How do you validate a great idea?
You have an idea. Maybe several. The question isn't whether it's clever — the question is whether someone will pay for it before you run out of time.
Validation is not a feeling. It is evidence that a specific person will spend specific money on a specific problem in a specific timeframe. Everything else is a wish wearing a business plan.
Here is what the data says about who spends, what they spend on, and how ideas become ventures that compound.
Who Pays
Three demographics spend the most, the easiest. Each for different reasons.
| Lens | Who | How Much | Why Easy |
|---|---|---|---|
| Volume | Top 10% income ($250K+), age 45-54 | 49.7% of all US consumer spending | Discretionary surplus after obligations |
| Velocity | Gen Z + Millennials (18-35) | $281/month impulse, 60-70% of retail unplanned | Dopamine-driven, mobile-native, BNPL removes friction |
| Surge | Identity transitions (new parent, homeowner, founder) | Wedding $36K, baby $15-36K/yr, home $87K first year | Emotionally committed, deadline-driven, price-insensitive |
The counterintuitive finding: the easiest money isn't from the richest people. It's from people in identity transitions. A new parent doesn't comparison-shop car seats for six months. A person launching a business doesn't negotiate the accountant down to zero. They spend urgently because the life event creates a deadline that overrides price sensitivity.
The 45-54 age bracket spends $100,327/year on average. But "spends the most" is not "spends the easiest." The spending that flows fastest comes from emotional commitment to an identity shift.
Validation test: Can you name the identity transition your customer is in? If not, you don't know who pays.
What They Buy
Ranked by opportunity signal — growth rate, digital delivery, recurring potential — not just size.
| Category | Market Size | Growth | Recurring? | AI Leverage |
|---|---|---|---|---|
| Social commerce | $820B (2025) | 26% CAGR | Variable | Agent-mediated purchasing |
| Creator economy | $205B (2024) | 23% CAGR | Subscriptions + tips | AI production, distribution |
| Embedded finance | $83B (2023) | 33% CAGR | Lending, insurance, payments | Underwriting from data |
| Subscription economy | $492B (2024) | 16% CAGR | By definition | Churn prediction, personalisation |
| Personal development | $48B (2024) | 5.7% CAGR | Coaching subscriptions | AI coaching, personalisation |
| Embedded insurance | $211B (2025) | 35% CAGR | Premiums | Risk scoring from usage data |
| Wellness economy | $6.8T (2024) | 7.9% CAGR | Mix | Meditation, sleep, mental health |
The pattern: the biggest growth categories are all infrastructure — embedded finance, embedded insurance, social commerce rails. Not the product. The plumbing underneath the product.
Within the $6.8 trillion wellness economy, the fastest-growing segments tell you where emotional spending meets recurring revenue: meditation and mindfulness (18.9%), sleep products (12.6%), mental wellness (10.1%). These aren't luxury categories. They're identity maintenance. People in transitions spend on them because the spending IS the identity work.
Validation test: Does your idea sit inside a growing category with recurring revenue potential? If it's one-time and shrinking, the data is telling you something.
The Wedge
Bain's research on adjacency moves: 75% fail. The 25% that succeed share one pattern — same customer, adjacent product. Companies that try to expand through new channels or value chains fail hardest. Two-step adjacencies are 35% more likely to fail.
A wedge is not a small version of the big thing. It's a narrow product that solves one acute problem so well that it earns the right to expand. The expansion isn't guaranteed — it's earned through trust.
| Wedge | Capital Required | Time to Revenue | What Trust Opens |
|---|---|---|---|
| AI coaching/training | $0-10K | Weeks | Financial products, insurance, tools |
| Affiliate curation | Near zero | Days | Commerce, community, data |
| Digital courses | $0-500 | Weeks | Certification, hiring, platform |
| Community membership | $0-5K | Weeks | Insurance, finance, marketplace |
The wedge pattern documented by Lenny Rachitsky: Amazon started with books. Stripe started with seven lines of code. PayPal started with eBay seller payments. Slack started with team messaging. Each earned the right to expand by solving one problem so thoroughly that customers trusted them with the next.
Validation test: Can you name the single acute problem your wedge solves? If you're solving three problems, you have zero wedges.
Trust Compounds
Existing customers spend 67% more than new ones. Cross-selling drives 30% of revenue in successful businesses. Upselling increases customer lifetime value 20-40%. But these numbers only work when trust transfers cleanly from one product to the next.
| From (Wedge) | Trust Transfers To | Why It Works | Growth Rate |
|---|---|---|---|
| Coaching/content | Financial services | "I trusted their advice, I trust their products" | Embedded finance: 33% CAGR |
| Community membership | Insurance | "I'm part of this group, group insurance makes sense" | Embedded insurance: 35% CAGR |
| SaaS tool | Lending/payments | "They already see my data, they can underwrite me" | Shopify Capital pattern |
| Content/education | Certification, hiring, tools | "I learned here, I credential here, I work here" | HubSpot Academy: 450K+ certified |
The models that prove this:
Costco — membership renewal rate 92.2%. Membership fees generate 65% of operating profit. Low-margin goods build trust. Ancillary services (travel, pharmacy, insurance) capture lifetime value. The grocery aisle is the wedge. Everything else is affiliation.
Apple — iPhone retention rate 92%. Services revenue $107 billion annually. 80% of iPhone users own at least one other Apple product. The phone is the wedge. Services are the compound.
WeChat — started as messaging. WeChat Pay now processes $2 trillion+ in payment volume. Mini Programs generate $400 billion in annual transactions. Messaging is the wedge. Commerce is the compound.
Same pattern every time: narrow wedge, earned trust, adjacent expansion, compounding switching costs.
Validation test: Can you draw the affiliation path — wedge to first adjacency to second — where each step serves the same customer? If you can't, the expansion is a fantasy.
Agent Commerce
The wave underneath the wave. McKinsey projects AI agents will mediate $3-5 trillion of consumer commerce by 2030. Gartner projects $15 trillion in B2B purchases by 2028. 36% of customers are already open to AI agents making purchases on their behalf.
This changes validation. When agents purchase for users, the trust relationship shifts from brand-to-human to brand-to-agent. The agent needs programmable trust — not a feeling, a verifiable credential. On-chain reputation, transparent pricing, API-first commerce.
Every coaching interaction that produces a measurable outcome (career move, revenue increase, health improvement) becomes a verifiable credential. That credential feeds a trust layer. That trust layer is what AI agents query when deciding where to route their principal's money.
The wedge isn't the coaching. The wedge is the trust data the coaching generates.
The Five Questions
Before anything else, answer these honestly enough that the answers surprise you.
| # | Question | What It Validates |
|---|---|---|
| 1 | What frustration do you keep noticing? | The problem you cannot stop seeing — repeated pain, not one-off complaint |
| 2 | Who else feels this and cannot solve it? | The market that already exists — identity transition, not abstract persona |
| 3 | What would good look like if this were solved? | The outcome, not the product — what changes in their life, measured |
| 4 | What do you know about this that others don't? | Your specific knowledge — earned, not borrowed |
| 5 | What would you build even if nobody paid you? | Your conviction, tested — the thing you cannot stop thinking about |
Five questions produce five seeds. Hold them up. Turn them. One pulls harder than the others. Not the safest one. The one you cannot stop thinking about.
That is the selection. Not analysis. Recognition.
The Ecosystem
A venture is not a company. It is a set of relationships. Remove one and the venture collapses.
| Counterparty | What to Understand | What Flows Between You |
|---|---|---|
| Customers | Identity transitions, spending triggers, emotional timeline | Goodwill earned through delivery |
| Suppliers | Constraints, incentives, durability | Standards you can build on |
| Contributors | Motivations, insecurities, desire for meaning | Agency — skin in the game, not hours |
| Owners | Risk tolerance, required returns, time horizon | Capital — patience or impatience |
| Regulators | Mandates, constraints, political pressures | Protocols — rules of engagement |
Most founders validate customers and ignore the rest. But a customer who loves you cannot save you from a supplier who breaks or a regulator who moves. Validate the whole ecosystem. The five are bound.
The Compound
Your venture is not unique. Not the idea — the infrastructure underneath it. Auth, CRM, data pipelines, payments, workflow automation. Every business needs the same horizontal layer. Roughly 95% of what any business runs is commodity dressed in different names.
The mycelium is the shared network underneath. Each venture is a mushroom cap — visible, distinct, serving a different customer. Underground, the roots share nutrients.
Build the first venture and the infrastructure costs everything. Build the second and it costs 20% of the first. Build the tenth and the marginal cost approaches zero. Each new mushroom cap compounds the network instead of starting from scratch.
This is the ultimate validation: does this venture contribute infrastructure that makes every subsequent venture cheaper? If yes, even a modest-sized opportunity justifies the build.
The Hum
Peter Kaufman tested ideas against 13.7 billion years of physics, 3.5 billion years of biology, and 20,000 years of human history. Two survived every bucket.
Mirrored reciprocation. Go positive. Go first. Be constant. Expected value is hugely positive. You release before you know what comes back.
Compound interest of behavior. Small consistent actions compound into trust, reputation, ecosystems. Not one big launch. Daily signal.
A tuning fork makes a silent one sing at the same frequency. A bee's waggle dance broadcasts enthusiasm without calculating rejection risk. Mycelium sends nutrients to the tree that needs them without negotiating terms.
Resonance is the mechanism. What is true vibrates. What vibrates attracts. What attracts compounds.
The venture you hold in silence cannot resonate. The one you release finds its frequency — and the swarm amplifies whatever is true.
Validate Today
You do not need a business plan. You need five honest answers and three data points.
- Answer the five questions. Fifteen minutes. No editing. Raw answers only.
- Name the identity transition. Who is your customer becoming? What deadline drives their spending?
- Name the wedge. One problem. One product. Lowest barrier to entry. Shortest path to trust.
- Name the affiliation path. Wedge to first adjacency to second. Same customer, adjacent products.
- Tell someone. Not for feedback. For release. The idea that survives contact with another mind is the one worth building.
Step five is the one everyone skips. It is also the only step that matters. The gap between "I have an idea" and "I validated my idea" is the gap between assumption and evidence. Everything compounds from the other side of that gap.
5P Playbook
| P | Application |
|---|---|
| Principles | Five honest questions reveal conviction. Data validates what intuition suspects. |
| Performance | The spending data is the compression test — if your customer isn't in a growing category with recurring potential, the math doesn't work. |
| Platform | Shared mycelium compounds. Every venture contributes infrastructure the next one inherits. |
| Protocols | Tokenization and DePIN make trust programmable, not philosophical. Agent commerce makes it queryable. |
| Players | Five counterparties, five flows. Validate the ecosystem, not just the customer. |
Part of The Tight Five series. Preceded by The Master Mind.
Context
- The Tight Five — The five questions that never stop mattering
- Creating Capital — Where capital should flow
- The Master Mind — What emerges when aligned minds combine
- Phygital Mycelium — The shared infrastructure underneath
- Business Ideas — Forces, patterns, opportunity discovery
- Business Development — The full planning template
- Dreamineering Ventures — Ideas manifested as a venture portfolio
- Participatory Capital — Crypto as coordination infrastructure
- Capital — Six types, ranked by durability
- Jobs To Be Done — Demand validation framework
Links
- Bain — Growth Outside the Core — 75% of adjacency moves fail. Same customer, adjacent product wins.
- McKinsey — Agentic Commerce — $3-5T agent-mediated commerce by 2030
- Lenny Rachitsky — Picking a Wedge — The narrow entry that opens the wide market
- BLS Consumer Expenditure 2024 — Who spends what, by age and income
- ARK Invest — Big Ideas 2026 — Convergence of exponential technologies
- Global Wellness Institute — $6.8T wellness economy growing 2x GDP
Questions
How do you know the difference between an idea that excites you and an idea someone will pay for?
- If your customer isn't in an identity transition, what creates the urgency to pay now instead of later?
- What would make your wedge-to-affiliation path fail — which adjacency step is the two-step that Bain warns about?
- When AI agents mediate purchasing decisions, what does "trust" become if not a human feeling?
- Which of the five counterparties have you not yet validated — and what breaks if they don't show up?