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3 minute read / Oct 19, 2015 /

Using Vaporware to Validate a Product Idea and Generate Demand for Your Startup

In 1964, IBM announced a mainframe computer family called the System 360. The mainframe wouldn’t ship for another three years, but the announcement reduced the mainframe sales of their competitor, Control Data Corporation, sufficiently to warrant an FBI investigation. And so a new marketing technique was born.

To be clear, there are many different forms of vaporware. Coined in the early 80s by Esther Dyson to describe software companies preannouncing a product, the term vaporware can refer to three different types of these announcements. There’s IBM’s practice of pre-announcing a product with the intent to gain competitive advantage, which violates antitrust law. Second, vaporware also refers to products that were announced but never shipped like the iPhone predecessor, Apple’s Wizzy Active Lifestyle Telephone or WALT.. Last and most useful, vaporware is software that’s pre-announced to gauge customer demand.

In the consumer hardware world, vaporware has a different name: crowdfunding. Every Kickstarter and Indiegogo project are vaporware. A team creates a project page with a pitch and a request for money. The product, movie, album or comic book won’t be completed for quite some time. But this type of marketing serves as terrific demand generation.

Vaporware can also be used as a product discovery tool. Sendwithus, an email automation company, describes how they validated their SaaS product without building it. They aimed to “gather information about what a great product might look like.” And the founders created Sendwithus Zero, a $28 experiment that collected data on the features customers valued the most - which informed the product roadmap when it was time to build the product.

The founders of Optimizely, Dan Siroker and Pete Koomen, used this same idea to determine the best idea to pursue after deciding to pivot from their education company, CarrotSticks. Dan and Pete sold two $1000 licenses to customers based on a landing page.

Not restricted to products as a whole, vaporware can also be used to inform individual features. Nick Kishfy writes about using this technique in live products by creating a new button in a mobile app that he calls the Button to Nowhere. By measuring how many users explore the feature, a team can proxy the demand.

There can be downsides to employing vaporware as a market research tactic. Some Sendwithus users expressed their dissatisfaction at having been unknowing participants in an experiment. In the Button to Nowhere experiment, Nick recommends telling users they’ve discovered an experimental feature to mitigate some of this risk.

When used properly, vaporware can be a terrific product discovery, product validation and demand generation technique.

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5 Mistakes SaaS Startups Often Make with Pricing