I have a startup idea, now what?
By Javid Jamae
Most people who have a startup idea have envisioned a product. They’ve identified a specific user problem and have hypothesized a solution that will solve that problem.
Problem + Solution = Product
Product people (engineers, product managers, designers, etc.) tend to come up with startup ideas that are products.
Some people who have a startup idea have envisioned a business. They’ve identified a specific market opportunity or trend and have hypothesized a product that will provide value to that market.
Market + Product = Business
Business people (industry experts, business analysts, market researchers, finance folks, etc.) tend to come up with startup ideas that are businesses.
Many people think they have a strong understanding of the problem, solution, and the market. They’re usually wrong.
Some people actually have a strong understanding of the problem, solution, and the market. This is extremely rare.
It doesn’t matter whether you’ve identified a market opportunity or a product, the challenge is to validate both before proceeding.
What is your goal?
Before we dive in to what it means to validate an idea, you need to understand your personal goals for this project. Generally, when I talk to people they have one of three goals for their startup idea:
1) They just want someone to listen to their brilliant idea but have no desire to actually build it
2) They are trying to build a small project for fun (typically as a side project)
3) They are trying to build a scalable startup
If you have an idea, but don’t really want to devote the time or money to it, then stop reading this article and keep searching for good ideas.
If you are looking to do a small side project that you can knock out in a few days, just build and launch it. Let me know and I’ll help you post it on Product Hunt.
As long as you’re only spending a few days or at most a few weeks, you’re not putting too much at risk. Launching a small side project can be a lot of fun and you’ll learn a lot. If you’re lucky (or smart), you’ll make a little money off of it and it will help fund your future projects. If you’re really lucky, it will open the doors to a bigger opportunity.
If someone tells you to spend 3–4 weeks doing customer interviews before spending 3–4 days to develop and launch your little project, then they’re probably trying to sabotage you.
If you are trying to build a scalable startup that you’re going to invest years of time and money into, then keep reading.
Assumptions and validation
When you think about your startup idea, you are envisioning a world that doesn’t yet exist. In order to create that world in your mind, you have to make certain assumptions about things that don’t exist and haven’t happened. Those assumptions carry no risk in your fantasy world, but in reality they can.
A risky assumption is an assumption that if incorrect, will cause the business to fail or necessitate that the business be redefined considerably in order to succeed. In other words, risky assumptions are assumptions that have costly and irreversible negative outcomes.
But risky assumptions can only create significant risk if they’re executed upon. Instead of moving forward and ignoring the risky assumptions, you should spend time validating them.
Validation is the process of testing or experimenting with each of your risky assumptions such that you mitigate the risk enough to justify moving forward with peace of mind.
There is a fallacy that validating assumptions means that you’re proving them true. But, this isn’t science, it’s business. Assumptions that are validated become less risky assumptions. There are no truths. As an entrepreneur, your job is to reduce the risk enough to where you can justify moving forward.
It’s foolish to think that your risky assumptions about the problem, solution and market are all correct. Spending your time and money based on those assumptions is irresponsible. Spending other people’s time and money based on those assumptions is downright unethical.
Hopefully, my strong words were enough to deter you from wasting time and money moving forward with unvalidated assumptions.
But, if not, just remember this: an innocent kitten dies each day that you spend time and money building a business while ignoring your risky assumptions.
List out each of the risky assumptions that you’re making about the problem, solution, and market. Rank them based on how risky they are.
A different way to list out your assumptions is using the Assumption Mapping exercise created by David J Bland from Precoil.
Passion check
OK, you’ve listed out a bunch of risky assumption. Time for a little more introspection before moving on.
Now, stop reading this article and think carefully about this question:
Do I love the market I’m about to enter?
No, really, stop reading and think about it very carefully. Do you really love the market? Do you love the customers?
It doesn’t matter if you love the solution or the technology you want to build it on. Assume that the product and technology will be completely different in 1–2 years time.
It doesn’t even matter if you love the specific problem. The problem will definitely change over time. Will you change along with it?
Assume that your business model will change multiple times over the next few months or years. Are you passionate enough about the market to commit the next 5–10 years of your life to it if your company succeeds?
If you’re not sure whether you love the market, then you shouldn’t proceed (at least for now). Do a little soul searching. Try to weigh this idea against your other ideas.
If you don’t know the market / industry very well, then it would behoove you to spend some time hanging out with people who do know the market very well. Find a mentor or two that can help you understand the market better.
Prioritizing your assumptions
OK, let’s look at that list of risky assumptions. There is much debate over what assumptions to validate first. You almost definitely have risky assumptions for your problem, solution, and market.
In general, you want to prioritize the assumptions you want to validate based on risk, not based on type. It’s ok to interleave between validating market and product.
That being said, in almost all cases, you should validate your riskiest assumptions about the problem and the market before spending time validating your assumptions about the solution.
There are businesses where the solution has the greatest risk because it has a great deal of technical risk or cost.
Even if you’re pursuing something with great technical risk, I would urge you to validate your assumptions about the problem and the market first. The last thing you want to do is spend a ton of time and money researching and validating complex or highly technical tools and processes for something that doesn’t solve a real problem or doesn’t have any market demand.
Some people will urge you to always validate the problem first. I’m torn on this prescriptive advice. If there is no market, then validating the problem (or solution) is a complete waste of time. If you validate that there is a market, you can experiment with different ideas within that market until you hit on something.
There is another variable though. How much do you know about the problem?
If you, yourself, are experiencing the problem and have an intimate knowledge of it, then I would lean towards getting a better understanding of the market first.
On the other hand, if you know a lot about the market already, then I would lean towards getting a better understanding of a particular problem that is worth solving.
If you don’t have a good sense of either the market or the problem you want to solve, you might be pursuing the wrong idea. Again, you need passion for the market you’re going to be working in. If you don’t know the market well, stop pursuing the idea and start researching and learning more about it first.
Validating the market
So, how do you validate the market without a product?
Well, since you have no product, you can’t really validate that your exact product, as you envision it, would fulfill a specific market need. But, you can test whether there is market demand for a particular value proposition.
A value proposition is a description of how you will make the customer’s life better. Constructing a value proposition requires you to have some sense of what the problem and solution are.
How do you present a value proposition to test market demand? You describe the value proposition and make an offer. You can offer information in exchange for an email. You can offer a pre-order in exchange for money. You can offer a future discount or credit in exchange for inviting friends.
You can make these offers using landing pages, online ads, contests, or a good old-fashioned sales pitch.
You really don’t need to have a product to offer somebody something. The entire premise behind crowdfunding, for example, is based on the notion that you are offering somebody something that doesn’t exist.
If that doesn’t convince you, have a chat with any sales person who has worked at any software company, ever. Ask them about how much “vaporware” they’ve sold (i.e. software and features that doesn’t exist yet).
In my last startup, we got hundreds of consumers and dozens of small businesses to sign up for our e-commerce marketplace before we even launched. We signed up consumers by offering store credit (for a store that didn’t yet exist). We got small businesses to list their products by offering them a reduced commission rate (for a store that didn’t yet exist).
Don’t be afraid to offer people things you haven’t built yet. Research can only take you so far, but asking people to take some action will help you understand the market demand.
Validating the problem
Assuming that you’re comfortable (enough) with the market, you’ll want to make sure you’re solving a real problem before spending too much time building a solution.
Time to dust off you interviewing skills. You need to get out of the building and talk to people.
“But, I don’t like talking to people, I just like building cool shit.”
Remember those poor little kittens?
If you really don’t want to talk to people then how can you build empathy for the customers that you’re going to serve for the next several years.
Not to be harsh, but if you’re not willing to go talk to customers face to face, just give up now. You’re doomed to fail. I suggest that you go work for someone else who actually cares about building a viable business and build cool shit for them. (Hmm, I guess that was harsh after all.)
“Well, can’t I just put out a few surveys?”
No. Surveys and focus groups don’t allow you to ask open ended questions and do the type of generative research that you need to do at this stage. Stick with interviews.
“OK, fine, I’ll go talk to people.”
Great, I’m glad you changed your mind!
I’m not going to dive into the mechanics of interviewing in this article. There are several great articles that I’ve listed below. There are even entire books dedicated to this topic.
But, I will give you some high-level advice:
Don’t talk about the solution — At this stage, you’re interviewing customers to understanding the problem. Don’t worry about proposing a solution, or trying to sell anything.
The founders need to do the interviews — Problem interviews cannot be outsourced. Would you really commit years of your life solving a problem that someone else said they validated on your behalf?
You don’t have to have a solution in mind to run interviews — Doing interviews and narrowing in on the problem can help you come up with a specific solution. Start talking to people as soon as possible.
Know if you’re talking to the user or the customer — Users use, customers buy. Sometimes they are the same like someone buying an app for themselves. Sometimes they are different like someone buying an app for their child or an executive buying a SaaS product for their marketing team. Know who you’re talking to.
Don’t ask people their opinions — Answers to opinion questions such as “what they think about X?” or “what would do if Y?” are generally not useful. People aren’t good judges of why the do things. For past behavior, ask people to describe the last 1–2 times they encountered the problem and how they solved it. Don’t even bother asking them what they think they would/will do in the future.
Interview in pairs — Writing and taking notes during the interview can be awkward. Most people will behave differently if you’re trying to record the conversation. I like to have an interviewer that is focused just on the conversation and a scribe who is just taking notes.
Capture the customers exact words and emotions about the problem — The exact language your customers use to describe the problems they face and their feelings about the problems are extremely valuable. It is highly likely that the words they use to describe the problem during these interviews will resonate with other people who face the same problem. When you go to craft your marketing material, you’ll likely want to use their exact words to describe the problem.
Here are a few great articles you should read:
- Customer Interviews: So you’ve decided to take your startup seriously.
- A Script To Kickstart Your Jobs To Be Done Interviews
- 4 Customer Interview Questions You Should Never Ask (and what to ask instead)
- How We Rode 167 Customer Interviews to a Validated Launch
- StartitUp — Problem Interview Script
I’m done with my problem interviews, now what?
The outcome of your problem interviews will be one of the following:
1) You found no problem worth pursuing
You were absolutely wrong about your problem hypothesis, and you didn’t learn about any other compelling problem worth pursuing.
Congratulations! You just saved yourself a lot of time and money by invalidating your problem hypothesis.
That being said, you might have been interviewing the wrong customer segment. You may want to reevaluate whether you should rerun the interviews with different people. Or, you can try to come up with a new problem hypothesis or switch to an entirely different startup idea.
2) Your hypothesis about the problem was invalid, but you discovered another problem worth pursuing
You were wrong about your problem hypothesis, but you learned about another compelling problem.
Congratulations! You have a problem that you can pursue. Remember my spiel about loving the market because the problem might change? Well, things just changed, sooner than you thought. Since you love the market, this shouldn’t bother you too much. Go after the new problem you’ve identified, or switch to an entirely different startup idea.
3) Your hypothesis about the problem was valid
You hit on a very specific problem that seems extremely compelling and it is obvious to you and those you spoke to that a solution needs to be created.
Congratulations! You were right. But don’t let it go to your head, you aren’t even close to having a viable business yet, there is a ton of hard work ahead of you. You still have to validate your assumptions about the solution and the market. Then, if you nail those, you have to build a product, launch it, achieve the highly sought-after product/market fit, and scale the company. You have years of hard work ahead of you.
The next step is to validate the solution, but I’ll save that for another article.
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