vending machines inside the building
like this. This is a Bodega
Wow, it looks very fancy
Inside the building and the tenant like her,
she can use the Bodega at night
So she doesn't have to worry about kind of safeties
because it's kind of an indoor vending machine
And she doesn't need the cashier or credit card, why?
Because if she has a mobile phone,
then she can use the mobile phone easily,
to unlock the Bodega and just
simply pick up the items from the Bodega
Then just touch the mobile phone and lock the door
Then the Bodega
will just check out your item,
like Amazon Go concept
So inside this vending machine,
there is advanced technology, which is AI,
there is a camera technology, something like that
And it attaches to your mobile phone
It's a revolutionized item,
revolutionized vending machine
What do you think?
Wow, their solution is great
So that's why they successfully raised outside funding,
In 2017
Then what happened?
They got the right consumer's problem
What is that?
Busy urban resident
Busy urban resident who lived in apartment
want ultra convenient access to essentials,
like snacks, drink, or toilet tissues
without going outside
And this vending machine
provide 24 hours, seven days convenience,
and also very close to their rooms
Because it is inside vending machines
And also, you don't have to meet the consumer, the peoples
People, because there is no human interaction needed
Which is pretty convenient
What about their solution?
Their solution was AI vending machine
Think about this
Having right consumer problems
doesn't necessarily mean that you should provide
AI-based solution, you know what I mean?
And also, consumers perceive your product
a little bit different way
Think about it
The Bodega, and so AI vending machines generate,
The cultural criticism immediately
The consumers out there perceive the Bodega,
AI vending machine, like kind of terrible,
terrible businesses
that replace traditional mom-and-pop store
with ugly technology
Look at this Bodega
Bodega is a small grocery store located in urban area,
but Bodega is not just a simple store for them
Bodega is a kind of a place
that they interact together
It's a kind of a symbol of the communities
The traditional Bodegas are not just stores,
and they are a place where the community can interact together
And also, the Bodega was run by the immigrants,
Such as Hispanic or Asian immigrants,
The Bodega is not just a store,
it's a kind of a mean of
livelihood for the immigrant
It's a very important place for them
But this startup
established by two young entrepreneur
who was working at Google,
tried to replace, tried to destroy the place,
destroy the very important place for the community
Oh my God, it's a terrible idea for them
Look at the opinion of the consumers
Some consumers said that Bodega,
the very bad startup that want to kill the mom and pop store
Other people said that
it is not pantry box, it is gentrification box,
which is very interesting
So, the Bodega identified
the consumer's problem very well
But their solution was perceived by the consumers
very ugly
And another thing is,
there's no economic benefits for the paying consumers
Basically, Bodega target two different types of consumers
They were end users, of course,
of course, urban tenant like us
It's a kind of a real users
This is end users
But Bodega target to the another users,
another paying consumers
Who are they?
Yes, of course, the building owners
Building owners who agree to adopt
this Bodega vending machine inside their building
Or property managers
Property manager who are responsible for
the filling up all the necessary items inside the Bodega
Think about if there is no item left,
then no item left at night, then what should we do?
And property manager should fill them up
But they should sleep
They should sleep. So that's why
there is a not consistent quality of the product
or services
So the machines were expensive also
and also required restocking, restocking
And also the building owners
do not expect any high profit margin
And also, it's very difficult
to manage these vending machines
So the Bodega did not satisfy end users' needs
and also did not satisfy
with kind of paying consumers' needs as well
So the Bodega was in trouble right now,
So best takeaway of this case, Bodega Case, is that
identifying consumer problem is not enough
Once you finish identifying consumer problem,
then you should go through
validating your service and product
In other words, you should test
whether your solution is a good solution or not
So you should go through the consumer validation process
Consumer validation process refers to
the process of testing whether your solution
actually solved the identified problem or not
This is the definition
The purpose of the consumer validation
is to confirm whether your solution,
your solution addressed the validated problems
Although you identified great consumer problem,
your solution was not
And you need to test your pricing,
you need to test the sales channels,
and you need to test the willingness to pay from the consumers
Basically, you should ask yourself,
does my solution solve the problem or not?
Does my solution solve the problem?
Problem's ready, but my solution are not ready
because my solution is kind of wrong solutions
And then what are we gonna do?
We need to find out kind of alternative solution
or the other solutions,
To solve the problem properly
How to?
You need to test your solution with your real consumers,
not hypothetical consumers
You get the feedback from your real consumers
You generate actionable feedback from your real consumers,
And very similar to the consumer discovery,
validation is also cyclical process
Again, you go through back and forth
There are three major methods for the consumer validation
First one, MVP
Second one, landing page test
Third one, your beta release
Let's look at MVP
MVP is a very famous concept,
which is a minimum viable product
Minimum viable product is the simplest version of your product
This is a core concept of the Lean Startup
that we already discussed about in the other sessions
So the MVP deliver core value to the early adopter
or early evangelist
MVP test the core assumption about your solutions
with the minimum resources and minimum effort
If your solutions was proved as wrong solution,
easily change your solution, easily fix your MVP
and easily provide another MVP
So the best example of the MVP is CarrotBot
Do you remember the CarrotBot?
CarrotBot is the MVP of the Blue River Technologies
Again, the Blue River Technology was founded
by two people in Stanford University
One guy is the MBA student,
one guy is the computer science PhD student
Anyway, they target to the lawn market
But they thought
the farming area has a real problem
So that's why they quickly revised their solutions
and they prepared kind of a simple MVP
to test their solution
In this kind of a humble
and very simple vehicle,
on the top of this vehicle, there is two cameras
and two lasers and one radar
You know that, okay?
Anyway, so with those technology,
this MVP tried to test their solution
on the real farming field
So the farmers were very impressed with this MVP
So later on, they revised this machine again and again,
then they became very successful
Thanks to the MVP about consumer validation
Let's move to another method for the consumer validation
This is a landing page test, landing page
You know what landing page is
If we have a website and you have a landing page,
this is a landing page
A landing page is a one-page website
designed to present your product idea
and measure consumers' behavior
So your purpose of the landing page is twofold
First, you introduce your product service to the consumer
Second, you gather the data, how consumers react
How consumers react
So usually, you gather the data
through the consumer's call-to-actions
Call-to-action means there are several types of call-to-action
For example, you provide some kind of the waiting list
and the consumers join the waiting list
Or you provide a kind of a sign-up page
and consumers sign up for your product or services
Then you count how many people sign up right now
And pre-order now, and you just provide a pre-order link
Then you can measure how many people click the pre-order
Or request the demo link,
and you just provide the request the demo link
for the consumers
And consumers watch your,
or read your explanation about your service or solutions
Then if they need it,
they just click the request the demo button
Then you count how many people click the request the demo button
This is all about your data
in order to validate your solutions
If you have tons of data, tons of clicks,
then it means your solution is a good solution
If there is no click, no activities, no call-to-actions,
then you think your solution currently is not a good solution
It's pretty simple
The best example of a landing page test was done by Dropbox
So basically, Dropbox filmed just a three-minute explanation
about how we can use Dropbox, or how Dropbox works
They just make a pretty simple animated video
Then just post this video on several websites,
and also they prepare for their landing page
The three-minute video at Hacker News in 2007,
to see if there is a market demand or not
about their concept
Then the Dropbox gathered
a lot of members, a lot of consumers,
and a lot of consumers waited for a long line
to use this Dropbox
They request the demo
So the Dropbox members increased from 5,000
to 75,000 people within a second
It's a pretty short period of time
So that's why later what happened,
Dropbox founder became one of the youngest billionaire
in the world
This is a landing page
Again, do not underestimate the importance
of the validation process, validation method
The last method of the validation is your beta release
What is beta?
Beta release, beta is,
beta version of your service is pre-launch version,
pre-launch version of your product or services
The purpose of the beta release is to collect data,
collect feedback from your real consumers
And also you want to validate your performance
of your solutions, your product
And then you can receive the feedback or comment,
then with this feedback comment,
you just improve your quality of the product or services
I want to give you example of the beta release
Look at him
He's a founder of the Slack
We already mentioned about the Slack
Slack is a team communication tool
And these days, so many companies use communication tool
Even in Hanyang University
we have many department, so many department
already adopted the Slack
And we pay the subscription to the Slack
Even in Hanyang University
So his name was Stuart Butterfield
He's a serial entrepreneur,
and he started Tiny Speck as a company in 2009
He came from Canada, anyway
Then what is the main product of Tiny Speck?
Tiny Speck main product was not team communication tool
Rather than
its main product was online game
So the Stuart want to make a new types of the online game
Mobile game, which is a glitch
The online game is a glitch
But sadly, the glitch was not popular,
and the glitch was shut down in 2012
So everything messed up
Then what happened?
So the Stuart and founding team get together,
and they discussed long
they discussed long, what to do
Then later they decided to pivot their services
Because they already developed some kind of very unique
team communication tool, which is Slack
They didn't have any name at that time
But guys, we have developed it,
kind of a new types of
team communication tool
I think this function of this tool,
the function of this tool is way better than email,
way better than the other communication tool
Why don't we make this communication tool
stand alone product?
Let's turn this internal chatting tool,
for the team communication
into a standalone product
Then later, they decided to launch this Slack,
this communication tool as a standalone product
Then, the Stuart met their friends,
his friends
and his friends are all entrepreneurs
So he met 10 of them and asked them to use Slack
as an internal communication tool in your company
Just use this Slack, this internal
team communication tool in your company
You have five departments, five teams
Just ask them to use our product
This is kind of a demo version
And then he tested the service and product
Then later,
he decided to conduct a beta release
He decided to release a pre-order,
pre-launch product as a beta product
So he waited for the users,
and then he found that 8,000 users
were interested in pre-version of Slack,
and they need it
So the 8,000 users already signed up for the preview,
Pre-order the Slack,
which is demo version or beta version
So, Stuart and his team realized that,
yes, we will be successful
Then what is the outcome? What is the result?
Yes, of course, it is successful
Beta release success,
and this success drew a huge word of mouth
Then what happened?
Slack grew from 8,000 users
to 1 million daily active users within 18 months
Then Slack went to IPO successfully
Then later Salesforce, the big company,
Salesforce acquired Slack for $27.7 billion
in 2007
That is not just a simple success
That is a huge success
This is all because of consumer validation
Please keep that in your mind
Before you launch your businesses,
you should go through consumer discovery stage,
and also you should go through
consumer validation stage
Then it will be much safer for you
Thank you for listening