Here’s the way a lot of startups work:
- Come up with an idea that sounds awesome
- Get really excited about how everyone will want to use it
- Ask all your friends and family if they think is a good idea, to which they will of course say it is a great idea
- Spend 6 months and $50k+ building the product
- Start selling it
Then one of two things happen
- It turns out to be an awesome idea and people really want it, or
- No one actually wants it and you make no money
Of course there are some in betweens. Maybe it didn’t cost 50k (or maybe it cost more!) or maybe you made a little bit of your money back from a limited audience.
Whatever the reason, a huge amount of startups never get off the ground. The exact percentage varies by industry, what source you read and what you classify as failure. Still, the fact remains that almost all of them fail.
That’s a lot of dreams and aspirations that have been squashed.
Product Idea Validation
The big mindshift change that is important from this is that you need to know that people really are interested in your stuff BEFORE you waste a ton of money creating a product, buying business cards, registering a business name and other silly stuff.
For the ones that showed a reasonable conversion rate, I added an email follow up saying thanks for signing up, and a link to a Google Forms survey. For example, for a video related product the survey asked a couple of things about how they used video in their sales, if they would be interested in a product that did what we were proposing, and if they would be prepared to upfront 3 months of payment for a 10% discount for life, once the product launched.
Feedback was OK but I still wasn’t convinced enough to hire a developer.
Enter Idea Extraction
Then I discovered the Foundation and Dane Maxwell.
While I didn’t end up joining the Foundation, there was a lot of value in Mixergy interviews of Dane Maxwell and former students, Foundation podcasts and blog posts from former students (I have a big list of resources on this if you want it). In the end, I thought I’d built up enough info to work the concept of “Idea Extraction” by myself.
At the most basic level this means contacting real businesses and finding something that they do that sucks. Something people in the business HATES doing, something that takes up stupid amounts of time & resources, or something that needlessly costs them money.
After that, the idea is to confirm the problem exists in a few businesses, mockup the app, get some businesses to front up the cost of the first 3 months (at a discount) then find a developer to build a minimum viable product (MVP). After that begins the growth.
What happens now
Right here you’re going to be able to read the entire process of finding my next business. I have no doubt I’ll get there eventually. Maybe (definitely) I’ll screw up a few times, have some crappy ideas and methods but in the end we’ll have something.
At first, the primary focus will be networking – both leveraging my existing mates and contacts, and making new ones.
This isn’t entirely in line with the Foundation approach of picking a market then using cold emails & calls, but is something I think will be massively effective. That said, I’ll also be cold contacting real businesses, which is going to suck.
Time to kick some ass.