you know as soon as the book is available.
In the meantime, happy squirrel watching,
and don’t forget your rabies shot!
Sandy (Squirrelgirl) Watson
Once the Fake Door website for the book is up and running, she needs a way to let squirrel enthusiasts around the world know about it. She composes a web ad:
Do you like stalking squirrels?
Go to www.SquirrelWatching.com
to preorder A Guide to Squirrel Watching
by Sandy Watson. Only $20.00.
Then she invests $60 to have her ad displayed on nature-related websites and as a sponsored link whenever people do squirrel-related online searches.
Now she’s all set to collect her YODA. When people click on her ad, they are redirected to her website, where they have the option of submitting their email (a bit of skin in the game) to be alerted when the book is ready. Executing this Fake Door pretotype will cost as little as $100, take just a few hours of work, and require minimal technical skills—but it will provide Sandy with invaluable YODA.
For example, by dividing the amount she spent on ads by the number of clicks on the “Buy” button, she can determine her customer acquisition cost (or CAC). If $60 spent on ads results in, say, 15 “Buy Now for $20” clicks, her CAC will be around $4 ($60 divided by 15)—a promising result, since $60 in ads would have resulted in $300 in sales. If, on the other hand, she only manages to get 1 or 2 “Buy” clicks, she might have to revisit either her marketing (the website design, the wording of the ad, etc.) or her Market Engagement Hypothesis. In either case, Sandy would get some hard, firsthand data to help her decide whether to write her book.
More on the Ethics of Fake Door Pretotypes
I know that we’ve already touched on the potential ethical issues associated with this pretotyping technique, but I want to talk about it a bit more, because I know that many people (including myself) care about such things. Did Antonia and Sandy do something ethically wrong, or at least questionable, in order to find out if their ideas are The Right It?
Assuming that you are not interested in an elaborate philosophical discussion of Antonia and Sandy’s actions, one way to analyze the ethics of Fake Door pretotypes is by considering possible scenarios in which Antonia and Sandy do not use this pretotype, but rely on other methods to evaluate their MEHs.
Instead of using a Fake Door pretotype to collect YODA, Antonia decides to go the market-survey route. Armed with a notepad, she plants herself at the corner of Main and Oak (the area where she’s thinking of opening her bookstore) and asks passersby:
Do you think this street could use a great antique bookstore?
Would you visit such a store? How many times a year?
How many books a year do you think you might buy?
Antonia’s body and notepad may be at the corner of Main and Oak, but (cue in Twilight Zone theme music) her data comes from another dimension, from a world inhabited by ideas and opinions, a place we call Thoughtland.
Antonia’s Thoughtland-based “research” indicates a great need for the kind of store she has in mind. Most people (77%) say they’d love an antique bookstore and would shop there regularly for themselves and for gifts for other people. An elderly woman comments, “Old books make such unique and thoughtful gifts for my friends. And I have many friends, you know. I’d buy at least a few books each month from you.” A college student says she spends at least $100 on books each month and would love a local bookstore. But not everyone is so enthusiastic and optimistic; a few people warn her that, given that other local bookstores closed due to a lack of customers, she is unlikely to succeed. But Antonia subconsciously ignores those naysayers (confirmation bias) as she crunches her numbers and makes her plans.
Eventually, she comes up with sales projections of over $14,000 per month. Empowered by this projection, she quits her job, gets a $100,000 loan, signs a three-year lease on a space, buys a bunch of old books, and holds a grand opening. Six months later she has a not-so-grand closing. She’s more than $100,000 in debt and jobless. Pretty painful for Antonia, wouldn’t you say?
Similarly, instead of enjoying time outdoors watching squirrels chase each other’s tails, Sandy makes the decision to go ahead with her book based solely on the opinions of her family, her friends, and a retired park ranger who says, “Everyone I know loves squirrels and is super interested in them.” She spends two years at her desk and several thousand dollars to write and self-publish her book. And now she avoids going into her garage because she can’t bear to see those fifty boxes of unsold books.
In both of these scenarios, by depending on opinions instead of data Antonia and Sandy fall victim to the Law of Market Failure and Thoughtland’s false positives. They commiserate over a couple of bottles of Chardonnay and wonder where they went wrong.
“Most of the people I interviewed seemed so positive and excited about the bookstore. Where did they all go?” asks Antonia before taking a big gulp of wine. “Doesn’t anyone buy books anymore?”
“Well, they ain’t buying mine for sure,” answers Sandy, refilling her glass. “I spent so much damn time and money on that squirrel book . . . I don’t think I can bear to look at another one of those rodents again.”
Now think again about the original scenarios in which Antonia and Sandy used the Fake Door pretotype, described above. Antonia was out $22 and a few hours of her time. The few people who actually knocked on the Fake Door were initially disappointed, but they forgot all about it a minute later. No real harm done.
In Sandy’s case, the time spent and inconvenience caused to the few people who clicked on her Fake Door online ad for the squirrel book are negligible compared to the time, money, and effort she was about to put into writing and publishing a book too few people would be interested in.
I hope you would agree that, in both Antonia’s and Sandy’s cases, the second scenario causes more pain and waste than the first one. The few minutes of people’s time wasted knocking or clicking on the fake doors are negligible compared to Antonia’s and Sandy’s potential losses.
Each year, millions of people just like Antonia and Sandy launch products, services, and businesses that fail in the market. Think of the cost to society for all the failed businesses and products that nobody wants. Think of the millions of unsold products that, after a huge investment in development, production, advertising, and shipping, end up in the garbage. Unless you are in the bankruptcy or landfill business, wouldn’t you prefer to have people like Antonia and Sandy either gainfully employed or running a successful business—and not in debt or collecting unemployment?
Not only that, but people who are not interested in the Fake Door offer are not going to knock on the door or click on the ads—so they suffer no inconvenience. And by knocking or clicking on the Fake Door offer, the people who are interested in the idea and might actually want the bookstore or the squirrel book to exist are, in a sense, “voting” for it and thus increasing the probability that the idea will become a reality.
Even with these rationalizations, you can probably understand why the Fake Door is, as I mentioned, both my favorite and my least favorite technique. I love the fact that it can be executed so quickly and inexpensively, making it possible to collect real-world data in a matter of hours. But I am still somewhat bothered by the minor deception involved. If that bothers you too, I offer two solutions.
The first solution is to be up front with and reward the people who knock on your fake door or click on your “Buy” button. For example, after a person knocks on the bookstore’s fake door, Antonia can walk up to them, admit that she was just running a test, apologize, and perhaps even give the person a $10 Amazon gift certificate to buy a book. Sandy can do something similar with her Fake Door website; perhaps give all people who click the “Buy” button a free one-page guide to squirrel identification or some other inexpensive squirrel-related gift. If you decide to use a Fake Door pretotype, I encourage you to do something simila
r—turn it into a win-win: potential customers get a free gift, and you get your YODA without a guilt trip.
The second solution is to use a variation of the Fake Door pretotype, the Facade pretotype, which I share with you next.
The Facade Pretotype
The Facade pretotype differs from the Fake Door in one important respect—when potential customers knock on that door or click that “Buy” button, someone answers and something happens. They may even get precisely what they were looking for. Let me illustrate this technique with a great example.
Example: CarsDirect
At the dawn of the internet age, IdeaLabs CEO and world-class innovator Bill Gross envisioned an online car-selling service. Such a website is something we take for granted these days, but at the time it was a very novel idea and market success was far from certain. Before making a major investment, before even having a single car in inventory, Bill Gross validated the idea using what we will call a Facade pretotype. Here’s how he explains it:
In 1999, we started CarsDirect. Back then people worried about putting credit cards online; here I wanted to sell a car online! We put a site up on a Wednesday night; by Thursday morning, we had four orders. We quickly shut the site down (we’d have to buy four cars at retail and deliver them to these four customers at a loss), but proved the thesis. Only then did we start building the real site and company.*
Even though CarsDirect had zero cars to sell, the website that it put up that Wednesday night is considered a Facade pretotype and not a Fake Door. Had it been a Fake Door, when people clicked “Buy” next to a photo and description of a car, they would have received a message along the lines of, “Sorry, the car you wanted is no longer available.”
But instead of getting an apology and an excuse in exchange for their involuntary participation in a market-research experiment, the first few people who clicked “Buy” on that CarsDirect website soon had the car they wanted sitting in their driveway. And what did Bill Gross and his team get? The best form of validation for the idea: YODA with lots of skin in the game. And the very best type of skin in the game: four checks for a few thousand dollars each.
A Facade pretotype requires more investment and commitment than a Fake Door, so why would you choose it over the faster, cheaper Fake Door? Well, depending on the idea and situation, the added investment might be worth it. First, as I’ve already mentioned, for some categories of products and services, using a Fake Door pretotype might be unethical or downright illegal, for example, if you pretend that you have a cure for some disease.
Second, you can learn a lot more about your potential business with a Facade than you can with just a Fake Door. In the CarsDirect example, Bill Gross and his team not only validated the demand for the service (i.e., people’s willingness to buy cars online), but in the process of delivering actual cars to their initial set of customers, they also learned firsthand about the necessary financial and legal paperwork required and about the back-end process associated with each sale. Not to mention that checks for a few thousand dollars each from several customers are more compelling and convincing evidence for potential investors than a spreadsheet showing how many people knocked on a door or clicked on a “Buy” button.
Example: Antonia’s Antique Bookstore Revisited
We’ve already seen how Antonia pretotyped her bookstore using a Fake Door with a minimal investment of time and money. Had she been willing to invest a bit more in exchange for learning a bit more about her market and customers, a Facade pretotype would have served her well. She could pretotype her brick-and-mortar business doing something similar to what CarsDirect did online.
Instead of simply putting a sign on the door of some vacant building or store, she could make arrangements to rent the space behind that door for just a few days and put a desk in front of a couple of bookcases filled with books she already owns. When people knock and come in the store, she explains that she’s still working on her book inventory. But if the customers already have an idea of the kind of books they are interested in, she’d be happy to help them find those books. Here’s how such an interaction might go.
A potential customer opens the door expecting rows of bookshelves stuffed with thousands of books and is surprised to see just a couple of bookcases and a desk where Antonia is working on a computer.
“Oops, sorry. I thought this was a bookstore,” says the customer.
“Oh, but it is,” answers Antonia with a beaming smile. “Or it will be, once all my inventory arrives.”
After getting out from behind her desk and shaking hands with the still slightly confused potential customer, she explains: “My name is Antonia. I’m just getting started, testing the waters and the neighborhood, so to speak. But I can already help you. Are you looking for any specific books?”
“Actually, I am very interested in Stoic philosophy and wanted to see if you had any interesting or unusual books on that subject for my collection.”
“Ah, yes, the Stoics. I believe a beautiful leather-bound nineteenth-century translation of Marcus Aurelius’s Meditations is available. It’s not cheap though, about $200. Would you like me to look it up and order it for you? Or are you looking for something a bit less expensive?”
“Sure, if it’s not too much trouble. I don’t mind spending that much if the book is worth it.”
“No trouble at all. By the way, while the computer searches for it, may I ask you—book lover to book lover—about your book collection . . .”
As you can see, with a Facade pretotype, Antonia will be able to capture much more data than just how many people knock on the door. She can get an idea of the type of people who would come into the bookstore, the kind of books they’d be looking for, and the price range with which they would be comfortable.
As you can probably tell from these examples, I love books. But I also love movies and videos—and not just for learning and entertainment, but also for pretotyping, as we shall see in this next section.
The YouTube Pretotype
Since their invention, movies and videos have helped us imagine and experience events, places, and devices that don’t yet exist (e.g., spaceships, time machines)—they’ve helped us pretend. This makes videos a natural tool for pretotyping. The YouTube pretotyping technique takes advantage of the “magic of movies” to bring to life product ideas that are not yet fully developed or widely available, so you can share them with your target market (using YouTube or any other video platform or device) in order to collect YODA about the market’s interest in your idea.
Example: Google Glass Explorer Edition
Google Glass is the name for an optical head-mounted display in the shape of a pair of eyeglasses. In addition to the ability to display information directly on the lenses, Glass contains a camera so the wearer can surreptitiously record or broadcast a video of what he or she is seeing. Well before Glass was ready for prime time, the team working on it made a video showing what the world would look like through Google Glass. It was a given that such a visionary (pun intended) concept—especially one coming from Google—would generate a lot of buzz and interest, but would that buzz and interest translate into commitment? Were enough people willing to invest real money to get their own pair of Google Glass? How would they use it? And, more important, would they keep using it after the initial geeky excitement wore off?
Sure enough, once the video introducing Glass was posted on YouTube, the buzz started big time. Everyone was talking about it; everyone had a prediction about how Glass would (or not) dramatically change the way we interact with the world. No surprises here, but also no data—just a bunch of Thoughtland opinions and speculations. How many people would actually be willing to part with some serious cash to buy a pair of Google Glass? And, even more important, how many of them would use it regularly? What would they use it for?
In order to turn a video of your yet-to-be-developed idea into a legitimate pretotype, you must use it to collect more than online views, thumbs-ups, or comments. You
must find a way to turn that video into a YODA-generating experiment.
The Glass team accomplished that by following the video demonstration with an offer to join the Google Glass Explorer program. To qualify for the Explorer program, you had to put quite a bit of skin in the game. First, you had to express interest by posting a message on Twitter using the #IfIHadGlass hashtag and describe what you’d do with Glass if you had it (e.g., #IfIHadGlass I would use it for a cooking show).
Thousands of people posted tweets with their ideas for using Glass. After reviewing these tweets, the Glass team selected a few thousand tweet authors and notified them that they had been accepted into the Explorer program. All they had to do to join was to pay $1,500 for their Google Glass and travel (at their own expense) to a Google office in San Francisco, Los Angeles, or New York for fitting and training.
Now that’s quite an investment of money and time—lots of skin in the game. Nevertheless, many people paid the fee, made the trip, sat through the training, and returned home with their own pair of Google Glass. At first, the Explorers were enthusiastic, some of them perhaps a bit too enthusiastic. A well-known tech blogger, for example, was so taken with Glass that he posted a photo of himself wearing them in the shower.
Unfortunately, the initial wave of interest was soon followed by a wave of criticism and a major backlash. Perhaps out of envy, perhaps because of the fact that they could be secretly recording a video, Google Glass wearers quickly went from being the focus of attention to being called “glassholes.” Many bars and restaurants banned their use. And, worst of all, after the initial period of excitement, most Glass Explorers stopped wearing them.
Although Glass showed a lot of promise for some applications, the original set of expectations was not met, and the Glass project was canceled. The idea may be resurrected in some other form or for some other market, but—despite all the initial hype—this particular version of the technology at this particular time was not The Right It.
The Right It Page 10