8 painfully-simple-yet-practical questions to scrutinise your new startup idea
Hello my name is Phillip, and I have a really bizarre job: I come up with startup ideas.
“Oh great, the ideas guy” I hear you cry — but also part of my job is to figure out if those ideas are any good. There’s many different ways me and my team go about doing just that, and in this series I’ll share a few of them.
In this first post I’ll outline some simple questions you can ask yourself that act as quick filter when you’re considering new ideas. Some of these may be painfully obvious, but seeing as 90% of startups fail because they’re not solving a real problem, they can’t be that obvious.
Maybe you’re thinking of starting a new business yourself, or maybe me and you have the same job (hey!) — whatever it is, if product and startup creation is your thing read on.
1. Do I know anyone else who has the same problem? Are they consciously aware of it?
If your idea is worth its weight in gold (from your future exit) then chances are someone else out there — hopefully more than one — is also experiencing the same problem as you. One of life’s best kept secrets is talking to people, and you can unearth a staggering amount of information by engaging in this simple act.
Hey Jeff, doesn’t it suck when you have to do X every-time Y happens?
Keep your questions centred on the problem being experienced, and not what your idea is (the most important thing is validating your pain point, rather than your hypothesis of how to solve it — which is almost always wrong at the start)
How many people do you need to ask to be certain? Well that’s largely dependent on who you think is experiencing your problem. If it’s a problem to do with air traffic controllers, then that’s fairly narrow, so you can probably get away with asking fewer people than if you were thinking of building something a little more mass market.
2. Are people “hacking” around the problem today?
If the problem is as big as you think it is, people will almost certainly be finding ways around it today. People were using taxis before Uber because the problem of “I need to get from A to B” was a genuine one — Uber built upon that. Maybe people have stringed together a workflow using a series of other products. Maybe they’ve created their own low-fi solutions using something like a spreadsheet. But one thing you can always be certain of if it’s a genuine problem, people will be finding ways to solve it already.
3. Is anyone else trying to solve it? What’s wrong with what they’re doing?
It seems counter intuitive, but if another business is tackling the same problem as you, that’s probably a good sign. Just because someone else is doing it doesn’t mean they are doing it well — what it does mean is that someone else believes in that problem enough to have also created something to solve it. The important thing is to understand why they haven’t solved it, or where they’re falling short on solving it. Perhaps your solution is novel enough to differentiate you from your competitors. Which leads nicely onto…
4. Why would I be the right person to solve it?
As it says on the tin: what gives you an edge over everyone else. At Founders Factory we call this our “Unfair Advantage”, and it’s usually something that our investors provide to give us a head start: be that unique market insights, or an existing customer base. When we were coming up with brb.travel we were able to leverage insights from easyJet that would have been difficult to get on our own.
For you it might be deep domain expertise in a particular market or industry that you know inside out. It may be some proprietary data set that you have access to. But think why you’re the right person to do this, and what will give you a leg-up over everyone else.
5. Could I build this myself?
This question always forces me to think about what’s involved in actually delivering upon an idea. I’m fortunate in that I’m both a designer and a developer so it’s relatively easy for me to ‘eyeball’ something, but even if you’re not, think about what off-the-shelf tools you could use to string together an MVP. And if you’re able to do it yourself, it’s obviously less risky to just go ahead and try it without worrying about expensive developers.
6. How am I going to acquire customers?
Thinking about this at the start will not only make you think about where your potential customers are (and how you can speak to more of them), but also get you to consider things you could build into the product itself. For example a referral system, or some type of sharable user content. Most people go straight to thinking about paid media, but there’s so many other alternatives such as targeting Facebook groups or online forums that don’t cost a thing.
7. Is my idea heavily dependent on another company outside my control?
Being dependent on another business is — well — risky business. Do you need access to 3rd party data from an API you don’t control? Are you building on-top of Facebook? If those businesses decide they don’t like you anymore, what would the consequences of that be? Think ahead and try to mitigate wherever possible: are there backup suppliers you could use? Could you get the data yourself?
8. Is there any growth left?
Finally, and perhaps the hardest question to answer: is there any significant growth left in this market? Unless you have a crystal ball you’re just ‘guestimating’ like the rest of us, but it’s something you should at least be thinking about. You can probably tell if you’re at the tail-end of a trend: are there signals to suggest that it’s going to keep on going, or is it looking like a bubble about to burst?
Something I probably wouldn’t ask myself just yet: What’s the business model?
If you can comfortably answer all the above, you can nearly always find a way to monetise it. Sure it’s a good thing to think about, but it’s hard — next to impossible — to accurately plan upfront. Notice how all the questions are centred around the problem or customer need, not your solution. You have so much to figure out about your product still; the exact features, how things will work, what that’s worth to customers. And it’ll almost certainly (and should) change as you learn more.
Do you agree?
So those are 8 questions I ask myself when thinking about new ideas. What do you think? Anything I’ve missed, or something you disagree with? Come at me on Twitter (@phillipcaudell)
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Founders Factory is a startup that builds startups. We build 13 new startups from scratch each year, and accelerate 35 more. We’re backed by the likes of L’Oreal, easyJet, The Guardian, Aviva and M&S who tasked us with uncovering and creating the next big thing through our Incubator and Accelerator programme.