You Must Prove Traction for Your Prototype

If you are going to apply to an accelerator or you are wanting to approach angel investors, it has become nearly essential to have proof of traction. You have to create some kind of MVP prototype for your idea, put it out in front of potential customers, and demonstrate that people care. Here are several different ways to do it:

  1. Michael Brand talks about one way to demonstrate traction. He built a hardware prototype, a software prototype, set a price, and put his idea on the market. His goal was to get to 100 customers actively using the system. Once he achieved this milestone, he was able to raise $3.8 million from VCs.
  2. Or we could come up with a description of an idea, put it on a landing page, drive some traffic to the landing page (e.g. with Facebook ads), and see if anyone will push a “buy” button even before an MVP exists.
  3. A successful campaign on Kickstarter is a great way to demonstrate traction.
  4. Steve Blank would advocate that we “get out of the building” and start talking directly to potential customers to understand their problems and needs. Then we come up with an idea based on those needs, formulate the feature set for an MVP, develop the MVP, test it with the people we talked to, and start refining it with this core set of initial customers. Once they are happy, take the refined product idea out into the wider world. If the product is expensive to launch (imagine that it has large plastic pieces and injection molds would cost $1.5 million), then the potential customers could be asked for letters of intent. The letters state, “if this product were produced, my facility would buy 10 of them”, or whatever. With a stack of 50 letters of intent, it paints a very compelling picture for investors.
  5. Or, if it is a web idea, we could simply create an MVP web site, put it out in public and see if it resonates at all. This is how Google, HowStuffWorks and many other web sites got started.

All of these are valid ways to prove customer demand. During the protoyping phase, you need to do something like this to demonstrate that people actually care about your product, that they are willing to pay money for it, and they are willing to tell their friends.

Go look up Eatsa. It is a new restaurant idea:

It started in San Francisco and is now scaling to other cities. It is super-resonant (anyone who goes there will tell friends, guaranteed), the price is right and therefore there has a good value prop, it is very quick (perhaps the quickest fast food ever) but also healthy, it can easily scale up, and the audience is easy to reach just by opening a new restaurant in an area with foot traffic. It really is an amazing idea.

How did they prototype this? They started with full size foam versions of the restaurant in a warehouse and let people try it out:

To ensure a seamless experience, Young and his partners invested a lot of time in upfront testing. There was a lot of research that went into its app, Young says, and the team built a mock Eatsa prototype before launching to test the user experience. It also conducted focus groups to make sure directional cues were clear and using the restaurant was intuitive. [ref]

Then they built the first restaurant to test the concept “in the real world”, and the response from the public was fantastic. This first restaurant proved traction and it was easy to start expanding.