If you are a start-up entrepreneur (or are on the verge of becoming one), you know the feeling. It keeps gnawing away at you. It’s so overpowering that it keeps you up at night. It makes your mind move so fast that you can hardly remember what you were thinking about a few moments ago.
To others it seems unreasonable and borderline ludicrous but to you it makes absolute sense. That’s passion in its most unadulterated form. It’s the passion we have in our ideas that will - if all goes according to plan - change the world.
Ironically, it’s this same passion that often clouds our judgment and blinds us to a very important question: do people really want what our start-up is selling?
Without validating a start-up idea the short answer is we simply don’t know. Entrepreneurship is hard. Really hard. Everyone starts out thinking their idea will have absurd traction and become the next big thing, but the bleak reality is that most start-ups fail.
You probably already know that nine out of 10 start-ups will fail but do you know the single biggest reason for failure? It’s not cash flow, it’s not a weak team, it’s not even poor execution. An extensive survey by Fortune found that the single biggest reason start-ups fail is a “lack of a market need for their product”, in other words, they make products nobody wants.
If you’re going to spend your time and money building out an idea, then doesn’t it make sense to spend a fraction of those resources making sure the idea is actually solving a real problem - a problem relevant enough to get the customer to overcome inertia and buy it?
It seems like an obvious thing to do, however oftentimes it’s a step that gets side-lined. The question is how to try and figure this out as quickly and cost effectively as possible.
Here are a three effective and affordable ways to test your assumptions and validate your start-up idea.
1. Talk about it a lot, and then some more
The biggest mistake entrepreneurs make is keeping their idea to themselves. You should be doing the exact opposite, share your idea with others - anyone who is willing to listen. You would be surprised at how open people become when you ask for their opinion.
Sharing your idea with friends and family is fine but the real insights come from talking to complete strangers (LinkedIn is a great tool to find and reach out to those relevant strangers).
The issue with family and friends is that they generally can’t help being biased. In most cases, they will choose to tell you how wonderful of an idea it is rather than be brutally honest. Complete strangers on the other hand, don’t care about you enough to worry about hurting your feelings.
An amazing phenomenon also starts to unfold - the more you talk about the idea, the more refined it becomes (or the more apparent that the idea is not a good one, which is great too).
With every opinion and with each piece of instinctive feedback you get from people, you will iterate the idea in your head. Eventually this rapid iteration will become second nature and you’ll quickly be able to sift through all the feedback you’re receiving to find those valuable nuggets.
The common reaction people have when thinking about sharing their idea is the possibility of someone taking it. The reality is that there aren’t many people out there willing to just drop everything they’re doing to copy someone else’s idea. Even in the rare event that they do, the idea alone is worth very little; it’s great execution that makes it valuable and that’s extremely hard to copy. They simply can’t replicate your passion, vision, talent or insights.
Most entrepreneurs believe their idea is what separates their start-up from the competition, but it’s not. It’s actually them (you!) that sets it apart.
2. Run a smoke test
A smoke test is an experiment that gives users the impression that there is a market ready product even though there really isn’t.
The idea is to lead the user to think that by clicking a button they can start using the product. However, after clicking on the call to action (e.g. ‘Buy Now’ button) you reveal to the user that the product isn’t ready just yet.
Essentially what you are doing is gauging buyer intent based on their willingness to take action. It’s pretty simple: just set up a landing page (tools like QuickMVP and LaunchRock can help you do this quickly), buy some traffic (Google Adwords, Facebook and/or Twitter ads are most effective) and analyse the conversion rates (Use Google Analytics and implement tracking codes on the call to action buttons).
Once it all comes together, just sit back and watch what happens.
If a decent number of people click through your call to action, then there’s likely to be genuine interest, and it’s time to move onto the next step; the minimum viable product (MVP). If the response is lukewarm, then the problem you’re aiming to solve might not be painful enough or you haven’t found the right solution yet so consider going back to the drawing board.
Quick fact: Dropbox started off with an explainer video showing off what their product would do. People who saw the video thought the product was real and visited the site only to realise it wasn’t actually ready. Their simple three minute video drove traffic and increased sign-ups exponentially. Their beta waiting list went from 5,000 people to 75,000 people literally overnight.
3. Tap into the wisdom of the crowd
TaskSpotting and similar tools can help you crowdsource feedback on your idea and gather insights - almost instantly and at scale. Their potency comes from their huge community of consumers who are ready and willing to share opinions on-demand.
With this kind of intellectual horsepower at your fingertips, it just makes sense to reach out to them for feedback, not just on your idea but also on which features they would use (read: what you should build first) and what price points they’re willing to part with their money at. This method is particularly relevant when it comes to consumer centric start-up ideas.
Getting started is painless, just create a poll using a simple builder and launch it to the crowd to start getting ideas, reactions and market intelligence in real-time.
To demonstrate how powerful this can be, we came up with an entirely fictitious mobile app concept and shared the idea with the crowd for validation. The concept was ‘InstaSitter’; an app to help parents find babysitters on-demand. We created a short poll and launched it to the crowd targeting a relevant age group in the UAE.
Within 48 hours we had 350 responses (a statistically valid sample size to represent the population) and uncovered some very interesting findings.
The results are in the graps to the left. By taking a quick look at these numbers it becomes easy draw some conclusions.
1) There seems to be a market for the InstaSitter app in the UAE.
2) The sweet spot for pricing is roughly 30 dirhams an hour.
3) The features in your MVP should include a user review mechanism with a ‘friendliness score’ and a qualification vetting process to assemble a well curated network of babysitters.
And so there it is: a crowd validated idea.
With any of these approaches, or better yet a combination of all three, a founder is armed with the insights they need to make an important decision; move forward, pivot, or kill the idea all together.
The purpose of validating an idea is so that we, as entrepreneurs, can work smarter rather than harder. Make no mistake though, in the end, every start-up is an experiment and is by definition; uncertain. No matter how much validation we get in theory, pursuing an idea will always remain a leap of faith.
That’s what makes entrepreneurs so unique, we vehemently pursue our passion to change something about the world even though we know full well it’s more likely to fail than to succeed.
We are the crazy ones indeed.
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