The Right It

by Alberto Savoia

  I’ve benefited from the help, knowledge, and experience of many, many people over the past few years, and I have a terrible feeling that some of them who fully deserve to be acknowledged here are not. If that’s the case, please know that it’s not due to a lack of gratitude, but to a mortifying fiasco by my memory, on whose behalf I sincerely apologize.

  Finally, a loving thank-you to my family and friends. I would not have been able to write The Right It without the encouragement and support of the Right Wife, the Right Daughter, the Right Son, the Right Parents, and the Right Friends.

  Glossary

  Beast of Failure: An imaginary merciless and insatiable creature that devours most new product ideas and bites and slashes those who pursue those ideas without first validating them.

  Data beats opinions: A key rule you need to internalize and practice with no exceptions if you want to improve your odds for market success. Don’t base your product decisions on opinions. Base them on market data, and not just any old data or other people’s data (see OPD)—but your own (see YODA).

  DTD (Distance to Data): A metric to help you quantify and minimize how far you have to go to collect your market data.

  $TD (Dollars to Data): A metric to help you quantify and minimize how much it will cost to collect your market data.

  expert opinions: See opinions.

  Failure is not an option: An inspiring but wrong and often harmful phrase and belief suitable for Hollywood movies but ill suited for most business ventures. Use it only if you are writing dialogue for an action flick with Arnold Schwarzenegger.

  false negative: An idea that is mocked and knocked in Thoughtland but, when competently executed and brought to market, turns out to be a success.

  false positive: An idea that sounds great in Thoughtland, is competently executed and brought to market, and fails miserably. Most market failures are false positives.

  HTD (Hours to Data): A metric to help you quantify and minimize how long it will take to collect your market data.

  hypozooming: The process of taking an XYZ Hypothesis and “zooming” it in with regard to scope, space, and time to derive a set of smaller related xyz hypotheses that can be tested locally, quickly, and inexpensively. For example, the xyz hypothesis for Second-Day Sushi: “At least 20% of students buying packaged sushi at Coupa Café today at lunch will choose Second-Day Sushi if it’s half the price of regular packaged sushi.” The principle is that if the XYZ Hypothesis is true, then the easily testable hypozoomed xyz hypotheses derived from it will reflect that.

  If there’s a market, there’s a way: An important reminder that if there’s enough market interest in an idea for a product, you (or someone else) will usually be able to find a way around whatever engineering, financial, legal, or other obstacles currently stand between the idea and its realization. If an idea is The Right It, one way or another it will usually find its way to market.

  If there’s no market, there’s no way: If there is no market interest in an idea, no amount of brilliant design, amazing engineering, superior reliability, or marketing fireworks will help the idea succeed.

  If we build it, they will come: An overly optimistic, ill-founded sentiment not suitable for business ventures, because they won’t come, unless you are building The Right It. However, by transposing two words and adding a question mark, you get the critical question you should ask before building anything: “If we build it, will they come?” That’s the key question this book helps you answer.

  Law of Market Failure: “Most new products will fail in the market, even if competently executed”; the stubborn hard fact that most new product ideas are destined to fail and that competent execution of an idea cannot save it from failure.

  market failure: When the actual market result from an investment in a new product is less than or the opposite of the expected result.

  market success: When the actual market result from an investment in a new product meets or exceeds the expected result.

  MEH (Market Engagement Hypothesis): A high-level description that combines the fundamental premise behind a new product idea with a vision of how the target market will engage with it. For example, the MEH for Second-Day Sushi: “A lot of people who want to eat healthy and who like sushi can’t afford to eat it regularly, because sushi tends to be quite expensive. If we can find a way to make sushi as affordable as other fast food, a lot of fast-food patrons will choose sushi over less healthy alternatives.”

  OPD (Other People’s Data): Market data collected by other people at other times, in other places, with other methods, using other filters, and for other purposes. Technically, OPD is data, but since it’s not your data, it can be as dangerous and as misleading as opinions. OPD is no substitute for YODA (see YODA), and given that OPD is neither necessary nor sufficient for evaluating your ideas, it’s best to not waste time seeking it.

  opinions: Subjective, biased, and often baseless judgments about an idea’s prospects for success. In the quest for The Right It, opinions are worse than useless—they are downright dangerous and misleading.

  pretotype: A specific artifact or technique used in pretotyping. Some pretotypes are the Mechanical Turk, the Pinocchio, the Fake Door, the Facade, the YouTube, the One-Night Stand, the Infiltrator, and the Relabel.

  pretotyping: Using a group of tools and techniques to collect fresh, reliable, and relevant market data (see YODA) about an idea for a new product as quickly and as inexpensively as possible. The goal of pretotyping is to help you make sure that you are building The Right It before you build It right.

  Say it with numbers: A reminder to quantify whenever possible. A number, even if it’s just an educated guess at the time, is more informative and useful than some fuzzy, vague term. For example, instead of “Our widget will be inexpensive,” say, “Our widget will cost $10,” or “Our widget will cost 40% less than the competition’s.”

  skin in the game: Something of value given to you by the market as evidence of interest in your idea. The simplest form of skin in the game is money (e.g., a paid preorder or a deposit), but it could also be someone’s time, information, reputation, and so on.

  Skin-in-the-Game Caliper: A tool to help you quantify and calibrate skin in the game, necessary because not all skin in the game is created equal. For example, a $1,000 preorder for a product should count more than a $100 deposit for the same product, and a commitment to attend a one-hour presentation should count more than, say, an email address.

  Thoughtland: An imaginary place where ideas for new products hang around collecting solicited and unsolicited opinions. Like visits to Las Vegas, visits to Thoughtland are best kept short: most of what happens in Thoughtland should stay in Thoughtland.

  The Right It: An idea for a new product (or service, company, initiative, etc.) that, if competently executed, will succeed in the market. The Right It is like Kryptonite to the Beast of Failure.

  The Wrong It: An idea for a new product (or service, company, initiative, etc.) that, even if competently executed, will fail in the market. The Wrong It is like catnip to the Beast of Failure.

  TRI Meter (The Right It Meter): A tool for mapping and visualizing the results of pretotyping experiments to help determine how likely it is that an idea is The Right It.

  XYZ Hypothesis: What you get when you apply “say it with numbers” to the Market Engagement Hypothesis. The basic form for the XYZ Hypothesis is: “At least X% of Y will Z,” where X% represents a percentage of your target market, Y, and Z represents how that percentage of the market will engage with your new product idea. For example, the XYZ Hypothesis for Second-Day Sushi: “At least 20% of packaged-sushi eaters will try Second-Day Sushi if it’s half the price of regular packaged sushi.”

  xyz hypothesis: A small, specific, easily and quickly testable hypothesis that is derived from, and consistent with, a broader XYZ Hypothesis. For example, a possible xyz hypothesis for Second-Day Sushi is: “At least 20% of students buying packaged sushi at Coupa Café today at lun
ch will choose Second-Day Sushi if it’s half the price of regular packaged sushi.” The process of going from a broad XYZ Hypothesis to one or more xyz hypotheses is called hypozooming.

  YODA (Your Own DAta): Data about your own product idea, collected firsthand by you and your own team, by running experiments you designed to validate your own market hypotheses. To qualify as such, YODA must come with skin in the game (see skin in the game). Unlike OPD, YODA is both necessary and sufficient for evaluating your idea.

  About the Author

  ALBERTO SAVOIA’s work combines his passion for technology and engineering with his interest in innovation, entrepreneurship, and the excitement of startups. In addition to founding three technology startups of his own, he had the good fortune of joining Sun Microsystems and Google when the two, now legendary, companies were also just startups. Over the years, Alberto experienced firsthand the amazing success and rewards that come from combining the right idea with hard work and competent execution. But he also learned firsthand the painful lesson that hard work and competent execution cannot save the wrong idea from market failure. After one particularly painful such failure, he decided that he had had enough of it and that it was time for him to do something about it. He shifted his focus from engineering excellence—making sure that an idea is built right—to research, develop, and share a set of tools and tactics designed to help himself and others make sure that they are building The Right It before they build It right.

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  Copyright

  Care has been taken to confirm the accuracy of the information presented and to describe generally sound and accepted practices and techniques. However, neither the author nor the publisher shall be held liable or responsible to any person or entity with respect to any loss or incidental or consequential damages caused, or alleged to be caused, directly or indirectly by the information contained therein.

  THE RIGHT IT. Copyright © 2019 by Alberto Savoia. All rights reserved under International and Pan-American Copyright Conventions. By payment of the required fees, you have been granted the nonexclusive, nontransferable right to access and read the text of this e-book on-screen. No part of this text may be reproduced, transmitted, downloaded, decompiled, reverse-engineered, or stored in or introduced into any information storage and retrieval system, in any form or by any means, whether electronic or mechanical, now known or hereafter invented, without the express written permission of HarperCollins e-books.

  FIRST EDITION

  Cover design: Belle Design

  Library of Congress Cataloging-in-Publication Data is available upon request.

  Digital Edition FEBRUARY 2019 ISBN: 978-0-06-288467-1

  Version 01092019

  Print ISBN: 978-0-06-288465-7

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  * If you want to check out the original booklet, just search online for “Pretotype It Alberto Savoia.”

  * I am aware that, technically, calling this a law is a stretch. It’s clearly not in the same category as, say, Newton’s First Law of Motion. So why do I call it a law? Because I want you to pay attention to it, respect it, take it into account. I could have called it “a rule of thumb” or “an observation,” but those and other such terms lack the necessary gravitas.

  * The problems that make Thoughtland-based market research so undependable for predicting market interest in a product belong to a family of cognitive errors and biases that are themselves the subject of much research. The book Thinking, Fast and Slow by Daniel Kahneman (New York: Farrar, Straus and Giroux, 2011) is a great resource if you need more evidence and examples of how our seemingly rational brain can fool most of us most of the time.

  * Ali Montag, “Amazon Is Buying Ring, a Business That Was Once Rejected on ‘Shark Tank,’” CNBC, February 27, 2018, https://www.cnbc.com/2018/02/27/amazon-buys-ring-a-former-shark-tank-reject.html.

  * David S. Jackson, “Palm-to-Palm Combat,” TIME, March 16, 1998.

  * Tim Ferriss, Tribe of Mentors: Short Life Advice from the Best in the World (New York: Houghton Mifflin Harcourt, 2017), p. 249.

  * That figure, $5,000, was a significant amount of money for our family in those days—about six months’ rent. And when you consider that at the time I had very limited programming experience and zero business experience, it was a foolish thing to do. Worrying about paying my dad back kept me up at night, and I think he worried a lot about it too. Fortunately it all worked out in the end.

  * Bill Gross, “Here Are the 12 Lessons I’ve Learned in My 30 Years of Being an Entrepreneur,” http://www.businessinsider.com/bill-gross-lessons-2011-12#would-anyone-actually-buy-a-car-online-29.

  * http://www.upwelldesign.com/portfolio/walhub-hacks-ikea-video/.

  * I highly recommend Nassim Nicholas Taleb’s Skin in the Game: Hidden Asymmetries in Daily Life (New York: Random House, 2018) for a broader and more in-depth discussion and analysis of this important concept.

  * You should assign no value at all to the kind of email addresses that you collect (or buy) without the owner’s explicit consent and for the purpose of spamming (e.g., “Get 100,000 email addresses for only $39.99”).

  * I highly recommend Tina’s book inGenius: A Crash Course on Creativity (San Francisco: HarperOne, 2012)—the next best thing to taking one of her classes.

  * Tina Seelig, “What Does Your Life Look Like Upside Down?” Medium, August 3, 2017, https://medium.com/@tseelig/what-does-your-life-look-like-upside-down-66a5048df461.

  * That “336 hours” looks awkward, doesn’t it? Great! It’s supposed to. At this stage I want you to think in terms of hours, not weeks.