Market validation matters because enthusiasm, however sincere, is a terrible predictor of commercial success. Here is why honest feedback on a new product or proposition is structurally scarce – and what founders and commercial leaders can do instead.
There is a peculiar asymmetry in commercial life that nobody really names. The people best placed to tell you your proposition won’t work are, almost without exception, the ones with the strongest incentive not to.
This applies whether you are a first-time founder about to put your savings into a manufacturing run, or a commercial director briefing a new product range to the board of a twenty-million-pound business. The structure is the same. Friends are kind. Family are supportive. Co-founders and colleagues are already invested. Advisors are polite. Non-executive directors don’t want to be the one who blocked the strategy. Investors who aren’t writing the cheque have no reason to give difficult feedback. Agencies quote on the build, not on whether the build should happen. Coaches charge by the hour, and nobody books a second session with the coach who told them to go home.
The result is an ecosystem that manufactures enthusiasm with great efficiency. Which is, incidentally, one of the least reliable predictors of commercial success ever studied.
The graveyard is full of cheered plans
James Dyson sank roughly £500 million of his own personal fortune into an electric car – a seven-seat SUV with a claimed 600-mile range, built at a proper Wiltshire test facility by a 400-strong team. This is a man who is, by almost any available measure, one of Britain’s most commercially astute engineers. In October 2019, two years into the project, he cancelled it. The engineering hadn’t failed. Dyson acknowledged publicly that the car would need to retail at around £150,000 to be profitable, and at that price, against incumbents selling electric cars at a loss offset by their petrol business, there was no viable buyer. The question of whether enough people would pay Porsche money for a Dyson was the commercial question all along. Two years and half a billion pounds in, he had his answer.
Made.com floated on the London Stock Exchange in June 2021 at a £775 million valuation. Sixteen months later it went into administration; Next bought the brand, domain and intellectual property for £3.4 million in a pre-pack sale. The product was fine. What failed was the assumption – made by a perfectly reasonable board of directors – that pandemic furniture-buying patterns would persist indefinitely. They did not. Having furnished their homes during lockdown, people did not then need another sofa every six months. The company had locked in warehouse space and fixed costs against demand that had evaporated.
Cazoo listed on the New York Stock Exchange via a SPAC in 2021 at a $7 billion valuation, three years after being founded. By 2024 it was in administration, sold to Motors.co.uk for around £5 million. In its 2022 financial year it grew revenue by 90 per cent to £1.3 billion and lost £704 million doing it. The business had scaled on the theory, popular at the time, that unit economics were a problem for later. They were not.
None of these are the work of naïve first-time founders with a napkin sketch. They are experienced, well-resourced, well-advised teams. Which is rather the point. Being further along the curve does not inoculate you against the problem. It just means the validation you skipped costs considerably more when the answer finally arrives.
Why honest feedback is structurally scarce
The problem is not that anyone is lying. It is subtler than that. The incentives around any commercial plan are almost entirely asymmetric.
Your partner doesn’t want to be the one who killed your dream. Your parents want you to feel supported. Your co-founder or head of product is betting their time and reputation on the same thesis – they are not an objective reviewer. Your mentor likes you and wants the relationship to continue. Your agency is quoting on the build. Your designer is excited about the brief. Your investor friend is either in or out, and if they are out they will usually say “it’s not for us right now” because the world is small and burning bridges is bad business.
Even the people who could give you an honest no usually won’t. The social cost of being wrong about a negative verdict is much higher than the cost of being wrong about a positive one. If they say “this will work” and it doesn’t, nobody remembers. If they say “this won’t work” and it does, they look like the idiot who dismissed the next Airbnb. Given those incentives, it is genuinely surprising that anyone ever delivers bad news at all.
So you operate inside a distorted signal. The enthusiasm is real. The encouragement is genuine. And it is almost completely uncorrelated with whether the market will buy.
What actually counts as market signal
Here’s the single most useful distinction in market validation: opinion is not behaviour.
There is, incidentally, a substantial body of behavioural research showing that human beings are remarkably poor at predicting their own future behaviour. We systematically overestimate how much exercise we will do, how healthy we will eat, how early we will book the flight, and how much we will spend on an app we have not yet downloaded. Economists even have a name for it: hypothetical bias. When a potential customer tells you they would buy your product, they are telling you how they feel about you in that moment, which is lovely, but not commercially actionable.
When they click an ad, fill in a form, or leave a deposit, they are telling you something about the market.
Most of what gets called “market research” in the early and mid-stages of a business is the first kind of data. Conversations. Surveys. LinkedIn polls. Internal workshops. “I showed it to ten people in my network and they loved it.” All of this measures how people feel when asked a question in a low-stakes context. None of it measures whether they will act when there is money, time or
commitment on the table.
Real signals look different:
• Paid clicks to a landing page where the cost per click is below your target customer acquisition cost.
• Sign-ups on a waitlist where people leave an email address even though they know the product does not yet exist.
• Pre-orders with a deposit – any sum, as long as it is a real payment method.
• A meeting booked into your calendar by someone who has read enough about the proposition to understand the price bracket.
• A signed letter of intent from a buyer in the sort of organisation you eventually need to win.
These signals cost something to produce. That is precisely why they mean something.
The honest audit
Before you spend another pound building, branding, launching or scaling, do this. Write down theten people whose feedback you have leant on most heavily to justify continuing. Next to each name, answer honestly:
- Do they have direct experience of the market you are trying to reach?
- Do they have anything to lose by being wrong?
- Would they feel socially comfortable telling you to stop?
Before you spend another pound building, branding, launching or scaling, do this. Write down theten people whose feedback you have leant on most heavily to justify continuing. Next to each name, answer honestly:
The uncomfortable question we exist to ask
BrandRefinery was set up on a simple principle: the most valuable thing we can do for a founder, a commercial director or a board is tell them the truth, before the market does it for them at five hundred times the cost.
We are not going to brand your idea. We are not going to build your deck.
We are going to help you design a real-world test that proves – or disproves – that people will act on the proposition you have put together, whether you are taking it to market for the first time or trying to make the second one bigger than the first. If the test comes back positive, you have evidence for investors, for your board, for your team, and for your own confidence. If it comes back negative, you have saved yourself from a much more expensive version of finding out.
Either way, the decision is made on data, not on how nicely your advisors smiled.
If you want a thirty-minute conversation about whether your current plan has been properly tested, or whether it has been politely encouraged, book a call. No pitch deck required.