Just knowing that it's an experiment defeats the purpose. By getting honest responses and behaviors, it is easier to build a solution that people actually need or would actually use.

And at the end of the entire process you've wasted their time with a nonfunctioning product.

Focus groups et al. are consensual. This is deceptive.

Note we call it a "Demo" right on the landing page - we made no promises up-front, and had no intention of deceit.

Demo means "demonstrator". Usually you use it to demonstrate (show) what your product can do. If it doesn't, you show them something that doesn't exist, and it's more of an illusionist show than a real demonstration.