How to Validate Your Business Idea

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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!

My question:

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.

Answer:

“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!

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Fascinating Finds: Books, Videos and the Big Bang

Reading Time: 3 Minutes

With my final exams on the horizon, I’ve been excelling at what I do best: Finding ways to procrastinate.

In my impassioned quest to find the best ways to do anything other than work, I’ve made a few interesting discoveries that I’ve been spending a lot of time on, and I’d like to share them with you. Feel free to add to the list in the comments, and I’ll check them out!

YouTube Highlight: Kurzgesagt

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One of the best YouTube channels. Ever.

I’d like to give a shout out to my roommate, Toby, for introducing me to this YouTube channel that’s virtually impossible to pronounce. Within the span of a week, I had watched pretty much every single video they’d ever produced. Kurzgesagt creates videos on scientific concepts and makes them fun and engaging to watch.

I recommend checking out their videos on overpopulation, human origins, “What is Life? Is Death Real?”, “Why the War on Drugs is a Huge Failure”, and – you know what, watch them all. They’re amazing. Amaaaaaazing.

The videos are expertly produced and each one can take anywhere between two hundred and six hundred hours to create!

They are fantastic at weighing both sides of an argument, and they present those arguments in a clear, concise manner.

Many of their videos on the universe and philosophy can induce existential dread, something they often acknowledge in their videos, but don’t let that scare you away. It’s a fantastic resource. Cheers Toby!

Check out this fascinating video they made on the topic of addiction:

 

Sapiens: A Brief History of Humankind by Yuval Noah Harari

This is a really fascinating book about the history of humanity. It’s been out for a while, so I was quite late to the party. I’d describe it as brilliant mix of philosophy and history, and is written in a way that’s engaging. To sum it up in one sentence, Sapiens talks about the rise of humankind and how we became what we are today.

It’s an excellent book. It was a fifteen hour listen on Audible, but I found myself wishing there was more. My full review of Sapiens will be out soon, so stay tuned for that!

Food for Thought: What Existed Before the Big Bang?

Something I’ve been pondering a lot recently (mostly due to the binge-watching of Kurzgesagt videos), is the origin of the universe. More precisely, what happened before the big bang?

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What Happened Before This?  Image Credit: Wikipedia

There’s a very long winded explanation by Stephen Hawking that’s extremely interesting (although hard to understand at times) that you can check out, or you can watch the video below, also by Kurzgesagt (in case you needed more evidence of how much I love them).

If my interpretation of it is correct, the short answer is that time didn’t exist before the Big Bang, and so the concept of before doesn’t have any meaning, because in order for there to be a “before”, time itself would need to exist. Whoa.

I’m still having trouble wrapping my head around this concept myself, so if you can explain this to me, please leave a comment and let me know!

Podcast Highlight: Sir Richard Branson — The Billionaire Maverick of the Virgin Empire

This is a fascinating conversation between Tim Ferriss and British billionaire, Sir Richard Branson.

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The conversation revolves around Branson’s history, how he ended up in prison, his habits and decision-making processes, risk management, and the lessons he’s learned. It’s one of the best podcast episodes I’ve listened to and I highly recommend having a listen. If you enjoy it, his first autobiography, Losing my Virginity is definitely worth picking up as well.

 

Side note, if you’re looking for a decent podcast app, check out CastBox (thank you to my friend Harold for the tip).

If you liked this post, give it a like so I know to make more of these. As usual, drop me a line and share your top recommendations!

See you in the next one!

Image credits: Kurzgesagt, Richard Branson by David Shankbone.

Full disclosure: Some of the links are affiliate links, so if I do make a profit from your purchase, the money goes into supporting this blog!