They may be paralysed by the fear of missing out on a better idea. They may simply not be confident enough in their own. But not you — you’ve managed to buck up the courage and are now facing a new challenge: how do you know if your disruptive business idea is something the world actually needs?
This is market validation, and it’s one of the most important steps in every entrepreneur’s journey. After working with hundreds of startups over the past decade, we’ve seen lots of validation methods come and go. Below are the four rules that have always held true.
1. Shred a couple of pounds
No, we’re not talking about all those home-workouts you’ve been banging out. This is about trimming down your business concepts. This is about getting lean.
Why? Well, dragging your idea from concept to reality is going to take a lot of time and money. And, now that you’re laying the foundations and calculating a strategy, it’s time to think practically.
A startup ship often sinks for holding too much cargo. To keep your head above water, you need to develop the very basic version of your product; the Minimum Viable Product.
What’s important is that as little of your precious resources as possible are wasted. You achieve this by reducing your business idea to its most important core feature — excluding all features that can be seen as “additional” and added on later. This is your leanbusiness concept, and it’s a slim version of the fully-loaded package you’re dreaming of assembling.
Instead of selling your life’s belongings to fund your startup, this strategy allows you to test the market and validate whether consumer interest and opportunity exists. As you’re only focusing on the central feature of your product/service, you’ll save a bucket load on development.
2. Don’t just assume a need case; find one.
It’s the Achilles’ heel of the majority of startups; being so fixated on growth and invested in bringing your idea to life that you fail to realise you’ve created a solution for a problem that doesn’t exist.
Your business may solve a problem for you, but does it solve a problem for others? Often coined as ‘founder’s vision,’ this phenomenon is driven by us so badly wanting to believe in our ideas that we’ll do anything to validate them, including scurrying for outdated statistics and asking the wrong people.
Instead, take a deep, objective dive. Customer interviews with people in your target market are critical, and should always take place before you’ve made a significant investment in your product/concept.
Start with a list of questions but, as you learn more info, deviate from it. What you’re looking for, more than anything else, are problems. What are your potential customers’ problems, needs and desires? How well does your idea respond to any of those things? Is your idea original? And how is it better than anything else that already exists?
If you’ve a spare penny or two (or good connections), you can also test your assumptions by interviewing experts (specialised investors, journalists, analysts, workers, consultants etc.). Even better is to test your idea at scale — by running cheap adverts on social media that link to a landing page where you drive subscriptions to a waitlist.
3. Beware false positives
This is an inherently subjective process. Black and white answers are hard to come by. Most people you’ll talk to will want to keep you happy — and even if they don’t care about that, they’ll naturally err on the side of politeness.
Which is nice in real life; less so when you’re trying to work out if your idea is up to scratch. To do that, you need to eliminate as many “false positives” as possible. Before you enter the validation conversation, prime your subjects to skew objective: tell them this process is only useful if they’re willing to give it to you straight.
Even then, be careful about accepting answers at face value. A person liking your idea is not the same as a person buying your product. When someone tells you “wow, that’s cool!” or “that’s an interesting idea,” your first reaction should be to ask, “why?”
Don’t be afraid to keep asking why over and over. It is by far the most useful question for encouraging your subjects to talk in detail and with honesty.
On a related note, don’t be tempted to play down or ignore the naysayers. Negative feedback = opportunities to improve your idea. Even if you don’t end up integrating their feedback into your final solution, hearing it at this stage will enable you to anticipate and mitigate any potential blowback when you take your product to market.
4. Check the other lanes
A brainstorm session, a chat with a friend, a dream; no matter how your idea found its way to you, there’s a good chance it’s been around the block.
No idea is 100 percent unique; there will always be businesses out in the world that are similar to yours. But it’s no stress if companies are already doing what you plan to; it’s a good thing. It means there’s a market for your idea.
The challenge is making sure you capture that market. To do that, you’ve got to know who you’re capturing market share from, what exactly they are providing and what you will do differently or better than they do.
So start doing research on the companies that could become your competition. Look at how much they charge, the shape of their business model, who their target audience is and how they market to them. This is validation in the sense it will help you prove your idea is truly disruptive. In the world of entrepreneurship, you can only trigger the earthquake when you’ve mapped the landscape.
Wait, what about coronavirus?
Covid-19’s untimely arrival has left VC pockets shallower than before, and valuations at new funding rounds have dropped 10-30%. Starting a business may be daunting in this environment — but there’s plenty of evidence that a recession is as good a time as any to start a business. General Motors, Burger King, CNN, Uber and Airbnb, to name a few, were all founded in the midst of economic downturns.
You’ll be faced with doubters, sceptics, and will likely be told that your idea is completely baseless. Annoyingly, the doubters and sceptics will always be there; but having a baseless idea or not is something you determine. Following these steps in bringing your concept to life will help turn a well-founded idea into a matter of fact, not opinion.
You’re all set. Time to fly.
For startups like yours, the biggest challenge is achieving more with less: money is tight, resources are few and doubters are many. That’s why we’re turning the agency model on its head. If you want to find out more about how we can help you unlock your innovation’s potential, get in touch at: firstname.lastname@example.org.