How good is your idea?
Both YCombinator and NFX recently wrote about how to evaluate new ideas: they both make the point that great ideas are the base for a great business, so how do you know whether your idea is worth quitting your job for?
NFX “believe the biggest waste in [their] startup/VC ecosystem is great people working on mediocre ideas”. And I love their follow up comment: “It’s just as hard to build a mediocre company as a transformative one. Both will take 100% of your time. So you might as well work on a bigger idea”.
Unfortunately, they only offer frameworks to come up with new ideas — great if you want alternatives, but not helping if you want to evaluate your existing solution.
As for YC, they give a list of criteria by which VCs tend to judge ideas, or to be more precise, judge the problem the idea is trying to solve: is the problem popular (do lots of people have that problem), is it urgent, is it growing, it is expensive, is it mandatory, and is it frequent. They reckon the more boxes ticked, the better the problem to work on. In other words, the idea should start with the problem, not the solution.
They go on to explain you need to have an “unfair advantage” explaining why you can solve that problem better: is it thanks to unique founders expertise, just grabbing a share of a fast-growing market, a product that is much better / cheaper / faster, or a potential monopoly with strong barriers to entry preventing competition from eating your lunch.
Those are all valid point, but in my opinion they don’t answer the original question, as they do not touch the “solution” itself. YC calls the solution an “experiment”, which implies you just need to try… So what do you do to improve the chances your “experiment” will work and validate your solution before spending time on an MVP (and iterating towards product/market fit).
Well, you could do… nothing indeed, and just get started on your product and solution: it might be the best option if it’s fast, easy and cheap to build a prototype or an MVP. But if we assume it could take months rather than weeks or days, then you’d want to know the direction is the right one before stepping on. You need a map, which shows you the different paths, ie alternatives you could work on, and prioritise a bit like Google map shows the fastest route..
Ideally, in the consumer space, you’d do a “concept test” online quant research to understand whether people like the idea, what they like / dislike about it and whether they’d pay for it. Better, you can test different solutions, to see which one resonates best, with whom, and why. You could even compare to existing or competing solutions, to make sure yours is 10x better than the alternative. It would cost up to $10k and the results are with you in a couple of weeks. There are plenty of research agencies who can manage that for you; just google them. Each concept (idea) is just a single slide with a picture, an explanation of why it solves a problem better and a price point. If you’re worried a slide is not enough because your solution is either hard to explain or needs to be used, then you could use a short video (30") instead. This said, if you can’t explain you idea on a single slide, you might have a good insight there!
In the B2B space, you can also do the same type of research, but make sure you have enough respondents covering all types of decision makers and stakeholders.
We know your original idea is likely to evolve and your business model is going to pivot before you eventually find your sweet spot and product-market fit, you might as well make it without the trouble and expense of changing the product first.
Putting it all together gives you a more comprehensive framework:
put your existing idea in context using the YC criteria regarding problems and unfair advantages (you’ll need that in your pitch deck, and that’s an integral part of your business model).
get more ideas using the NFX frameworks (there are 15 of them, so I won’t include them — just go to https://bit.ly/2Zl6uNu)
and then do compare them by doing an online concept test which will be the best evaluation criteria of all: quantified feedback from your target market.
Now you’re armed to work on your MVP, and the path to product-market fit should be that little be smoother and faster. Importantly, you’ll also have some good data about your concept to include in your pitch deck, reassuring potential investors that there is demand and if you build it, they really will come and get it!