Measure demand before committing capital

If you’re ignoring demand testing, you’re a champion of inefficiency.

De-risking is the name of the game: especially for product teams, heads of innovation and folks responsible for portfolio companies.

Read on to look at some of the data illustrating the downside and what I'm doing about it.

Right now we’re in uncertain times. Mass layoffs are happening left, right and center. People and brands are reluctant to spend. This sentiment appears to be system-wide: it’s all people are talking about in my network.

I get it. Marketing is often the first to go. It’s considered superfluous at least and shady at best. If “half of ad spend can’t be attributed”, then why bother trying?

Of course I see it differently. I come from the literal school of engineering. The place where ingenuity was formalized. (The etymology of ‘engineering’ is actual 'ingenuity', stemming from the innovation required to solve complex problems). Mine is the team who’s motto is "striving for elegant solutions".

News flash: we have measurement now. Which means we can be scientific about it. We can observe our audience, collect data, make assertions, formulate hypotheses, test and validate.

We do not have to guess anymore. We do not have to risk significant resources on the next big thing. We’ve removed the gambling from marketing. Do not bet the farm when your employees’ livelihoods depend on that entity.

All that’s needed is to take a moment before launching, to measure demand and see if anyone else shares your vision.

The data which illustrates a problem

• 42% of startups fail due to “no market need” (CB Insights)
• Beyond startups, 70-80% of product launches fail for the same reason (McKinsey)
• Premature scaling accounts for 74% of failed ventures (Startup Genome)

The solution

• De-risking looks different for each segment
  • SaaS product teams: Get a demand signal before your next sprint planning.
  • Corporate innovation: De-risk your innovation pipeline with live market data.
  • PE portfolio companies: Validate the growth thesis before you deploy capital.
• The VScore
  • My ‘validation score’, a proprietary measure of market demand. I input test campaign metrics and it outputs a score out of 100. What’s cool is that the VScores collected so far fit a normal distribution. So when I say your concept, product or re-positioning scored 85 and this puts you in the upper quartile, it's how you know it's good.
  • I’m not offering a go/no-go proclamation. But I do provide data to help you decide. Maybe you’re ok with some risk. But this way you have a better understanding of what you’re heading into.

If you're reading this it means you're in my inner circle. Reply to say what's up! Or let me know how this content is resonating.

Cheers,

Michael