Is your startup idea shit? How to validate it and know for sure
Josephmark’s Growth Strategy Director Charlotte Crivelli and Product Strategist Jared Fossey join forces to delve into how they future-proof ideas and why it’s essential to do so.
Many of us have had an aha moment for an innovative business idea. That day-dreamed glimmer of the next Uber, Airbnb, insert other billion dollar idea that no one in Silicon Valley has thought of yet here.
We might entertain the idea in our minds for months at a time, and fantasise about becoming our own boss, telling our existing boss where to shove it, and glorifying every little detail in our minds without any intention of actually going through with it.
You might be left wondering – how will I know for sure that my idea will work?
Companies like MasterCard, Coca-Cola, General Electric, IBM and MetLife have created internal venture labs to help them innovate and launch their own startups. As Jennifer Alsever puts it so well, “They’re holding innovation contests and using panels of executives to dole out investment dollars to fund internal startup ideas.”
Sure, Coca-Cola have a process and a committee to know when to make the investment but how does an individual know when to make the investment or the leap? What if there was a process to help you validate that idea with 100% certainty?
At Josephmark Ventures we take the leap often. As a venture development group, we think of, create, build, launch and grow businesses that are nurtured in a lab by talented teams of developers, product managers, UI/UX experts, designers, content strategists and growth teams.
Through our years of experience, we’ve created a process to validate an idea before we embark on the rollercoaster ride.
We call it our reconnaissance (AKA recon) process.
“Time spent in reconnaissance is seldom wasted.” – John Marsden
The aim of recon is to decide if we should move forward with an idea. We scout a landscape to identify strategic direction in terms of product, growth, marketing, content and more.
The focus is on swiftness, ensuring we have enough information to make the right bet, faster. Because speed is the new IP.
We run recons to explore self-directed ventures as well as for clients or partners who are looking to innovate. We do recons for individuals to help them determine if they should pursue an idea or startups looking to pivot.
When we are excited about a new idea, like a victor indulging in a few celebratory drinks, the recon acts like our conscience, keeping the project, and our choices, in check. The framework created by the recon is our designated driver for the rest of the night, making sure our project gets home safe.
Here’s a slimmed down version of our recon process at a glance:
1. Research and understand
– What is the existing idea or vision?
– Where has the industry been and where is it going?
– What similar products or solutions exist?
– What unfair advantages or relationships can we leverage?
– Identify potential partners, costs, dependencies and income streams
2. Question the brief
– Is the initial problem or opportunity hypothesis valid?
– What neighbouring problems or opportunities exist?
– Validate and prioritise problems and opportunities
3. Define the customer so we can define the problem/opportunity
– Define the target customer and the size of the market
– Identify other potential customer groups (B2B, other segments, other countries, etc)
– Define how we will know we’ve solved that problem or realised the opportunity (validation criteria)
– Design a draft business model
– List and prioritise all assumptions
4. Map the product
– Sense-making: putting all the pieces above into a cohesive product
– Story-telling: preparing the material so it’s ready to for pitching – back to the client, investors, or to customers
1. Research and understand
In this phase we do as much research as we can to understand the idea and vision, the target audience and the industry and competitor landscape. We interview key stakeholders, do user surveys, buy or acquire research reports, and do our own investigations. We aim to learn where competitors fall short, how they describe themselves, where the industry has gone and, more than that, predict where it is going.
For example, for a divorce administration app we are working on we interviewed family lawyers, influencers and thought leaders in the industry as well as people who had been through a divorce to gather qualitative information. To give the qualitative data context, we collected quantitative data by downloading or buying the most relevant reports we could find on the topic.
Don’t underestimate how long this phase will take. You are trying to get up to speed on an industry that your competitors have most likely spent years in. And, more than that, you are trying to predict where that industry is going and how to get your business there before anyone else does.
The aim of this phase is to understand the industry to better understand the opportunities available to you and realise what it might take to get to product/market fit.
2. Question the brief
AKA, define the product hypothesis. This phase follows on nicely from the research phase, now that we understand what the opportunity is, we get clear on the product hypothesis.
This is essentially the assumption we are either trying to prove or disprove with the recon process.
In many cases, the hypothesis will evolve, as we learn through the project about the context and the landscape it will be entering.
For example, we may begin with the hypothesis that children’s toys that teach 5-year-olds how to write code will be both compelling to parents, fun for kids and commercially successful.
3. Defining the customer and problem
First, the customer domain.
This is a fancy way of saying define who your primary target audience is – and then go beyond that and define the entire ecosystem of customers. For example, if you are creating a children’s tech toy your customers might be the parents who are buying it, the children who are using it but it could also be early learning child centres and teachers.
This helps us to frame our solution in a way that delivers value for the entire ecosystem, rather than just one side of it.
For example, we developed a product strategy for a digital platform for golf players, and in our early investigations we learned that a number of competitors had been creating value for the players of that sport at the detriment of the clubs and associations. By mapping out the entire customer and stakeholder ecosystem, we began to consider what a solution might need to look like if it was going to serve everyone’s needs, rather than target one at the expense of the other.
This led to the vision of a platform that added value for the players in a way that hasn’t been done before, while at the same time collecting this information to support the (largely volunteer-run) clubs and associations to provide them with better marketing and business intelligence insights, based on how people were engaging with the sport.
The design of the platform was informed by the need to create value for everyone, and this realisation was what influenced business model requirements, marketing requirements and many other factors of the product’s design.
Secondly, define the problem.
“By far the most common mistake startups make is to solve customer problems no one has.” – Paul Graham
Once you understand the customer domain intimately you will have a firm grasp of the problem you are trying to solve for them. It should go without saying that the solution you are providing for your customers should address a very real and very valid pain point.
You can validate that it is a real problem through desk research, reading reports, observation or interviews with domain knowledge experts.
A great article to help you do this research is: Is Your Startup Solving A Worthwhile Problem? Seven Questions to Ponder. To summarise, the customer problems must be real, focused (to a segment that needs it), big (a lot of money will be spent on it), difficult (not everyone can solve it), obvious (easy to define), complete (problem 100% solved, not 80%) and worsening (over time the need becomes bigger).
At this stage you will finish validating the idea through sense-making and then work out if you can tell the narrative of your idea in a way that convinces everyone else.
Being able to sound convincing is important because you’ll almost never work on your idea alone.
If you can’t convince anyone else, then perhaps you’ve got your blinkers on. If you can’t get anyone else on board with your idea, it won’t work. Who do you need on board? Investors, co-founders, a team full of talent who you’re prepared to part with stock for, and who are prepared to live and breathe your company as passionately as you are. If you don’t get these people, you will have a hard time filling the skills gap, or getting the capital to bring any of it to life.
We use storytelling because, as Jane Goodall says, “to create change is by telling stories, meeting with people, and then trying to find a way to reach the heart.”
To make sense of the opportunity, product, platform or idea. In other words, it’s the ability to make sense of an ambiguous situation.
“I’m not asking because I want to know the answer, I’m asking because I want to know the right question.” –
At JM we use many sense-making tools, like persona role-playing, business model conceptualising, value proposition design, among others to identify if the concept has enough promise to become a venture. The key to success here is involving the right team, a mix of both breadth and depth of experience, and especially in client and partner engagements, working in collaborative workshop sessions with clients – who have far deeper knowledge about the subject matter.
Some of the areas you should review in this subject matter deep dive could include:
Technical audit. At times, the technology we need to execute on an idea does not exist and might not be possible to create. We investigate available technology that seems like it will be integral to the concept, to see if we are talking about something that’s realistic, or if we’re playing in the science fiction space.
Product visioning and strategy. Think big – think about what will change the world, for good. Create a north star vision that illustrates at a super high-level what the ambition of the project might be, and what difference it will make in the world. The strategy is the way we plan to reach that north star. Check out Tim Brown’s talk urging designers to think big.
Business modelling. Using frameworks like the business model canvas to conceptualise what the business model of the venture might look like.
Product architecture. What are the building blocks of the product? And by product we mean the digital platform – the website or app. How do those building blocks interact with one another, and how does a user interact with them?
Riskiest Assumption Test (RAT). What is the most risky assumption in your idea that, if disproven, could completely invalidate the whole venture? How can you test this quickly on its own?
Storytelling in this context means to build the story to justify the decision to proceed or abandon the idea.
“Storytelling is the difference between solving a problem and creating a cause.” – Jeanne Liedtka
The second phase is to tell the story of your business in a compelling and convincing manner. This is more than just providing bullet points of reasons to either sprint or scrap the idea, rather it is about telling a story and providing enough context to make the decision a no-brainer.
User stories are a staple activity of product designers. It’s an activity where you create short, simple descriptions of a feature told from the perspective of a user or customer of the system.
This is a really easy activity to force you to think from the customer’s point of view. What is the user trying to achieve? What do they want? What will make them happy?
It would be beneficial to have a clear project plan to enable the next steps to be put into action, including an understanding of the user stories to communicate the design of the product itself, as well as any further requirements for pitch decks, FOMO videos or communication of the broader venture.
At this stage we present our findings to our investment board who decide whether we should proceed. You could come up with your own committee of friends whose business acumen you respect. Or, even better, some friends that you feel represent the target user.
If your committee can’t find an argument to proceed, and seem genuinely excited, then you may have just validated that whimsical idea you had. At this point, feel free to go forth and sprint, and tell aforementioned boss where to shove it.
I’m sure there are a few billion dollar companies that would have failed the recon test. It’s not foolproof. But it is the culmination of about 10+ years of experience launching ventures from a myriad of technical and creative perspectives. And, as always, there’s an element of gut instinct layered into the process.
Hopefully the recon process helps to support your intuition that this is a brilliant idea and make you feel a bit better about telling your boss what you think of them, quitting your day job and starting one helluva rollercoaster ride. Good luck!
Don’t want to validate your own idea? Have us do it for you. Email email@example.com to set up a chat.