Dollars in hand
If you build your own software instead of using something “off the shelf”, things can get expensive very quickly.
How can you mitigate this cost and iterate quickly to get the right solution?
My favorite technique is “Dollars in hand.”
This technique requires that you don’t build any custom software that hasn’t yet been vetted through a manual process. This forces people to put their money where their mouth is.
It’s easy to say, “Yeah, that’s a great idea! I’d pay for that!” (Heck I do this frequently!) Getting people to back up their words with cold, hard cash is the real challenge.
Note: If you’re building an internal tool or something that improves your or your employees’ productivity, this rule won’t apply. In this case, you’d want to make a series of small bets.
Example
Let’s say you have an idea for a website that will help connect people with dog walkers. You might start researching how much a website costs, and what technologies they could use. You might imagine how much joy this site would bring to both dog walkers and people with dogs to walk. This is a common and expensive mistake.
Instead, you should begin calling people with dogs, and asking if they would like to hire a dog walker. Discover the underlying pains and validate that someone actually needs a service that comes to them and walks their dog. You may find an untapped market just waiting for the right service to ease their troubles. More likely than not, you’ll discover things aren’t as straightforward as they seem.
Maybe the problem isn’t expensive. Maybe it’s a problem, but it isn’t painful enough to solve. At any rate—you want to know that someone is willing to pay for a solution.
Then, and only then, you can start building a software solution for your idea.
🔑 Key Takeaways
When you have an idea that you think can make money, verify it’ll make money before you try to solve the software.
Pilot programs, MVPs, prototypes, and good old-fashioned pen and paper can validate 90% of the software ideas out there. (💡 GrubHub started by calling restaurants and then calling delivery people and processing the payments between them manually!)
Custom software is expensive. Start with the ugliest most manual solution you can stomach and validate your approach.