8. On Preferences Survey for Idea Validation

Dear Co-creator;

This masterclass is a sequential journey in tech startup creation. If you are joining us now, I encourage you to start reading from the first newsletter, ground zero. Otherwise, you don’t get to enjoy the holistic look at the life of an entrepreneur, and the methods by which we go from one week to another.

It is not an easy journey. If there was a straight line from zero to hero, we’d all be instantly successful. Entrepreneurship from scratch (true scratch when we are trying to find an idea) is an iterative effort that may have many false starts. So here we are trying to validate one potential idea: The Cooperative that finds good investments (a very liberal definition) for its members by its members; somewhere between a Costco (where members get good deals but don’t feel themselves a “contributing” factor the Costco “community” per se) and a typical social club where members have a serious belonging first, and the deals are secondary.

I started a month ago thinking I’d do a doctor in your pocket Healthcare AI software. Or some other AI software 😉. Then the whole masterclass effort with you reading my newsletters pointed me to a Community-as-a-Product. Now I am trying to merge the two. Maybe? Well, the quest continues and so please help me with this brief and anonymous survey.

If you search for conjoint analysis on Google, you will find many detailed explanations, and quite a bit of online/offline software that does it for you for exuberant prices. The whole thing is geared for relatively sophisticated somewhat corporate marketing professionals with a budget. We, as tech entrepreneurs do not have that luxury.

So behold what I call the Pareto Conjoint for us, entrepreneurs. I call it such because it is quick and dirty, gets the job done, and costs nothing. So let me tell you how we will use this tool that I created with nothing but Google Sheets. And you can use it for your own purposes easily with 80% accuracy (hence the name Pareto), freely and I’d be willing to help to get you started. Or you can get to 100% with a commercial offering like this one https://conjointly.com/pricing/ but pay $1,795. So, you are welcome!

Our proposed membership model idea has 4 attributes and up to 3 variations as you can see below:

One can mix and match these attributes and come up with different membership tiers. That’s what almost all entrepreneurs do. But we are smarter. We want to know what the most important factors are, and how they interact with each other to give us the best possible combinations, if any. Hence the conjoint which is literally a multiregression on these aspects to get the best possible outcome (here we will optimize for revenue).

Most entrepreneurs conduct their customer validation by throwing their different combinations in a survey and pick the most ranked combo. They have no idea about the part-worths of the attributes. Like I said, we are smarter. You will appreciate the analysis when it is done.

Anyways, going back to our own survey, I want to know how much the members will spend on effort and membership fee, and an investment to feel they have gotten what they want: maximum returns. Choices are fractional and not mathematically optimized due to reality constraints and also because I can’t ask you 100 questions. But they are directionally accurate. For instance:

Someone might spend more time and less money. Someone may want unlimited returns (as some deals may have much more upside) in exchange for investing more. Someone may just want to have the optionality ie. spend minimal, invest none and be on the lookout. Since it is a marketing nightmare to segment everyone uniquely, we would want at most 3-4 membership segments that optimize our business model.

Let’s state the obvious: if nobody wanted this cooperative then the idea is dead and you are stuck with me for more surveys in the future. We will find out. If it is not dead, then we will have stated preferences that give us quick and dirty optimum levels for the attributes of a membership model.

Everyone gets my model to use for their own purposes, and hopefully we will have enough data to run an analysis within a week.

See you then, Oltac