Setting yourself up for success
In this post we share what we consider to be the science behind early-stage idea development.
Not sure about you, but at school I liked science class.
But I hated english.
Science had a far greater degree of exactness to it. You go through a process and figure something out, with a high degree of certainty.
When I was learning about the concept of entrepreneurship and the early stages of starting a business, I found that most approaches were either too wishy washy, or extremely rigid. In our opinion, it's important to find a balance. You need the space to explore the meaning of an idea and where the opportunities lie, but you also need methodologies or practices to create certainty and make decisions. So we teach both.....well actually all three; the science, the art and the practice.
In this article we share what we consider to be science behind early stage idea development, which is a process called market validation. We'll take you through understanding the important variables, identifying assumptions and the 3 important steps for getting started on validating your idea.
What is Market Validation?
What it does:
- Marketing validation is a process to turn an idea into something that people actually want, and will pay for.
What it is:
- Marketing validation is the process and behaviour of collecting information to test assumptions about the variables that will drive the success of your business, before you invest significant resources into building the product.
Wait - testing the assumptions about *what*?
A variable is anything in your business that you have the ability to change. And there’s more than many business owners would like to think.
Here are some quick examples of the key variables:
- Your co-founder (if you have one)
- One type of customer (persona)
- One problem you’re solving
- One solution you provide (product)
- One product feature
- One input into your product
- An employee or contractor (if you need any)
- Your company vision
- Your company mission
- One of your companies values
- There are a whole lot of variables that make up a business.
And a successful business is one that has a combination of variables that work together to produce the final result -- a sustainable business.
For most budding entrepreneurs, the thought of these variables is daunting and often paralysing -- there is so much to think about that moving forwards becomes hard.
But the secret to moving forward is only concerning yourself with the variables that matter right now. There’s no point thinking about all the employees you’ll need, what your company culture will be, how much money you need to raise, when it’s just you in your blue jeans with barely any cash. Don't waste time and energy worrying about your future problems now, only concern yourself with the things that you need to know to gauge whether your idea is valuable. You can work the other things out when the time comes (and things will change A LOT, so any time thinking about later variables is time wasted).
So for now, here are the key variables you need to focus on:
- The problem you’re solving (it needs to be a real problem that people will pay to have solved)
- Who you’re solving it for (your early customers -- the people who will pay for the first version of whatever you create)
- What your early customers care about in a solution (the bare basics, so you know how you can make something that people will pay for with minimal resources)
- Why you care (because you need to care to commit the next 5yrs of your life working towards this thing)
If you cast your mind back to school science, you’ll probably remember the concept of a hypothesis.
A hypothesis is a “proposed explanation made, on the basis of limited evidence, which acts as a starting point for further investigation."
A hypothesis is also the starting point for any experiment.
Similar to this, the thoughts you have about your idea are also mostly assumptions. They’re based on your experiences and views. So your assumptions are really the starting point for further investigation.
So what is the “further investigation”? Figure out the actual truths behind your idea, which variables will enable you to turn your idea into a business that is viable.
The next half of this blog will focus on how to approach the “further investigation” that we call market validation.
3 Steps to Market Validation
Step 1: Identify the problem you’re solving:
People invent things to solve problems. The wheel was invented to solve the problem of moving goods. 5,500 years later, Airbnb was invented to help solve the problem of an accommodation shortage during a design conference in San Francisco when the co-founders couldn’t pay their rent.
People find solutions to their problems in products or services. And the bigger the problem, the easier it is to get someone to buy the thing that solves their problem.
So, before you start building a product, it’s important to have a good understanding of the problem you’re solving. Figure out how to solve a problem, and it’s easy for the product to define itself.
Take a minute to reaffirm the question: what problem do you think you’re solving?
Note: this is an assumption, or hypothesis.
Step 2: Identify your early adopters (customers):
When I ask most startups what kind of customers they’re targeting, they often give a wide field, for example: women aged 25.
They assume everyone in that audience has the same problem. Sure, maybe plenty of them have the problem, but do they all behave in the same way? Do they all care about the same things; or experience the problem because of the exact same reasons? Unlikely.
In the early stage it’s important to define and focus the customer personas that have the problem the most and so would most likely use your product early on, so you can focus on this group. This helps you to refine the number of variables in your business (because the more different types of people you target, the more features, benefits, problems, you have to solve)
These types of potential customers, are called your early adopters. They are the subset of customers who have the problem you identified in step 1, but are also most likely to take an active interest in your startup from an early phase.
Who do you think has the problem that you’re solving the most, and will be most willing to pay for a solution?
Note: this is an assumption, or hypothesis.
Step 3: Talk to your early adopters:
Identifying your early adopters is one thing, but understanding them is another. Most people spend a lot of time THINKING about their potential customers, hypothesising about their motives and beliefs.
But not enough people actually take the action and do the work that is required to validate the actual reality.
Which is unfortunate, because it’s fundamentally an easy and effective process: Talk to them!
The relationships you have with your first customers will be fundamental to your ability to build a great product. If there’s one single thing you can do to quickly validate your idea, giving you confidence and assurance you need to take it out into the world, it’s this:
Get to know your potential customers.
So, now you know what you should be doing to take the next steps towards turning your hypothesis into a set of fundamental variables, or truths.
Next step is learning how to do market validation.
Take a look at our full guide on Market Validation.
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We’re here to help kiwi startups get off the ground. We wanna help you turn your startup idea into a reality.