Read Time: 3 Minutes
Have you ever had that sudden moment of inspiration where you sit up in your chair, slam your fist into the desk and go, “that would be a great business idea!”?
Perhaps not as dramatic as that, but I’ve had a few of those moments, and more often than not, I was dead wrong. After the initial excitement wore off, I’d soon realise it was either a stupid idea or a better solution already existed. You might have gone through the same thing yourself. The question is, how do you know if you have a good business idea on your hands?
I’m sure you’ve heard that 50% of all startups fail within the first year, or some other severely depressing statistic. Unfortunately, that’s the nature of the business world. To survive, you need a business that provides something that people want, or need. Idea validation is the main step in figuring that out, but I never had any idea how to do it.
I recently had the chance to ask a question about idea validation to Mark Goldenson during an AMA session. Mark is a serial entrepreneur, and the founder of Breakthrough.com. So far, he’s founded four companies and raised a total of $27 million in funding.
The response I got was much better than anything else I had read so far, which is why I decided to share it with you. Mark’s advice is actionable, so if you have any aspirations of starting your own gig, it’s something you could potentially use to validate your idea!
Hi Mark, I’ve had a few ideas for startups, but I don’t know how to validate any of the ideas. I don’t have much capital, but are there any ways to do this without needing a large budget/ at no cost?
I’ve always received the advice that I should talk to potential customers, but where’s the best place to talk to these people? I feel like people don’t really want to be stopped and questioned by a stranger.
“Where to talk with potential customers depends on your target audience. I like Starbucks as a default because it has a broad reach across demographics, income, and locations.
But really you should identify personas (customer types) that your product would serve. Here’s one guide on creating personas.
Once you have a hypothesis on people who might want what you’re building, you can have insights into where to reach them:
- Low-income people who really want more income? Try budget retailers like Walmart and Target.
- Yuppies who might buy a premium accessory? High-end malls and nightclubs.
- Teenage gamers? Game stores and online gaming communities.
- Sports fans? Sports bars and events.
For Breakthrough, I visited clinics and talked with dozens of therapists and clients. It was tricky because people can be skittish about being in therapy but I still got good insights about what people wanted in an online therapy service (insurance coverage, convenience, privacy, detailed info about providers).
Brian Chesky, founding CEO of Airbnb, spent a year early on traveling around the country and staying at Airbns to learn what his users wanted. He said it was invaluable for learning what to build.
Re: talking to a stranger, it’s true that many people don’t want to be bothered but being an effective founder is like being a golden retriever. You have to be positive, relentless, and okay with rejection.
You can also learn charisma to engage with strangers. Don’t imagine the huckster type that schmoozes his way into selling snake oil. Even imagining Steve Jobs intensity is probably wrong for most. Just imagine nice but assertive people you know. People who listen but also make sure they’re heard. If you want to watch examples, I think Google CEO Sundar Pichai, Amazon CEO Jeff Bezos, and former President Barack Obama are decent models.”
If you have any of your own suggestions, or thoughts on this particular strategy, feel free to leave a comment below!