The Ultimate Guide to Validating your Startup Idea for Free
So you think your idea will change the world — how can you be sure?
In our previous guide to building a startup, we highlighted four steps to turn your idea into a startup. After structuring your idea in a fuss-free and coherent manner (a great way to do that is through the Business Model Canvas!), the next thing for you to do is to get out of the building and validate!
Why validate?
According to a 2018 study by CBInsights, the #1 reason why start-ups fail is the lack of a market need; when a product or an idea however novel or ground-breaking, has no sustainable level of demand by the market.
Unfortunately, many budding entrepreneurs jump head-first into building their Minimum Viable Product (MVP) based on their beliefs and assumptions of their idea’s strengths before considering if there is a practical need for their idea. It is important to validate your ideas before even building anything. This is to prevent a wastage of time and resources creating a product or service when there might be simply no market demand for it.
What to look out for when validating
At the crux of validation lies two key questions. These two principles should guide the validation process that you are about to carry out.
#1: Is the product/service able to meet the needs and wants of the market?
Any idea requires a practical purpose for it to exist — what problem will your product be used to address, and by who? It is crucial that your product can value-add to existing solutions in an industry, or is a brand-new approach to tackling problems faced by that industry. You have to be sure that the problem you are looking to solve is in fact a real problem that actually needs a solution.
#2: Is the startup idea technically feasible and financially viable?
It might be unwise to create a product that already has existing and effective solutions to fulfil the market’s needs. Think about food delivery apps — it might be difficult to obtain sufficient demand and product differentiation for a new app in a market that is already saturated.
Once you have confirmed that the problem you are trying to solve is real, the next step will be to validate whether the market is large enough to generate a sustainable (or even growing) demand. Where will your users/customers come from, and more importantly, will it be a financially viable opportunity?
How to carry out validation
Primary Research
Armed with a firm idea on where your future product is going to be grounded in, go out and speak to as many people as possible about your idea. There are no hard and fast rules around the quantity of interviews you should be getting at the initial stage but capturing 25–50 interviews is a good start.
- Use your personal social media to reach out beyond your immediate circle of contacts. Look to mutual friends that you share with your direct connections to obtain bias-free feedback.
- Perform in-person canvassing at relevant places (i.e. interviewing respondents at parking lots if you are trying to develop a parking app)
Seek to understand the customers’ needs, wants and willingness to spend on your product/service and use these insights to gauge the general demand of the market. When getting to know potential customers, seek to uncover several pieces of essential information:
- What do customers pay attention to/don’t care about?
- Would they be interested in using it?
- What does it take for them to be an adopter?
- What are they willing to pay?
- What is their decision making process?
- How did they try to solve the problem and did it work?
If a respondent suggests some modifications or changes to your features or products, do remember to ask them for the rationale behind it, to better understand the user flow and thought processes of your customers. Gather as many insights as possible — keep your interview questions open-ended, objective, and seek to dig deeper into why a potential user/customer feels a certain way.
Secondary Research
Secondary research can be useful in helping you to validate the market and carry out competitor analysis.
Run Google Searches with the keywords associated with your idea, and explore websites and publications like e27 and Tech in Asia that cover startup news, trends, and initiatives by corporates to spur innovation. AngelList has a comprehensive database of startups in any particular field. After identifying your competitors, delve into how these companies operate — be it structurally or financially. Find out what their customers like/dislike about their products, and whether your idea is able to better meet the needs of your target market.
Google Trends, is useful in analysing the popularity of search queries in Google Search across various regions and languages. This is a good starting point to understand the changes in market demand for a product over time.
For example, when comparing interest in the term “AI Chatbot” and “Chatroom”, we can observe from the image above that “Chatroom” has a greater search volume than “AI Chatbot” in recent months. Developers who might be looking to develop any given chatbot system(s) can use these results to further explore the market.
There is a multitude of ways in which you can carry out idea validation. At the very core of validation lies the million-dollar question — “Is your product wanted?” It is important to note that there is a difference between customers “liking” your product, and “using” or “buying” your product. Always aim to delve deep into customers’ intentions, and uncover the true selling point of your product.
Post-Validation: Pivoting and the Feedback Loop
After you have carried out the steps to validate the problem and the market, check whether your hypotheses are confirmed. If so, you can start building your initial prototypes and carry out validation on the product to test its technical feasibility.
Don’t be discouraged if your hypotheses were proven wrong in the initial stages. It could be possible that you have not achieved product-market fit, and a change in direction might just be needed. Use the feedback collected from validation to constantly refine your idea and address any potential obstacles that might arise before execution.
Many startup founders choose to pivot their ideas as well, re-defining the problem and its solution. Flickr and Slack were only launched after two failed attempts to create Game Neverending, an online game that would go on forever. Due to limitations such as insufficient funding and time, the co-founders selected specific features from the failed projects and developed them as standalone products.
The rest, as they say, is history.
Validation as a perpetual “Work in Progress”
The validation process should not only be limited to the initial stages of setting up a business. There should be a feedback loop, where you constantly improve on the product, measure its fit in the market, learn from the feedback that you receive, and repeat the whole cycle iteratively.
“We want to get through that loop as quickly as possible. But it’s not just failing fast, it’s failing well.”
— Eric Ries, The Startup Way
Validation goes a long way in impacting many facets of your final business model, allowing you to grasp a better understanding of your target customers’ needs and wants, expand your potential customer base, and understand the competitor landscape. In the end, the process helps you to improve and eventually create a product or solution that is practical and solves a real problem, and is wanted by the market as well.
Pitchspot is a community driven innovation platform for innovators to discover, share, and build validated ideas using innovation frameworks such as the Business Model Canvas.
Learn more about how to innovate better with us at Pitchspot, and feel free to drop us a line at hello@pitchspot.co!
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