A Framework for Developing and Evaluating New Technology Concepts

What is a Concept?

I define a concept as a proposed model for a fundamental problem in a large-scale industry that takes a long-term view and accounts for stakeholder dynamics within the market. The model should include clear value proposition(s) tailored towards specific customer segment(s), an outline of a software-driven product, and a path to profitability. It should be well-researched and documented.

The concept should address the following questions:

• How can this plan eventually grow into a profitable, +$1B business?
• What significant impact can this idea have on a legacy industry (ex. manufacturing, healthcare, etc.)?
• How does this concept account for changes in its respective market?
• What are the general principles that are guiding this project?

The process outlined below is not immediately scalable, but it is actionable.

1: Choose a Starting Path

To start building out a concept, initialize with a path. A path is a set of related questions that implies the emergence of problems or conflicts within a market.

Here are some sample paths:

• How can hardware companies efficiently connect to manufacturing/supply chain expertise? How can they better manage their processes and access domain-specific knowledge bases?
• How can institutional real estate investors improve their underwriting processes? What sort of open data paradigms can come into play here?
• How can commercial real estate landlords and asset managers gather better data on prospective tenants? What services and amenities can they offer to tenants to boost ROI?
• How can mental health patients access better care? Are there ways to deliver generic mental health medication in safe and affordable ways?
• In which ways can consumers access higher yield investment products? Can Dropbox’s ‘freemium’ approach improve wealth management for consumers and enterprises alike?
• Can you build a strong brand around health and wellness products tailored for seniors?
• Are there ways tech company product managers can comprehend how product decisions affect revenue? How do they collaborate with revenue and finance teams?
• With an easing regulatory environment, can someone build a de-novo commercial bank that is technology-enabled? What does API-oriented banking infrastructure built on the cloud look like?
• Are recruiting processes for investment banks, buy-side shops, and trading firms too extensive and costly? How large is the freelance recruiter market within this arena?
• Are there specific banking needs that healthcare providers and clinics have? How have their banking solutions integrated into the revenue cycle management ecosystem?
• How can institutional investors gather better data on structured products and credit opportunities? What role does machine learning play?
• What does an equipment leasing company built for the 21st century look like? How can investors access yields in this space?
• What does the AWS of life sciences look like? How can software and hardware automation play a role in expediting experiments and drug discovery?
• What role can distributed manufacturing paradigms play in pre-fabricated home and multifamily construction? Could a web platform empower local and regional developers?
• How can insurance underwriters build better risk profiles? Could a data exchange like Compstak be useful here?
• What are ways to incentivize micro-learning? How can mobile video and micro-payments build a structure around summarizing important books, articles, and academic work?

2: Background Research

What are the current dynamics in the space? Who are the big players? What are the major challenges? What is the existing consensus on opportunity? How do different stakeholders agree or disagree?

• Compile and read a list of industry overviews, business news, and academic literature.
• Organize a basic list of companies (tech and non-tech focused) in the space.
• Read profiles, launch posts, and postmortems on startups and companies working in the space. Why did they start the companies? What did they view as the large opportunity?
• Understand the recent activity of public companies.
• Get a sense for margins and metrics in the arena. Here’s a useful tool: Teddy Citrin’s D2C Landscape.

3: User Research

What are the current pain points within transactions for users and stakeholders right now? What do transactions look like currently? What steps or blockers are users taking for granted?

• If it’s enterprise focused, create a list of 60-80 potential customers and find the right person within the organization to speak with.
• Try to get at least 20 discovery interviews to understand the pain points and challenges stakeholders face. Follow Jason Lemkin’s 20 Interview Rule.
• Synthesize and analyze learnings with an attempt to quantify (ex. X% of people agreed with this and Y% of people didn’t agree).

4: Key Assumptions + Business Model Evaluation

Given a better understanding of the problem(s) at hand, what popular software-driven business models would make sense? Within the business model, what are the key assumptions about important input variables (ex. For a SaaS product, what is the average CAC?)

• With a business model in mind, create an evaluation framework and plug in your assumptions. You can use Arteen Arabshahi’s Marketplace Calculator as a prototype.
• Build a sample 3-5 year P&L and test/tweak your assumptions to see if the margins are theoretically possible.

5: Market Evaluation

Which segments of the market should be prioritized? What are the drivers of demand in each segment? What are the characteristics of each division?

• Create 3-5 customer personas with needs statements, pain points, and potential acquisition channels.
• Take a note of macro drivers, including economic shifts and regulatory policies.
• Prioritize customer groups to develop tailored value propositions, product features, and revenue model.

6: Test and Update

How will new entrants in the space affect the development of the proposed concept? How will incumbents’ activity affect the proposed concept? How will key assumptions change as the market matures?

• Set up a landing page to capture leads.
• Think through and pay for small-scale digital advertising.
• Design mockups and wireframes.
• Write a 8–10 page concept summary and gather feedback on it.
• Create a slide deck.

If you enjoyed this post and would like to discuss further, I welcome outreach at aashaysanghvi[at]gmail.com.