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Sell first, build second: use presales and small orders to confirm people will buy before you put money into production

  • Moderate value
  • Evidence B
  • Saves money
  • Costs a little
  • Takes some hours
  • Some willpower

In plain words

Researchers followed 116 new Italian companies for about a year. Founders who first set a hypothesis and then tested it against market feedback did better in business and were also more willing to change direction in time, and they did not give up earlier. So if no one will prepay and no one will place a small order, don't believe that "if I make it, people will come to buy."

Cost

A few dozen to a few hundred CNY, to make a sample or a page. Then find several dozen real customers and ask them to prepay or place a small order. This is a few weeks slower than starting production straight away. The hard part is holding back from making the goods first.

What you get

A randomized controlled trial followed 116 Italian startups for about a year. A randomized controlled trial splits people at random into two groups, trains only one group, and compares the results. The result: founders who were trained to make decisions by "first stating a hypothesis, then testing it rigorously against market feedback" performed better and were more likely to pivot in time to another plan, and their early dropout rate was not higher. The authors' explanation is that this approach reduces the chance of continuing to pour money into projects that look promising but cannot succeed (false-positive projects) (Italy, published 2020)

Notes

This is a single study, with a small sample, run in Italy, so it is graded B. The title, source and abstract were checked against Crossref and Semantic Scholar, but the effect figures in the full text were not verified here. In practice: if no one will prepay and no one will place a small order, don't believe that "if I make it, people will buy."

Evidence grade
B : Supported by research but without a precise number, or based on small or single studies.
Sources
  1. Camuffo A, Cordova A, Gambardella A, Spina C (2020). A Scientific Approach to Entrepreneurial Decision Making: Evidence from a Randomized Control Trial. Management Science 66(2):564-586. https://doi.org/10.1287/mnsc.2018.3249

Translated from the Chinese original. Original book, section 12, tip 18. This section describes legal rules, mostly mainland China’s. It is general information, not legal advice; for your own case, talk to a lawyer. Content may be out of date and rules differ by place. When you actually deal with an agency, a doctor or a court, follow what local officials, doctors and lawyers tell you. Disclaimer