SNM098: How to Test an Idea Before You Throw All Your Money Down the Toilet

speaker 0: 0:00 had a test. An idea before you throw all your money down the toilet on today's episode, today's episode is brought to you by get response. Are you a small business owner, professional blogger or marketing agency? Get response Can help you connect with your audience in a meaningful way to see how get response can help your business and get your first month free. Go to serve. No master dot com Backslash Get response. Are you tired of dealing with your boss?

Do you feel underpaid and underappreciated? If you want to make it online, fire your boss and start living your retirement dreams now then you've come to the right place. Welcome to serve no master podcast where you learn how to open new revenue streams and make money while you sleep. Presented live from a tropical island in the South Pacific by best selling author Jonathan Green. Now here's your host. There's nothing worse than creating something that nobody wants.

Every once in a while, someone approaches me with a product idea that's absolutely terrible, and I have this really bad feeling about it and have this idea. They started anything that you could get in on the ground floor anytime. So mentions the ground floor. I know it's a bad idea. I was makes me real nervous. That's one of the phrases that people used to make up for the fact that no one wants to idea yet or that no one sees the potential.

Really great ideas are things that you know will do well because other people the market recently, when a lot of times we have an idea go. No one's doing this yet. I want to get into this space I was watching. You know, I love to talk about the TV shows I watch. I get a lot of ideas from watching these investors shows. This guy invented these lights that you strapped to the side of your ice skates, which people absolutely loved.

I can assure way like they got some lights. It looks like you're dancing on light when you're ice skating around. And then you met to these gloves that you could use to control them, and the gloves were both getting the gloves where encounter when everyone hated the gloves and, you know, negotiate trying to do a deal. And he goes, No, the gloves were part of it. You know, that's why the price is so high. People have to have the gloves, I think.

And they did this sum this test? Yeah, they had a much You will try it out like a focus group. They want to scare. Anybody will try because we love the skates. We hate the gloves and he walks out and go see, I was right. Everyone loves everything ever loves my invention. And you watched every single person. I hate the gloves, hit the gloves, hit the gloves. You see, they all love the gloves.

And when you cut up into these delusions, how did people get these illusions? We watch that you How could anyone be that delusional where someone could go? I hate the shoes. He goes. I'm so glad you love the shoes, right? How could we get to that point? And we need to I understand that testing is absolutely critical. Before you put show which effort I'm in the middle of a new project. I closed this amazing deal with the new partner after my conference in Bangkok.

This one deal has already earned me twice. What? The conference costs me to attend. We have already doubled my investment. We have an amazing deal. He came to you with an idea for a product. It's actually really good, and the reason I know it's really good is because there's competition out there doing something very similar. Basically, there's training courses that cost anywhere from 10 to $20,000. Average prices around $11,000 we're gonna create a book that fits into that space.

That's before you jump in and pay a bunch of extra money. For instance. Of course, this is kind of get you off the ground to get a feel before you go. That next steps. It's a really good space, so renting the space right now the competition is high ticket. Well, here's a low tech, and we can then take our customer base in and send them to the right high ticket program for them. So we're creating an opportunity.

So already, by seeing the market, I see something really good now. There's not a lot of low ticket competition. There's a little bit. What that tells me is that there's some interest in some other people had a little bit of money in space, but it doesn't guarantee me that are off work now there's a couple of things about our offer. It teaches people how to do something with technology. And so the first thing we really had to die alone.

We're talking about the age of the market in these things. And, you know, I think the main story should be out. Someone's 29. I said, Well, when you talk about technology, when you're saying to someone my age in my late thirties well, mid thirties at the end of my mid thirties, not quite to late thirties and when you're away from that, when you say to me, 0 29 year old could do it, I go well, that doesn't mean anything to me.

There's tons of things that younger people could do that I'll never be able to do. I used to be a very good video game player. My neighbor, one of my friends, used to be a professional player, travel the world. He will never compete Inter. Actually, again, he's simply too old. Younger kids who grew up on the modern games or the latest duration games. They have different twitch muscles. They can move their eye hand coordination faster. They always be better.

All of the best video game players will always be under 25 just like any other sport. I guess that's why does this sport? As you get older, your reflexes slow down. Your ability to adapt slows down and you simply aren't at the top of your game. There's no one who's 40 on the professional video game circuit. I could be wrong. We'll get an email saying until the wrong and you'll have an exception.

But there's been my experience because when I was in my early twenties, I was very good. And now when I played the same game, I'm awful. So competitions gotten better. But I've also gotten worse. I could admit I'm not very good anymore. Feel younger. Me could be modern. Me, So the messaging has to fit your audience. If I hear the same story, Oh, that's the technology. Think even some of their forties could do. I go then I am in the group, people that could do that.

That was part we're talking about and the way we'll find our rain answers. Even though we know there's a market for this product, it's actually a good space the guy's been in space for a long time is by testing. And so when we start to launch the product, we've already got three messages I want to test. One is that we're targeting people who are already interested in this type of technology business, people who want to work for themselves, not business.

Anything you want to look at is how can we offer this as, ah, biz up and biz up is the idea of Hey, let me train you how to do something where you can make good money. So it's a business opportunity, our business in a box. This is really what's interesting is this really trains you for a job. So it trains. You had to get a job that Tai Pang and there's a lot of openings right now in that particular market.

There's always more jobs in their people to fill them, so it's a really good space. It's a growing space, and a lot of colleges are launching new programs to adapt to this. You know, technology jobs. But it's something you can learn how to do in less than three months, so it's really interesting. That's really cool a lot of ways, but we want to test that. So I want to test.

How can we say to people, Oh, this is just like getting into foreign exchange or this is just like getting into currency speculation. This is just like getting into binary, which is a type of stock investment program which is very popular. People love that stuff now. I'm not really interested in going that far. I don't wantto really launch a binary offer because you have to constantly people stock alerts and tell them which stock toe do this in which doctor do that, too, and that enters.

I don't want to become the wolf of Wall Street and kind of dabble in a market cause I'm not a stock market guy, but we want to approach those same people say, Here's something that's a little more stable, but a lot of people they want push a button, get rich, so it's finding that balance. So the way to create our message will be to test it well by traffic and run different types of ads.

The guy I work with is an expert of buying advertising, and we're gonna buy advertising and test several different markets, it would probably test several different variations. So how can you do testing yourself? A lot of people would have an idea in the invention. They go around to their friends and they say, Hey, would you buy this thing? People? Oh, yes, and the person goes, Okay, I have a winner and the thing is, Would you buy? It means nothing. That's an empty statement.

People say it all the time. Would you buy? It means I like it, but there's a huge difference. I like it and that I would spend $20 on this rather than going out to dinner tonight, right when we actually to spend her own real money, that we get a real answer. So what we really want to do is have people buy our product before we created. There's a couple of ways to do this. The first is to have a fake seals page.

What this means is you create your sales message, you create your sales page and you have a check out page. Well, people collect on the checkout page and let some film their credit card information. And then the next day he goes, Oh, sorry, we're out of stock. Your order's been canceled and we didn't. And you don't say their credit card fish. Please don't do that. Okay, that's illegal. What you do is you don't accept their order information don't accept their order.

Now, the reason you do like this is because of CART abandons about 90% of people that get to the checkout page. When they can see the price of something, they see the cost of shipping and everything, and then they don't complete the order. So if you only measure people wanna check out page, you won't get a real answer unless you don't want to take that number and divide by 10. But still all estimation game. Because maybe for your product, 50% people say yes.

And a lot of times you will just click on that ad, the car button, because they want to see all the price. And they say, OK, what is this really cost was the cost of shipping. What else? He's sticking in here so it doesn't mean anything. It's only when people enter the credit card information.

The second thing, you could d'oh it take preorders and people do this all the time in one of the ways you can do this to say the product will be delivered in the course of the next 12 weeks, starting on the state. I see courses like that all the time, and people think it's so cool. It's delivered live. I'm like they're doing that because they haven't made it yet. They're doing that because they don't want to make it.

If only one person vise and sometimes they all it's delivered by live training sessions is Livia Webinar. It's over, of course. Next, 6 12 10 weeks, whatever. All of that is pre orders for a service for training because you're saying pay now, what's that people paid? Then I'll did you. They don't provide the product, and this is the business model for the T shirt business model as well.

A lot of people go design a T shirt and they say, Oh, we sell 50 of these T shirts in the next seven days, then we'll create them so they take all the credit cards and Craig, it's only get charged if the shirt hits its number. This is the entire T spring business model, which is a very strong business model. It's the idea of we need to make sure there's enough interest before we make it. We're not printing a one off of a Sure we're not.

Designing a silkscreen template for one shirt is what it's really about is the suction stuff costs. So it's a way of spreading the cost before you create something. And this is someone have crowdfunding works for other things. You know, you look a Kickstarter and you go the way the platforms workers. They get people basically to buy the product before it's even made. Often times he will invest in the campaign. And I've seen this before. The thing never gets made.

I saw someone raise $176,000 then they never made what people paid for and fibers rules of the time, never said, You have to have to make it. You could take the money to every want with it. So, needless to say, several people that play that game are in the middle of lawsuits and as they should be if you're gonna take a bunch of money and they never do what you promised in fact, one of those people then launched another campaign.

If you later make something else for you to make the first thing, what you doing? How dare you? But you can. You can do that because some of those places they made some mistakes with how they designed their rules because they never thought somewhere come in, launch a campaign and they just never do anything with it. Just keep the money. And there's a couple of companies that have done that. I think there was a motorcycle helmet company that did. I can't read the exact name.

There's a video game company did. There's someone who said they were gonna make a series of YouTube videos that did it. They make these products. They make just enough to get through their crowdfunding campaign. You don't want to do that. The purpose of the crowdfunding campaign is to show people your idea, show much of pictures that we showed them a prototype and see if people actually want it.

Every single tech company now in a lot of venture cos they go through this face, this is their process. The first thing they dio is the crowd fund and crowdfunding school, cause you could raise a lot of money, and you. Sometimes you'll get 10 or 20 times more than you asked for. You'll raise a huge amount of money, but also let you know, Will people pay for this idea?

And the great thing about crowdfunding my favorite things that if you don't raise 100% of your goal, no one gets charged, don't get it. So if you say I need $7000 to launch this idea, if you were $6500 it's not a money. The market of said, Hey, we don't want it. There's nothing worse than when someone launches a crowdfunding campaign that fails and then they don't give up. They go, No, I'm gonna keep going. It's like that. The markets are instead they hate your idea.

You've really got a really big hate and they don't know. They just don't understand. And this is where you run into trouble. These there's a couple of things about ideas that will destroy you if you're about to partner with someone or you say Who says these things are you? Say these things yourself. Red flag, red flag, red flags.

If someone you're about to do business with or a product or you have an idea and you say I just need to educate the market, Get out of the house when I'm in a movie and things were in the house and out of the house is trying to kill her with the house that moment. That's what I hear when everyone said was that we need to educate the market. Educate the market means nobody wants that.

We have to convince them that they want it, then convince him to buy it. They're these commercials for some dental thing. They always talk about acid erosion and have someone in a lab coat who looks like a dentist but isn't cause it's the actor underneath them. And the top of that. No one's ever heard of that problem. And that company spent millions and millions of dollars running commercial stick convince people that this disease they invented exists.

There are several diseases like that that never existed and tell people invented the cure, and so then they hadn't met the disease. But when they do that, they spent millions and often 22 $50 million to create a market. That's why only pharmaceutical companies do it successfully when someone says, Oh, I need to convince people that they market needs to change because now you're paying for advertising First you're paying for education, then you pay for advertising. After that, those businesses 99.99999% of the time massively failed.

Lots of money disappears. Another thing I hate to hear. So I What else is wrong? And when he doesn't get it, you just don't get it. You don't see you're not understanding or you do. Ah showed a bunch of people. There's a TV show where people invent this app false people in Silicon Valley, and it's just it's a comedy show. But they invent this program that can save stuff using very, very small amount of space.

Like it's a really good compression algorithm, basically, which means this is something you're 100 megabytes. It takes one. They've invented a really cool formula for, and he has to every time they want people to buy it. They go to these small group meetings and the new massive education campaign people in a room with him for four hours, while explains how the software works or why it's valuable otherwise, people hate it. And that's a sign. Your product, of course.

Just like in the show, The product fails because if you have to teach people why they want her, how it works, that was gonna want it. How many guys do you know who would they buy a product? They take those instructions. They throw him right away. Don't give you the instructions. That's insulting. If I can't, if you got on my own, I don't want it. We don't be educated even after we fought something. What? We wanna be educated beforehand.

And maybe maybe there's some women throw away the plans to. I don't know. My girlfriend is always willing to really instructions. I'm going to throw them away, but that's my experience. How about this one? There's no competition. No one else is selling something like this. Oftentimes, there's a reason for that. All the time. People enter a market, they go. There's no one making this particular type of product. They make other things that are similar. But don't make this one. We're meeting a niche need.

Once you start to demonstrate that people want to buy your product, the larger company will go okay, and they'll make something that matches what you're doing and you'll disappear. You'll have a really good market share for about three years, and then the larger companies other. We'll just make something compete with this guy. People want it now. This guy's prove the market for us.

They're still your testing, but usually when there's no market for it 99% of the time when there's no market for it because no one wants. There are so many inventions just nobody wants. And that's the problem. There's things that people just don't worry about or don't care about. Your invention could be cool. Your training can be amazing with your teaching people how to do something they don't want to. D'oh, it doesn't matter.

So the idea that no one else has seen something your 1st 1 to see it, that's very risky. It's very unlikely, but it's possible. But this is why we need testing again. All of these right when you go Oh, no, I'm right And amaryllis is wrong. You could, nor these red flags. Testing is the answer. You contest a product, right? Sometimes I see a product and I think no one would ever want. And we have $2 million in sales. Go. Well, I'm wrong. Okay?

The ultimate answer to all of these red flags will be answered. All of these reasons not to do business or go no product is if you have sales. And if you don't have sales examining the product, getting I recommend you don't make the practical people want it is to run a testing campaign where you see if people would be willing to buy it or you get people to pay money before you create it.

Doing that allows you to really overcome these objections, because you all I can have all these objections, right? I can say I don't know what you're saying. A lot of things don't listen. The market seems really tough No one else wants. It seems like you're kind of caught up trying to educate our goes. Oh, no, I already sold a bunch that I go Okay, Never mind. That's interesting. That's why that's so critical. And a lot of times you can't afford to make the product.

So that's why we do this other form of testing. When I hear all they don't see what I see people don't understand. You know, people sometimes walk off of these investment shows and they try to get a raise, a bunch of money. It's like I have a failing business and they all they don't see what I see. Don't say that. You can't say they don't see what I see unless you have sales or unless you have testing proof.

So this is why testing is so critical in this is why we have these four testing methods. And again, this is where used the fake sales page or they were out of stock. They have the pre orders. Where you taking prayers on your Web site? Number three is where you still buy webinar, where they pay for something. You're delivered a couple of weeks, and the number four the crowd finding when used any of these four platforms you contested confirm your idea.

But if your idea of fails, be willing to walk away, it's very important. Thio admit we have a bad idea because, look, I've had some stinkers. I don't like to talk about it too much, but I've made products and worked on projects that went nowhere. Understanding, testing, being willing to spend a little money. Advertising is very important. Sometimes you have to spend a couple of $1000 on ads, send them to your ideas to see if anyone's interested in it.

The way I like to enter a market, the way I like to create a product is usually I'll being affiliate for something so by a bunch of traffic, or I'll mail It offered my list a few times, and my list keeps buying it. I go OK. I should make something similar. They like this type of offer. That's how I create offers when I have an idea. Oh, my list likes courses about had him build a block. I'll make my own block building course.

He uses everything I've learned and is a little better than the course. I'm promoting this how you contest it, right? You can buy some adding my Facebook ad, spend five or $10 a day, send them to an offer that's already doing well. If you're found an audience that likes to buy the menu, okay, now, if I make my own offer now get 100% of profits, I could actually make more money because I proven that the market wants it.

That's why buying a little bit of advertising do a little bit of testing. It cost a bit of money up front will save you a lot of money in the long run because it avoids wasting time and investing in something that nobody wants or an idea or a project or product that's not gonna go anywhere. Being able to tell if something's a zero, our hero, winner or a loser. It takes a lot of time, a lot of experience.

And even when you've been around the game a long time and always could be right, most people that are big investors, most venture capital firms, they invest in 10 ideas they think are wonderful, with the expectation that one will succeed and make enough money to pay for the other nine failures.

I often talk about this other podcast that I listen to that I think they the podcast things actually dying evident episode in a couple of weeks where you get to listen to people talk about their new companies there, start their inventions and I tracked them and the majority of the investor people asking for investments of people, kind of tell mother startups they've gone out of business in the last two years. Almost all of math. Most startups fail now.

The people inside the startup don't understand that because they think, Oh no, mine's the one that's going to succeed. How many APS are there about doing yoga in your house? How many laps are there about doing exercise? How many APS are there that do anything? They all do the same thing. We all have the same buddy. How many abs are there to help you find a parking space? Oh, man, there's like, 50. How many apus are there to help you do currency conversions?

Doesn't how many apus in there to help you track the mileage when you drive your car around so you can properly do your taxes? This is the ultimate nightmare of being a small business person thing, with those road miles and taxes and all that stuff in appreciation, your car tracking all that stuff. It's such a nightmare. So so many abs to try to help you. How many absolutely help you scan your receipts. All of these APS exist.

They're all out there, and there's tons in the competition. But each one of us goes, ours is the one who's gonna succeed. When you're inside an idea, it's very hard to see. It's very, very, very hard to see the reality. The out is that, you know, nine out of 10 albums music industry fail and nine out of 10 startups fail. So when you're on the inside, it's really tough. This is why people diversify their investments. Why people investing a lot of projects, even projects.

It seemed huge and seemed genius. Eventually they fade away. Look, Twitter's never meaning money. I haven't talked about this for a little while because I'm so fascinated by watching company kill itself recently, Company said. They're thinking about banning the president because that's what you should do. When your stock has lost 70% of its value in 18 months and your investors are suing you for running poorly, you should start a personal war with the president. That's a genius marketing move.

It doesn't matter what your politics are in general. When you publicly threaten the President, your platform is gonna be in trouble because what will happen Whatever political party are, 50% of the people are with you, right So if you kick off one candidate or other president, at least half the country's gonna be mad. Why would you want to alienate a huge amount of market? This is the reason that it's not just Twitter. People brag about being early investors and Twitter.

That company's lost $2 billion since ever made a dollar. That's the reason that it had a shutdown vine. They paid $30 million for something, ran into the crowd, and now it's gone. These ideas, even if they seem great, they don't always last. And this is why testing so critical even once you've launched your product launcher service, you want to test ideas before you release him. Well, the reasons twitters on the way out is because they tested a bunch of ideas and my test.

I mean, they didn't test and the release of these ideas into the market that really destroy things. One of the things that they really start telling people was a timeline modification, so they messed around with what you get to see. So no longer do you see who you were following.

You get to see who they want you to, and they mess with your feet, and they started messing with as a community service feature blocking anyone who had political views they don't agree with, but that the problem is if you're right wing and you're falling some right wing and now you can't see that person's message when he argues the service anymore, are you? And that's the reason they've been hemorrhaging users for almost two years now. They're ideas that they think are good ideas they didn't test.

And when the implement, without testing kill their user base, can you imagine would be liketo walk into your parent's house and say, Hey, Mom and Dad, I started a software company. We lost $2 billion can help me out. Two billion. How do you lose $2 billion? It's astounding to me that they let you get away with that. How do you? I don't know where the two big doors come from people.

Obviously, the stock is worth nothing anymore, and it's lost like about 80% of its value or something. Now, this is the problem with releasing. Ideas are testing even you have a proven product. The product is really well was actually doing great two years ago, they change CEOs, there's a hostile takeover, and they brought in someone who likes to release stuff without testing. And also, sometimes he will find out they're about to release. Something goes. We would never do that.

They'll do a big announcement, never release something like that. And then, a week later, they released without telling you. Do it. Don't do that to, like leading. Even worse is delight your audience to say we would never do that and then do it a week later, which happened about twice in the last year. So it's interesting to watch when people get to the point where we don't have the test ideas anymore. You know why Amazon does so well, whether you like or don't like the politics.

I don't care about politics. I care about business, right? I don't care about the politics of Twitter, whether you're left or right now that matters. What I care about is when a company makes decisions, lose 80% of its money or lose $2 billion goes, you know what? Let's double down. Let's double down on our bad idea. The reason Amazon does so well if they test all the time. My book pages look different every couple of weeks.

There are a couple of Web sites where people always post in the different experiences they have. So they say, Well, look, the sales page looks different. Amazons doing this or Amazons doing that. Amazon tests all the time. They have new ideas. They'll test them to like 1% of the audience and see what happens. And sometimes they'll run the test in a foreign country that, well, let's just test this in Argentina and see what happens, and then we'll move into bigger, bigger countries.

Facebook does something very similar now. Facebook, I think, is getting close to the tipping point as well, because now your news feed and this is no accident. One in every seven things. Your news feed will be an ad. They finally broken the ad blocking algorithms over the first time in three years. I see these ads, and it's very strict. One and seven.

A lot of people hate that MySpace went out of business for doing too many ads, so Facebook's always testing to see how many as they can put before people give up. Now, that's the reason that people under the age of 20. Don't use Facebook. Kids don't. Your kids will never use Facebook. You have to worry about that. Kids under the age of 20 really into Snapchat and Instagram. That's what they're into. It always changes, right? That's social.

The social media I was in college was my space. No one uses that anymore than it was Bebo. No one uses that anymore. Like platforms change, things shift and the businesses that last the longest do the most testing. And the more testing you do, the more you see. If your idea is good, then will you see if people want what you're going to sell before you sell it. The more you say, Hey, don't just tell me you would buy it. Go to the checkout page.

You go to the checkout page and click actually credit card info. Then I know you really do want to buy it. That's the difference. That's how you test. And when you use thes tests, when you cast your product, you can avoid spending six months a year, two years, thousands or tens of thousands of dollars on a product that nobody likes.

Nobody wants this how you avoid going in the hole financially, and you could ensure that every idea you are loose in the market is actually a winner and makes you tons and tons and tons of sweet, sweet money. Thank you for listening to this week's episode of Serve No Master. Make sure you subscribe, so you never miss another episode. We'll be back tomorrow with more tips and tactics on how to escape that rat race.

Head over to serve no master dot com forward slash podcasts Now for your chance to win a free coffee of Jonathan's best seller, serve No master. All you have to do is leave a five star review of this podcast. See you tomorrow. Thank you for listening to this episode of the serve. No master podcast to find out, I can get a free copy of my new book Head Over to serve no master dot com back slash podcasts right now