An Entrepreneur’s Guide to Startup Idea Validation

If we think back to our childhoods, we can all point to a time where creativity was in abundance. Everyday was an adventure, a journey, a discovery and our very environment fostered us to think up ideas after ideas.

As we grow nothing really changes for some people, especially creatives and entrepreneurs. Every day, I speak with people who have amazing ideas, they want to be the change that they want to see in the world.

Some ideas are brilliant, solve a real problem, take off and become part of our lives. Other ideas never take and the founder walks away, with a great story, and nothing else to show.

This was the reason, I founded my first startup Squill. Squill focussed on providing quick insights via secondary research methods to entrepreneurs seeking validation around their startup idea.

Squill’s mission was to solve the “Problem Solution Fit”, to really understand if you’re solving a problem people have and importantly, if those people are willing to pay for the proposed solution.

When I think about business ideas, I put them through tests and benchmarks before investing further.

Following influencers on lean principles, Steve Blank & Eric Ries, I like to visualise the different phases they describe within their methods as a pyramid.

I adapted this diagram below from another influencer Sean Ellis.

PROBLEM SOLUTION FIT (‘PSF’)
PSF has a variety of tasks involved to help you get to the next phases of your startup journey, key points are these:

Idea validation —Does this problem have a current solution and if so who is solving it?

Market Discovery — Is there an existing or growing market for this to be viable?

Customer Discovery — Am I solving a real problem people have and are willing to pay for?

IDEA VALIDATION
You’ve had an idea, now what? Google it!

Google certain keywords or phrases “Tinder for dogs” or “Uber for cats”. If nothing comes up, don’t assume it doesn’t exist.

Google is just the beginning of your search. You need to be creative in where you look for information. Analysing failed startups in similar industries will also help you identify useful information.

Exercise:

Write out 5–10 keyword phrases to search. Capture these in a spreadsheet along with the results. You can use this later on in the competitor analysis phase (I write about this phase in an upcoming blog post).

Example:

Tinder for finding a doggie play date (not a bad idea!).

Tools:

Google Search  – do both Australia (.com.au) and (.com).

ProductHunt.com — Existing and active startup database.

AngelList.co — Existing and active startup database.

Google App stores — Android and iOS solutions.

Facebook.com — Looking for community based solutions E.g. Sydney CBD Dog Walking group.

Meetup.com — Looking for community based solutions similar to above.

Autopsy.io — Lessons from failed startups here!

Hint Q — Does a solution currently exist?
Depending on the idea it may not be an app. It could be in the form of a meetup group, a facebook community or even an email signup list. Not every problem needs to be solved via an app or website.

MARKET DISCOVERY
As you delve a little deeper into understanding the landscape of your idea and it’s viability, important questions ensue:

Is there even a market (beyond my friends and family) for this to even exist?
What type of market am I entering? Is it an existing, resegmented, new or a clone market?
This takes us into our next phase…….

Backing it up with cold hard stats
At this stage, I like to paint a picture from widely available secondary information which exists for free, just waiting for you to use it.

Deep down in the layers of ABS data is some pretty useful stuff. However, there are a few other resources I like to use to get a more holistic insight.

Tools:

ABS

Google Scholar

Think with Google

Statista

Startup Muster

and my very own StartFizz.com to find some handy links.

These are just a few of MANY public databases available  (make sure that no matter which search engine you use that the source data is reputable).

The outcome of this is to understand if what you’re about to get yourself into will have longevity or at the least have indicators it’s worth the time and money you’re about to invest.

Are you jumping on a current trend, emerging trend or something not yet discovered by the masses (Startup Level = Elon Musk).

Let’s say for example, I want to build an app which helps university students buy a new car. Some areas you may want to research are:

New car buying trends amongst under 25’s / students
Where are the universities located and what is access to public transport like?
How densely populated are those universities and which university has the highest student attendance?
What are the investment strategies and development plans for public transport?
How far away do university students generally live from their universities?
How much debt do university students have in general?
What are the purchasing and debt trends of millennials?
What are the trends around the automotive industry and are we moving more towards automated transport?
As you can see these questions reflect on many different areas including the target market, car industry, public transport, and debt (geographic, demographic and behavioural).

To conclude this section, there is only so much secondary research you can do before you need to get out there and start gathering primary research. Steve Blank likes to call it “Getting Out Of The Building”.

CUSTOMER DISCOVERY
Once you’re satisfied you have discovered market potential and have some solid research around potential target markets you can start conducting primary research.

There are many ways to gather primary research. I find the most effective is via customer interviews. You can perform this in multiple ways via:

Face to face Q and A or surveys;
Online surveys to relevant communities
There are tools such as Google Consumer Surveys where you can pay a small amount for survey responses. Whatever survey method you use, make sure it is independent, and people aren’t paid for comment.

Make sure your online surveys are targeted to relevant communities which match your initial target persona (E.g. Uni students who drive) and use your survey tools as a lead magnet to capture emails.

You can also try to gain insights from public opinion websites Reddit and Quora. These are free and we all know how much people love sharing their opinions!

8 Tips when performing customer interviews (source thanks to Blog Strategyzer).

Listen with open ears and an open mind and avoid interpreting customer responses too early
Avoid wasting time sharing your opinions, and trying to convince them of your solution
Ask questions to get your customers to share facts and experiences rather than questions which result in opinions.
Ask “why?” frequently
The goal is to learn, not to sell . Don’t ask whether or not somebody would buy your solution or how much they would pay for it
Don’t mention solutions too early
Get permission from your customers to keep their contact information and ask if they’d be willing to let you contact them again in the future
At the end of an interview always ask your customers if they would be willing to make an introduction to people who might find your business useful. Make it easy for them to say yes by offering to write an email or social media intro which can be sent to the contact on your behalf.
Just remember that in the end you are trying to build a business, solve a problem, not create a website or app.

The idea phase is probably one of the most exciting parts of the journey as you want to jump right in and start executing all of your wildest dreams, but it is really important to consider the viability right from the beginning.

About the Author: Kiah Hickson

Kiah is extremely passionate about women in the tech industry, evangelical about widespread access to web development education and brings an end-to-end leadership and execution approach to her projects. Her mission is to lead the charge as a woman in tech, to not only disrupt an industry through bringing a product to life through code, but to disrupt underrepresentation and perceived barriers.