A startup idea is like a seed that germinates in your head. You start with the beginning with the seed of an idea and see if it germinates and ignites the imagination. Where will that idea take you? Will you change the world? Solve a problem? Make something that matters? Build an empire? Make millions? Be famous? Which end is it to be?
You can imagine all of the above from the idea and you get excited about it. You are euphoric, you wallow in your idea. Some people do that for hours, for days, some even do that for years as a form of intellectual masturbation. We develop an emotional connection with the startup idea and tend to get carried away with it. But is that startup idea really worth your while?
I don’t know about you but I have had dozens of startup ideas and a few on my shortlist. I’ve trained myself to be ruthlessly selective when it comes to entertaining startup ideas. Here is a vetting process for startup ideas that I use that should help you pick a winner.
Whether you want to change the world, solve a problem, make millions or all of the above, the only sure way of getting there is by creating something that people want. Note the added emphasis for people and want, preferably millions of people! The cool thing about starting a startup in this day and age is that you have the means of production literally at your fingertips —your trusty laptop with an internet connection, duh!
• Are you passionate about your idea?
• Do you believe in your idea wholeheartedly?
• Do you have personal experience/insight/expertise about the problem you are solving?
• Are you excited about it?
You need to have a strong emotional connection to your startup idea to fuel the enormous drive it takes to build a startup. Or else you will not have the stamina to go far and you will stumble at the first set back. Choosing to work with an idea that you are passionate and excited about, that you wholeheartedly believe in and have some personal experience and insight about will give you a much needed edge right off the bat.
If your answer to all of the above questions is Yes, then proceed to the next vetting step. If not, scout for other ideas.
Don’t assume and wish that they do. You don’t know until you find out. You don’t want to spend months or years, not to mention $$$ building something only to find that people don’t want it. This is the sad story of many a startup rookie.
There’s a whole lot you can do to find out if people want your product before you invest precious time, money and energy to build it. This is called market validation in startup speak. For example, you could research Google Adword keyword search popularity, talk to your target audience, test your idea with Google ads or Facebook ads for a month, do a survey with AYTM (Ask Your Target Market), research similar existing products and competitors, build a mockup and a landing page to bait for bites or just get one, test with a crowdfunding campaign.
By the way, it makes more sense to get your market validation before you build your product, not after as many people do.
If your answer is Yes after having done your market validation homework, proceed to the next test. Else, start over with the next idea.
You need to figure out a bomb-proof strategy to get your product to a large number of people before you even start to build it. At least that would be the smart way to go about it. This is called distribution or go-to-market strategy in startup speak. Can you partner with someone who already has your target audience?
OK, so putting your app in iTunes will get your product to millions. That’s one great distribution channel but it won’t cut it. There are over a million apps in iTunes and GooglePlay and yours can easily be lost – you need to have more tricks up your sleeve to get attention and generate interest.
Poor distribution has been said to be the No.1 cause of startup failure. You really need to have cracked this tough nut before settling on an idea.
Really go to town on this one. I mean don’t just have a vague notion of a few possible distribution channels, come up with a bomb-proof distribution strategy, preferably deploying multiple distribution channels. You will be glad that you did one day and you’d want to thank me for instilling the bomb-proof concept in you! And validate your strategy with real world data and tests as much as you can.
Implicit in the Distribution test is that there are millions of people out there (aka large enough market) for your product. If not, it may not be worth your while, unless you are B2B, or building something with a 5-6 figure price tag (size of market is generally inversely proportional to your price tag). You’d still need to get your distribution figured out though.
If your answers to all of the above is Yes, you still need to crack this one. That’s the bottom line. You need to figure out how your startup is going to make money and how much you could make. More importantly, that you can make more money than it costs you to keep the business running and acquire new customers. You need to come up with a range of scenarios, playing with the variables, crunch some numbers and see what you get. This is called financial modeling. Understand that “modeling” is not the same as projections or forecasts. A lot of people don’t get that. There is no way you can come up with meaningful and accurate projections with so many unknowns.
The whole point about modeling is that you can plug in a bunch of different numbers for “what-if” scenarios (the variables) to see the range of outcomes you would get. Like, what if we provide the service for free? Or charge $5 a month? Or grow at 5% a month? Or have a 50% churn (drop out) rate? That’s the whole point of modeling. You’d do your financial modelling to get an idea of what you could expect under different scenarios, choose the scenario you can work with and devise your strategies to help you get there.
So if you think you can make money and lots of it after figuring out how and doing some honest-to-self financial modeling on a spreadsheet, then there’s just one last test to take care of now.
This one is often overlooked because it’s so easy to underestimate what it takes when you are carried away with a good idea. If you throw enough time, energy and money at something, it usually gets done. This is another honest-to-self question you need to answer. Do you have something that gives you an advantage in the build and development process? Something like expertise, experience and insight that is relevant to the project so you don’t have to hire people for everything, assuming that you will be bootstrapping to start off with. It’s important that you have a significant insider input in the development process, and preferably the time and the skills to do most of the legwork and not to just contract out your development. The point about your hands-on involvement is not just to save money, you could be a trustafarian for all I know. The No.1 reason why you need to be significantly involved with your startup project every step of the way is because nobody will care about your baby as much as you do. Someone has to really care about your startup baby for it to be going anywhere, and that person has to be you.
And do you have the time and money to see the project to fruition without having to ask/beg other people for money?
This is called ease of implementation. Your idea may be brilliant and checks all boxes up to this point but could be a pain and a huge challenge to implement. If that’s the case, it would be wise to pick something that is more manageable to implement, especially so if this is going to be your first startup project. Don’t bite off more than you can chew!
If you can’t bear to part with your brilliant-but-complex-to-execute idea, try to phase your project into standalone, self-sufficient and manageable chunks and implement one phase at a time.
I would score the idea on these 5 vetting criteria on a scale of 1 to 5, 5 being a Yes and 1 a No. “Maybe”, “depends” or “not sure” would be anywhere from 2 to 4. If you are entertaining more than one idea, score them with this vetting criteria and hopefully it will give you more clarity as to which one is more worthwhile.
Oh, “Begin with the end in mind…”, if you haven’t got it by now, means that building your product is among the last things you do!
So instead of “If you build it, they will come”, it should really be “Make them come first, then go build it.”