Product risk — Can I build it? Can I grow it? Customer/market risk — Do they want it? Will they pay me? Are there lots of them?
Pure Market Risk situations: B2B CRUD/SaaS apps, consumer apps
Pure Product Risk: Cheaper hardware based products, Low freq and low cost transaction marketplaces, deep tech apps
Consumer Risk:
“Does-this-problem-matter” questions:
“How seriously do you take your blog?”
“Do you make money from it?”
“Have you tried making more money from it?”
“How much time do you spend on it each week?”
“Do you have any major aspirations for your blog?”
“Which tools and services do you use for it?”
“What are you already doing to improve this?”
“What are the 3 big things you’re trying to fix or improve right now?”
(p. 50)
If you have product risk, having more conversations won't help, you need to start building product early, and even with less certainty.
Video games are pure product risk. What sort of question could you ask to validate your game idea? “Do you like having fun? Would you like to have even more fun?” Practically 100% of the risk is in the product and almost none is in the customer. You know people buy games. If yours is good and you can find a way to make them notice it, they’ll buy it. You don’t need to rediscover people’s desire to play video games. This isn’t to say that you shouldn’t talk to anyone if you’re building something with product risk. In the case of the farm fertility monitor, it’s good to know that the farmer isn’t opposed to switching tech, for example. For the nightclubs, it’s good to know that they’re at least theoretically willing to pay for promotion. It would be tragic to succeed at the hard work of creating the product or community only to learn nobody will pay for it. What all this does mean is that if you’ve got heavy product risk (as opposed to pure market risk), then you’re not going to be able to prove as much of your business through conversations alone. The conversations give you a starting point, but you’ll have to start building product earlier and with less certainty than if you had pure market risk.
