If They Come, We Will Build
This article is part of my blog series, âIdea to CEOâ. In my earlier article I spoke of ideas and inspiration, and how my own pain and frustration led me to build a startup to solve the problem for other parents. In this article I provide some techniques and insights that I used for my idea validation of Yoyochimp. I have split this article in 2 parts as there is lot of ground to cover on this topic. This is a long article, but with lots of golden nuggets and inspiring stories to help you with your idea validation.
It so happened that in 2002 when I started my earlier startup, Amnel, with my husband, nobody had heard of the beast called âidea validationâ or any validation for that matter. Then, all you did was, learn to spell World Wide Web, find a domain name, and you were all set to open doors to VC money. Back then it was the VCs who prepared shiniest of the pitch decks to lure entrepreneurs into taking their money! Ok, I am exaggerating, but just a bit.
It's 2014 now, and idea validation is a pre-requisite to building your startup. Now it means that you try to build products by asking your prospective customers whether they will buy your product, yes I mean BUY, with cold hard cash, and not just use it for free. The âbuild and they will comeâ humble attitude has been flipped on its head to a more egotistical âIf they come, we will buildâ attitude. But thatâs how most of the big name startups are building their businesses, and surprisingly it is working!! It is all about Lean Startup movement pioneered by Eric Reis and promoted by Stanford professor, Steve Blank. Lean startup is all about doing more with less, by building products iteratively â build, measure, learn over and over again, so that you build products that will actuallysolve customer problems and one that your customers will actually pay for. There is a ton of material out there on Lean Startup topic at the links above. Lean Launchpad, a free course on Udacity, by Steve Blank, is amazing!
Houston, we have a problem
If your idea comes from a problem either you or your friends are facing, you still need to verify whether the problem exists on a large enough scale that justifies building an entire startup for. In case of Yoyochimp, it was very clear that this was indeed a large problem for both working moms and small businesses. If you do find enough people facing this problem, find out how they are solving the problem today, what tools/apps are they using, whatâs wrong with those tools. This will also help you gain insights into your competitorsâ weaknesses. Their weakness could help you find your strengths or differentiation. It is important that you limit yourself to just understanding your customersâ problems and not asking your customers to suggest a solution.
If I had asked people what they wanted, they would have said faster horses.
Define and refine your target audience
So now that you know there is indeed a problem, do you know if you are solving the problem for the right audience? Do you know if your target audience is an individual consumer, a small business, or fortune 500 enterprise? If it is an individual consumer, what is their demography â age range, gender, income, education, job, etc.? The more specific and clear you are about your customer persona, the easier it will be to solve the problem and acquire customers. It is ok to start by targeting a very small niche audience but make sure that it constitutes a large enough market size in dollars (either due to high revenue/customer or due to large number of customers). Not knowing your target audience or targeting a very large, generic market, for example, targeting âeveryoneâ, is one of the most common and fatal mistakes entrepreneurs make. At Yoyochimp, one of the customer segments that we have identified is made up of working moms aged 30-45 years with school-age kids 5-13 years old and an annual income of 120K+. Yes, that specific!! We may later expand to offer services for other kidsâ age groups as well, but this is our starting point for now.
Build a low-cost, low-effort prototype
If youâre a techie/expert and capable of building a low-cost/low-effort prototype in a few days, that could be your aid in communicating your idea. Depending on your product â hardware, software, drug, service, drone, robot, app, virtual currency, etc., it may or may not be possible to build a low-cost, low-effort prototype but I have heard stories of people successfully using easily found materials like paper, plastic, etc. to build complex hardware prototypes and using them to demonstrate their ideas. Web and mobile apps are a no-brainer.
As Steve Blank says, âGet out of the buildingâ and talk to your customers. The key is to not to pitch your product, but to get them to talk to you about their problems. Starting your pitch with âI have an awesome product that will solve your problemâ will not take you far. Instead start with inquiring about their business problems. What keeps them awake at night and would they pay if someone offered them to solve that problem. There are plenty of tricks and techniques that you could use to find your customers. Though many times it starts with cold calls, cold emails, cold walk-ins, etc., over time you will find out what works or doesnât work for you. Read how Aaron Patzer of Mint.com interviewed his customers at train station. For Yoyochimp I used a lot of cold calling and cold walk-ins to my customersâ (class and camp providers) offices located in strip malls and was surprised to see how willing these businesses were to share their problems with a complete stranger.
Another neat trick that entrepreneurs use today is to create landing pages to validate their idea. Here is how it works:
Create a simple web page explaining your idea with graphics and text. Write a simple but crisp message explaining how your product works.
Create a simple form for visitors to sign up for, just name and email address, not a mile-long form
Now promote this page as if it were a real product/website/app, through Google adwords or social media. Spend no more than $100 on advertising.
If you get enough signups from your visitors, you know you are on the right track.
It is important your message and value proposition is simple yet compelling that users are willing to give their email address to you. Do spend time and effort crafting your one-page landing page.
There are quite a few websites that will let you easily build and host landing pages for free. There are free site builders such as Weebly, Wix, Strikingly, etc. you can use to build your 1 or 2 page website for free and start collecting leads.
Create a 2-minute video explaining your concept with graphics, audio, or your product demo and add this to the landing page, it could do wonders. See how Drew Houstonâs video got him VC attention. Fiverr could be your friend to find help with some of these things for cheap.
Eavesdrop on LinkedIn groups or industry forums
There is quite a lot of learning you can achieve just by listening, reading and observing. Join industry forums and LinkedIn groups, monitor the conversations or best yet participate and ask questions, you will be surprised how much you get to learn from others.
These are the techniques that I used for my idea validation, but be creative and go wild, thatâs why you are an entrepreneur â you donât follow rules! Now that you know that the problem indeed exists on a large scale, your next step woud be to find out how big a market, in terms of dollars or other currency, is this, and who your competitors are. That is the topic for part 2 of the idea validation topic that I will publish next. Stay tuned!
Meanwhile, share in the comments, if there are other techniques that you came across or used for your startup. Any out-of-the-box, creative ideas that worked for you?
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