5 killer questions to validate startup
by paulftw
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1. Does your idea solve a problem that people actually have? Does your target consumer want to use your solution? You can begin to answer these questions by getting out in the world and talking to people who you think might be your target consumer. One-on-one interviews, focus groups or even market research can be easy, cheap ways to get data. Sit in a coffee shop and bribe would-be customers with a cup of coffee in exchange for 10 minutes of their time. Try an inexpensive market research product like Lab42. Whatever you do, don’t just run it by your mom and call it a day.
2. Is it possible for you to actually build the solution? Sure, a time machine would solve a big problem and consumers would definitely use it, but can you build it? The time travel example is perhaps a little dramatic, but being able to actually create the product is a prerequisite to being able to build a business. Sometimes you can’t answer this question until you start development and that can get expensive (Phil Needleman could probably relate) so, in that case, you’ll want to try to answer some of the other questions before you begin. Maybe you can kill it for another reason and you’ll never need to try to answer this question.
3. Is the opportunity big enough to justify the necessary investment? The variables here all depend on what you’re trying to build. If you’ll need to raise millions in venture capital funding to simply determine that it’s possible to build the product, you’ll have to contemplate a pretty big payout in exchange for the risk. Meanwhile, if your idea is a lemonade stand, adjust accordingly.
4. Is there a plausible revenue model and path to profitability? Usually the answer here is affirmative if you’ve solved a significant problem that people actually have, but there are a number of complicating factors. For example, when your end user is different from the person paying the bill, the revenue model gets tricky. This arises notably in healthcare and enterprise...