In 1984 Richard Branson’s flight from Puerto Rico to The British Virgin Islands was cancelled. The airline didn’t have enough passengers to warrant a flight so he decided to charter one, grabbed a blackboard and as a joke wrote, ‘Virgin Airlines’ on top of it. He then wrote $39 one way to BVI. He went out and proactively rounded up all of the passengers and filled his first plane. Virgin Airlines was born on that day. Richard was frustrated with how airlines treated their customers and wanted to make a change. This first real life and resourceful validation made it a lot easier to jump right into the business. To protect Virgin’s downside, Branson creatively worked out an agreement with Boeing. Within the agreement, should the airline fail within 3 years, Virgin could sell the 747 back to Boeing for an already predetermined price. This is truly the resourceful approach.
In 1998, Bill Gross of Idealab was frustrated with the existing process of buying a car and wanted to start selling cars online. To validate this idea, they quickly set up a website in one night and ‘faked it until they made it.’
“We gave the CEO a 90-day contract to work for us as a consultant, and his goal was to sell one car. I told him to complete the whole transaction, financing and everything, and then go buy the car at a dealership. I didn’t care if we lost money. My focus was just delivering the car to the customer’s house on a flatbed truck, just seeing what the experience is like — and if people love it.” Gross said.
They sold 4 cars in one night. Gross got his validation and had to shut the site down until they could completely build it. This site, CarsDirect was sold to KKR in 2014 for $1.1 Billion.
Let’s say we were to develop a “Coach” app that used AI and your phone to give real-time coaching feedback for any sport. We could actually fake this quite easily and show the athletes and coaches how it would work as if it was already built. For example, we could live stream a Microsoft Skype or Google Duo call and point the camera from our phone at the batter. We could then have a professional athlete or winning coach on the other end taking notes and using a virtual pencil to show where the athlete can immediately improve their swing.
This real-time feedback could be in the backend, where they don’t even know there is a coach on the other side. All the customer would see is feedback on their form. We of course, would eventually use artificial intelligence and learning algorithms to accomplish this at scale but the purpose of this is to get feedback from the coaches and athletes who will be using the service. We need to quickly and resourcefully validate the idea before we build it.