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How to Get Your Start-Up Idea Validated

Last updated:
3rd Mar, 2017
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How to Get Your Start-Up Idea Validated

“Why do so many founders build things no one wants?”

Paul Graham, Co-founder, Y-Combinator 
It’s surprising to see the number of entrepreneurs that do not consider getting their idea validated before hitting the market. The result is no one buys their offering leading to the failure of yet another start-up among many.
As per one of the studies conducted by CB Insights on start-ups in Silicon Valley, approximately 90% of start-ups fail. Among many reasons evaluated, the top reason was the lack of market need for the prospective product.
More than 1,000 startups also failed in India in the last two years. The prime reason has been the inability of the team to carry out sufficient work to validate the idea. Thus, testing the market’s acceptance of the product, through validating the idea of it before building the product, is critical.
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Even if you feel that you have a very strong idea, you need not jump straight into creating the product or launching the service. The idea may be workable or non-workable in the market as that depends upon numerous internal as well as external factors.
It’s always better to validate your idea before introducing your product or service to your potential customers. This will save you valuable time, effort and money, which is always in scarcity for any aspiring entrepreneur.
Idea validation is a process where you can test out your assumptions relating to your initial business idea with minimal time and cost involvement before investing huge amounts of money in building the final product.
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Here are 7 ways in which you can validate your business idea:

  1. Look for potential competitors

As soon as you have an initial product idea, and if you belong to the Digital Generation, one thing you should ideally do, instinctively, is to take your smartphone out, type Google in the browser and look for any product/service similar to your idea that is available in the market already.
You need to get an answer to the question – “Is there anyone else in the same business?” If the answer is “No,” then re-think your idea as to why there is no one solving the problem that you intend to address.

“Competition validates you. It creates a category. It permits the sale to be this or that, not yes or no.”

– Seth Godin, Co-founder, Yoyodyne & Squidoo
And if the answer is “yes”, then go ahead and think about how you can be better than them.
Finding such differentiation will require you to carry out a comprehensive competitor analysis. There is nothing wrong with entering a market where competition exists. But entering the market with something different and better becomes critical in such a case.
Give consumers a better version of what they are already getting.
In the year 2003, MakeMyTrip studied one of their prime competitors in the online ticket booking domain. They saw that the Indian Railway’s IRCTC was doing fairly well in India that time. IRCTC was the pioneer in getting people comfortable enough to make travel bookings online, which helped MakeMyTrip validate their decision of entering the online ticket-booking market in India.
By 2005, they officially launched MakeMyTrip in India. And today, we all know how convenient it is to book tickets (not just train tickets anymore) through their portal as compared to booking from the IRCTC website.

  1. Look for the initial set of customers

Another aspect to consider when it comes to idea validation is your potential consumers. Therefore, the second question that you need to find an answer to is – “Will anyone be buying what I’m offering?” If you are doubtful, then you should go out in the market and identify your initial set of customers.
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Beware of launching your product or service if you see no customers as takers of your offering.
On top of this, you may have to evaluate your customer’s willingness to pay for your product/service. This helps validate that there are people in the market that face the pain points that have been identified by you, to base your solution on.

“Validating the demand for your product is more important than ANYTHING. Without market validation, you’ll have a product that no one will pay for.”

– Mitchell Harper, Co-founder, Bigcommerce
Before launching their company, the founders of OLA cabs identified that there were many young working professionals in urban areas of India who faced the problem of finding and hailing a cab. That was a vast and growing consumer base for them. Such initial identification helped them validate their app-based offering as there was ample opportunity among such user groups.

  1. Talk to others

Another great way to get your idea validated is to talk to others about it. You can begin with discussing your idea with the people you know. Such sharing of ideas will help you get many different insights, which will help in refining the idea more and more.
The more you share your idea, the more mature it will become.
You may feel uncomfortable sharing your ideas with a complete stranger, which is understandable. But you need to understand the fundamental difference that separates you from others – they don’t share the same passion about your idea.
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Moreover, the execution plan is likely ready in your mind and, in most cases, only you are prepared to take it to completion. Plus, if you feel that your idea is entirely original and nobody else has ever thought of it then you are being naïve. The thing is that others don’t want to or rather can’t take your idea to the market. Thus, you should share your idea as much you can.
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You can also start a discussion relating to your idea on websites like Quora to invite diverse viewpoints. It’s a very useful forum to ignite human interaction around the topic or agenda of your choice. Discuss your idea with others in your network, experts, friends and family and even strangers to get relevant feedback.

 “Get five or six of your smartest friends in a room and ask them to rate your idea.”

– Mark Pincus, CEO, Zynga
Shraddha Sharma of YourStory is of the view that one should share their prospective ideas with as many people as possible during the idea validation phase.
She did a similar thing after coming up with the idea of a web portal for people sharing their start-up stories. She believes that your idea can’t be stolen as it’s not just about the idea. It is also about the execution and your crazy passion. It’s about your internal fuel that will propel you to reach your dreams.
She met a lot of interesting people who gave her great feedback which helped YourStory improve upon its initial idea.

  1. Analyze market potential

You may identify some customers in the market who will be willing to pay for your offering. But this is a very crude level of validation. You would be required to analyze the extent and size of the market that you intend to enter.
An idea catering to a small market is not a business idea at all.
There have been many cases where the market is there, but it’s not big enough to create multiple opportunities for an entrepreneur to sustain the venture in the long term. The market for the offering needs to be sized to know its potential for future revenue generation and growth.
You should focus on the idea that either has a huge market or is able to expand/create the market with an innovative offering.

“Saying that you’re aiming for x% of a $y billion industry is unambitious – great companies change the y, not the x.”

– Benedict Evans, Partner, Andreessen Horowitz
Timesaverz validated their idea primarily through extensive consumer research studies. But another important task they did was sizing the market to know the potential of the opportunity.
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In 2013, there were 20 million online shoppers in India. Online services by itself was a very metro phenomenon at that time. So, Timesaverz researched their target group, which was tech-savvy, urban or city-dwelling couples. Thus, as per their estimate, 12 million online shoppers (around 60% of the total 20 million online shoppers in India) stayed in the metros or the urban cities. Then, they determined the target group of tech-savvy people to be around 25% of the 12 million which is a 3 million audience. Also, through research, they found out that on an average, households spend close to Rs. 20,000 per year to take care of the home chores that fall into the various segments of cleaning, handyman repairs, beauty and laundry etc.
So, it turned out to be an approximately Rs. 60 billion market, which proved the potential of the market and validated them to proceed with the launch of their prototype.

  1. Get your idea validated by users

After you have identified the initial set of potential customers, you should approach them and share your idea to get answers to the following questions –

  • Will the prospective offering solve their problem?
  • Will they prefer buying it once it is introduced in the market, over its competitors?
  • Would they like to have any other, additional features along with the core product/service?
  • Are they be eager to pay for it? And how much?
  • Will they want such an offering to be available in the market immediately or after some time – weeks/months, etc.?

Such an exercise will give you great insight into your product/service idea and will help you judge the utility of the same for prospective consumers.
Users are the primary source for idea validation.
You should create a well-thought-out questionnaire on the basis of which you can conduct user research – either through an online/offline survey or one-to-one interviews. There are various online tools such as Google Forms, SurveyMonkey, Typeform, etc. which can be used to conduct online surveys.
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You cannot ignore interviewing consumers as the data points you get from such interviews can help enormously.

“Wonder what your customer really wants? Ask. Don’t tell.”

Lisa Stone, Co-founder & CEO, BlogHer
MobiKwik wanted to solve for payments and not just for recharge. They wanted to do this across different use cases like payment for utilities, bill payments, peer to peer transfers, payments to merchants on their websites, or on their apps.
They understood their users. Once they realized that users are keeping money in the wallet to pay their monthly recharge bills, they would want to use the same money wherever they go and whenever they are ordering a pizza or buying a movie ticket or paying for a cab, etc.
They should be able to use the same money, and they could get the same seamless payment experience when they are doing a recharge. This user research helped them validate their idea to foray into the mobile e-wallet space from being just an online recharge portal.

  1. Build a mini-MVP

You may share your idea with others and conduct in-depth user research, but a working prototype for that idea is always preferred to test the real market’s response before getting into the market in a big way.
Such a working prototype is called a Minimum Viable Product (MVP). In fact, you can even build a mini version of such an MVP for initial idea validation at a very early stage. For instance, rather than creating a completely basic MVP web portal, you can just have a landing page set up to test in the market.
Validation through a prototype will get you much better results than anything else.
A user will be able to give much better feedback if he/she is shown the actual prototype than just an idea. You can get your idea validated very early with your first product as a mini MVP. The first product will not be a good one. The feedback on it will help you validate what you are building and get you on the right path and improvise.

“If you are not embarrassed by the first version of your product, you’ve launched too late.”

– Reid Hoffman, LinkedIn co-founder
ISayOrganic initially launched a very basic website and did some elementary level of telemarketing to gauge potential consumer’s interest in consuming organic vegetables. They validated their idea, and based on the responses they got from the first thousand odd customers, they launched their portal for selling organic vegetables.

  1. Take pre-orders

At the time of conducting user research, you may encounter a scenario where the prospective consumer shows willingness to buy your offering when it will be available in the market, in the future. But in reality, they may not convert to being your buyers if given an option to purchase right away. This is standard user behaviour.
Such an issue can be resolved by actually pitching for sales of your product/service.
If you are building an online business, you can create a landing page with the product information and provide the option of buying the product/service too. You can accept orders and payments even before the product is launched in the market. This will help you get a fair estimate of the number of pre-orders you can get and evaluate the attraction of your offering to actual paying customers.
Sale of a product that is yet to be completely built is a big validation in itself.
To create a pull for people on your landing page you can use Google AdWords or something similar to create a campaign and run that on various social media platforms like Facebook, Twitter, LinkedIn, etc. An early digital presence and pre-selling efforts help validate your idea.

“Pre-selling is the online version of relationship-building. Pre-selling warms up (your product/service) and builds trust and respect (with your customer).”

– Ken Evoy, President, SiteSell
Dropbox, which is in the business of simplifying the way one creates, shares and collaborates with, computer data; tried pre-selling their services. They got thousands of consumers to sign up on their landing page, even before they created their prime offering.
You may be in a tight spot about whether to leave your well-paying job before taking the entrepreneurial plunge – full-time. But it’s very important to make a calculated and wise decision.
You should leave your job only when you are assured of the idea and have validated it – and indeed the outcome of such validation is positive. The validation approach may not be easy and may even involve some expenses, along with a strict timeline. But trust me, it’s worth spending every penny to save wasting a dollar in the future.
This type of validation may not lead you to 100% success, but it is sure to increase your chances of success. All the best!
Comment below to let us know your thoughts on business idea validation and if you have any ideas we may have missed that could help struggling entrepreneurs – we may even publish it in this post!

If you want to learn more about marketing and entrepreneurship, Liverpool Business School & upGrad offers Master of Business Administration (MBA) Liverpool Business School which helps you to transform your career. The program provides 1-on-1 mentorship from industry leaders, 1-week immersion program at University campus, dual credentials (MBA from LBS & PGPM from IMT), network with peers at offline basecamps and more.


Himanshu Puri

Blog Author
Himanshu is a Content Strategist for the Entrepreneurship Program at UpGrad. He has 7 years of experience in the education sector. He has worked with various universities & B-schools and has also authored a book on Cost Accounting. Himanshu has written 30+ research papers and blogs. He is currently pursuing his PhD in Management while working at UpGrad.
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