0:00 You have probably heard that speed is a startup's only unfair advantage. Move fast, break things, get outside the building, go talk to customers, and start building an MVP. But here's the thing. Simply moving fast is not enough. In fact, it can be a recipe for just getting lost faster. I learned this lesson the hard way with the product I built called Cloudfire, where I seemingly did everything by the book. But it wasn't until I learned about a 5-minute test that I realized I was heading down a dead end. This five-minute test saved my business and I'm going to share that story with you today. Hi there. If you're new to this channel, my name is Ash Moria. I'm an author and entrepreneur and creator of the popular one-page business modeling tool, Lean Canvas. On this channel, I share systematic strategies and techniques for launching and growing a
0:46 startup. Okay, so Cloudfire was a classic scratch your own itch product. I had recently become a parent and watched my wife struggle with sharing photos and videos with family and friends. On the one hand, she was taking a lot more photos and videos of the new baby than ever before, which she wanted to share regularly with friends and family. But on the other hand, neither of us were hardly getting any sleep and had no time to be uploading, organizing, and sharing photos. To put this in context, this was around the 2009 time frame when sharing digital photos was still pretty clunky. And so I had the idea of building a desktop product that would automatically sync photos and videos on your computer to the cloud and make sharing with friends and family really simple. Now, I
1:32 already had one failed product under my belt by this point, and I didn't want to rush into building another product that nobody wanted. So this time around, I decided to do things by the book. I reached out to a few friends who had also become new dads like myself to see if they too were struggling with this problem. They quickly pointed me to the moms who were doing most of the sharing. With the help of my wife's network, referrals from other friends, and a few other channels, I conducted almost 40 problem interviews over the next 6 weeks. What I found was that almost everyone I spoke with related to the struggle of sharing lots of photos and videos. Their typical workaround was handpicking a couple of pictures every week and then emailing them as an attachment to family. This only reinforced my problem assumptions and my
2:19 confidence grew. Over the next two weeks, I stitched together a quick demo using a few screenshots from my product, which I hadn't fully built yet, to highlight how easily one could share a folder full of photos and videos in just minutes versus hours. Then I spent the next four weeks pitching this concept. Now, those of you familiar with this channel will recognize this as the demo, sell build or sell before you build approach, where the goal is to test demand for a new product by selling a demo before building the product. In other words, if you can sell the demo, why build the product? In my case, I managed to get over 70% of my prospects to agree to test drive my product, which I had packaged as a 30-day trial, followed by a $49 a year software
3:05 product. Now, I didn't want to just rely on verbal commitments at this point because a lot of people politely lie to you at this stage where they say they are interested and then don't follow up to buy your product when the time comes. So, to secure a more tangible commitment, I had them fill out an early access signup form where I collected their credit card information. And sure enough, half my prospects who told me they loved my demo decided not to move forward. Just a little bit of signup friction goes a long way to separating users from customers. Now, I still ended up with several dozen people ready to pay for my product. And so, I was off to the races. I spent the next two months getting the first version of my product or MVP out the door and into the hands of the first batch of my customers. Now,
3:52 during this time, I ran many in-person sessions with parents, showing them how to use the product, recording quick start videos and answering tons of support questions. Then came the moment of truth. Would people keep paying past the 30 days? Now, NoFunnel converts at 100% and I ended up with a 20% conversion rate. Not all that great, but still encouraging to keep moving forward. And so over the next several months, I continually refined my product, signed up more customers, and grew my paying customer base. Fast forward 9 months, I had 500 paying customers, which seemed like great progress. And that's when I had my wakeup call. I knew I'd eventually need to bring on a co-founder, but even with 500 paying customers, the product just wasn't making enough revenue to justify
4:39 that yet. Now, maybe it was time to raise a seed funding round. And so I reached out to a longtime friend who was also an angel investor for advice. I gave him a quick update and asked for his advice on fundraising at this point. And here's how that conversation went. He told me that while I had made a lot of progress, I might need to show better metrics to get an investor's attention. I said, "Well, I knew the numbers weren't all that impressive yet, but doesn't 500 customers derisk the product for an earlystage investor? After all, the market for parents is massive with lots and lots of growth potential. He said, "Yes, that's a great start, but you need to show a road map for how you will intersect your investors expectations at product market fit." Right? Now, his instincts were telling
5:24 him something else. And that's when he pulled out his notebook and walked me through a simple 5-minute back of the envelope calculation that changed everything. I'll link to the actual calculation he did at the end of this video. Then he drew a simple traction road map and told me that to be able to pitch my idea to an investor, I'd ideally need to increase the number of customers I had by four-fold from 500 to 2,000 in the next 3 months. And then in the next year, I needed to grow that number to 20,000 paying customers and then to 200,000 customers by the following year. Now, I was totally shocked because these numbers were a lot bigger than I thought. even factoring a 10% conversion rate, which is already quite high for a product like this one, I'd need a funnel with millions of leads
6:10 to pull that off. And that's when a light bulb went off for me. I said to him, "I noticed one of the key metrics you used in the calculation was my pricing model, which is why these numbers are so crazy and high. If I could charge more for my product, wouldn't I need fewer customers?" and he said, "Yes, pricing is one of those key inputs for business model viability, but can you really charge parents a lot more than $50 a year since their current solution is email and email is free?" I told him I wasn't thinking about parents anymore. Just the other day, I had a wedding photographer who was also a parent reach out over email. He had signed up for Cloudfire and loved the product. He was wondering if I'd consider creating a pro version of that same product for photographers that he
6:56 could use in his business with his clients. He told me that he was taking thousands of wedding photos a week and struggling to manage his workflow with the current tools that he had. My friend then asked me if I needed to build a different product entirely to support his needs. And I didn't think so. I told him I would need to support a few additional integrations to professional products like Photoshop and Lightroom that he used, but it wasn't all that complicated. And given that it would be a B2B product, I thought I might be able to charge three to four times more. And that's when my friend's eyes lit up and he told me to charge 12 times more instead of $49 a year. You could easily set your starting pricing to $49 a month and probably go higher over time. He told me to set that call up with the
7:42 wedding photographer immediately. On the ride home from my meeting, while I was deflated about my busy parents' business model, I was excited about the potential pivot to a more promising customer segment and was glad I had reached out to my friend when I did. But then it hit me. Nothing we did in that back of the envelope calculation required a working product. I could have done that same exact math 9 months ago and would have reached the exact same conclusion. In my exuberance for getting outside the building, I had rushed out too quickly. I seemingly did everything by the book. I had sketched a one-page lean canvas, ran problem interviews with potential customers, pitched an offer using demo cell build, built a quick MVP, and even charged my customers after a 30-day trial, and I had a growing customer
8:29 base. All this sounds exactly like what you should do. But I realized that the real danger is getting stuck even after all that with a suboptimal business model six or nine months down the road that either doesn't match your ambition or isn't scalable and you get stuck in a zombie startup that is neither dead nor alive. You're just stuck. Had I known what I had learned in that 5-minute conversation, I would have saved 9 months of my life. That experience completely changed how I pursued future products. I turned this 5-minute test my friend showed me into one of seven stress tests that I now apply on any new product idea before going allin. Each test in this suite helps you avoid obvious cracks and pitfalls at the
9:16 design or early stage of an idea so you don't waste needless resources like I did. Running through these stress tests takes just a few hours, but it can save you months or even years of wasted effort. If you're serious about starting or working on a side hustle or startup idea, I've put together a business model design challenge that walks you through these seven stress tests step by step. New cohorts start every Monday and I'd love to see you there. You can learn more at bmdchallenge.com and I'll link that in the description below. And oh yes, if you'd like to see the exact steps of the 5-minute viability stress test that my friend did, check out this video over here. Thanks for watching and until next time, take
