There is a rule to starting a startup that most entrepreneurs instinctively get; don’t splurge on the business until you are sure it will at least solve a problem. It’s why expert CEOs, industry pundits and startup mentors (like Fred Wilson) get asked a lot: is this a good startup idea?
In one of his tweetstorms earlier in 2015, Fred Wilson said about this question; “It doesn’t matter if I think it [the idea] is good. It matters if they think it’s good”.
This is true. What matters according to Fred, is that the founder “believes in [herself] and [her] idea or nobody else will.”
Aside this, the fact that these industry pundits have years of experience doesn’t translate into an understanding of your business or its viability. In many cases, they don’t know for sure and there have been stories of investors (usually pundits) who passed on an investment opportunity because they did not identify the viability of a business.
AirBnB co-founder, Brian Chesky, told an interesting story of the rejection letters from investors the startup pitched to in its early stages.
Not a lot of VCs thought AirBnb would work. Grabbing a seat up in the Unicorn club was definitely not in the picture. It’s often been said that an idea that everyone immediately gets is probably not a very good one. An idea that has the potential of being great, will take a while for people to wrap their heads around (before nodding vigorously in apprehension).
With pundits not absolutely sure what works, where does this leave a founder who really wants to know the viability of a business?
It’s never wise to jump off a cliff without at least considering the distance from the cliff’s edge to the body of water. This doesn’t tell if the water is shallow, but it at least gives an idea of how long one will be in the air.
A market research won’t lie if done right, and it will help you answer most questions regarding the viability of your idea; is the problem real? How much are people willing to pay for it? Who is your model customer? What are present alternatives? One fear is that the idea can be stolen in this process, but I personally think that, while ideas are a dime dozen and someone else has probably had the same idea as you, more often than not, people are too lazy to steal your idea. But it’s important to be careful still. You don’t want to give away your core execution strategies.
Asking these questions, and more, will help you know if your idea is worth pursuing and even more, get facts around your startup; market size and value of the market.
Another advantage to this is that it will help you figure out how many people are willing to pay for the product. A startup is only as valuable as there are people willing to pay for it, so it’s certainly a good idea speaking to customers right at the beginning, rather than investors who may not understand the full scope of the offering.
One way to conduct these surveys is via interviews or online survey forms. Check out a sample survey and a survey strategy here. Whatever the case on the survey strategy, however, know that you will be stepping away from the PC and getting on the road on this one.
As Steve Blank said, “There are no facts inside the building, get the heck outside.”
Photo Credit: Lex”i”con via Compfight cc