"Everyone I have told loves the idea."
That is not validation. That is politeness.
Friends, family and the people at the barbecue are a poor test market, and not because they lie. It is because the question you asked them was free to answer. Nobody has to back an opinion with money. Validation replaces the opinion with a test.
The evidence that testing works
This is not just a nice idea. It has been tested properly.
In a randomised trial of 116 Italian startups published in Management Science, one group was taught to treat a business idea the way a scientist treats a hypothesis - state what has to be true, design a test, accept the result. The other group used the usual instincts and market feedback.
The trained founders were more likely to drop their original idea and pursue something else, and they chased fewer false positives. In plainer terms, they spent less money on ideas that were never going to work. A later replication across 759 firms found the same pattern.
That is what validation buys. Not certainty - fewer expensive months on the wrong thing.
The four questions that do most of the work
- Demand - is anyone genuinely willing to pay for this? "Would you use this" is free to say yes to. "Here is the price, will you commit" is not.
- Competition - who is already doing it here, what do they charge, and what would actually make you different? "Nobody in New Zealand is doing this" is more often a verdict than a gap.
- Feasibility - what would it really take to build and deliver? The consent, the supplier, the staff, the licence you do not have yet.
- The numbers - what has to be true for this to make money? How many customers, at what price, at what cost. Write the number down, then ask an honest question about whether it is plausible.
If the answers come back weak, you have lost a few weeks. Skip the questions and you find out later, with the mortgage attached.
What validation is really for
Validation is not about talking yourself out of the idea. It is about knowing which idea you are actually funding - and sometimes discovering that the idea in your head and the idea the evidence supports are not quite the same thing.
That is the cheapest discovery you will ever make, because you make it before the money goes in.
Where this fits
Idea validation is the first step of our Entrepreneur Module: we test the concept against demand, competition, feasibility and the numbers, then tell you where it lands - including when the honest answer is no. If you are weighing up an idea of your own, that is the place to start.
A note on the evidence
The studies above are real and peer-reviewed, and worth reading with their limits in mind. Both trials ran with Italian and European early-stage firms, many of them in technology. The finding is that a disciplined, test-first approach leads to better decisions - not that it guarantees survival, and nobody has run the same experiment on a New Zealand cafe or a contracting business. We think the direction holds. We would rather you know where the evidence stops than overstate it.
Sources: Camuffo, Cordova, Gambardella and Spina, "A Scientific Approach to Entrepreneurial Decision Making: Evidence from a Randomized Control Trial", Management Science (2020); Camuffo and colleagues, "A scientific approach to entrepreneurial decision-making: Large-scale replication and extension", Strategic Management Journal (2024).