The Concierge test is testing by doing. Never a week goes by that we don’t hear of a new online multisided marketplace idea. These entrepreneurs have grand plans to build an online platform that brings together two or more parties who aren’t readily accessible to each other.
In the instance of creating a new market, in other words bringing new buyers and sellers together, the Concierge test is conducted by manually bringing buyers and sellers together and repeating that process until you learn (1) whether taking a cut of the transaction would support a business, and (2) what part of the transaction can be automated.
This test might be useful in non-marketplace examples, too. In many instances, if you can’t make a transaction happen in the real world in real time, it’s not likely to work online, either. If nothing else, you will learn what it will take to get the parties to the market.
Services-based businesses are good examples of Concierge tests. If someone pays you for a service, you pretty much know a pain exists and someone is willing to pay for it. (This is beyond the point that many product startups get to!) This, of course, doesn’t mean you have a scalable business. Whether a product-based startup can be built from a successfully sold service is no small matter.
Converting a services business into a (scalable) products business is always a tough proposition.
(We once worked with a successful consulting business to help establish a products division. Despite ...