May 3, 2019

Courtland's business validation checklist web app

Chris McCormick @chr15m

Hello indie hackers! Recently @csallen posted his business validation checklist and I thought it was so great & helpful that I turned it into a little web app that you can use to evaluate your own business ideas:


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    I'm not sure the really big bootstrapped successes like Github, Mojave (Minecraft), Epic Games (Fortnite), Automattic (WordPress) or WhatsApp, etc… would have passed this checklist.

    Maybe part of it is a strategy of increasing odds of any win at the expense of black swans, but It's also a very long list!

    I could also have interpreted more strictly than Cortland did, though.

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      Perhaps this is a technicality, but almost none of these companies were bootstrapped. WhatsApp, GitHub, Epic Games, and Automattic all raised hundreds of millions of dollars.

      You mentioned Epic Games, the creators of Fortnite, and Mojave/Notch, who made Minecraft. These are extreme outlier successes driven by luck — forces that weren't foreseen by anyone, not even their creators. I wouldn't recommend that anyone try to replicate them, because your chances of success are almost zero. The creators wouldn't be able to replicate those successes themselves.

      ------ begin long rant on gaming ------

      The gaming industry is full of one-hit wonders, and it generally won't score very highly on my checklist. There is a massive barrier to entry for many popular distribution channels (e.g. Xbox, Playstation), making it almost impossible to release an MVP. And it's flooded with competition. Due to the nature of games, it's difficult for customers to discern how your game will solve their "problems" (boredom, desire for interactive entertainment, etc.) without investing in playing it first. So growth often comes down to word-of-mouth, which you can't drive by simply making a quality product, because doing so is unremarkable, because there are thousands of competitors who are also making quality products.

      You generally need to spend millions on marketing, or already have past successes so you can rely on customer loyalty to franchises (e.g. EA's sports games), or get lucky and catch some wave.

      B2C is brutal, because forces outside of your control affect the appeal of your product. In essence, the "problem" that consumers and gamers are often solving is that they want to connect with each other. That means glomming onto whatever the hot new thing is that everyone else has glommed onto, which is why fads exist. The leaders don't want to be associated with the laggards, so they move on quickly, and the laggards follow. And of course nobody knows what the next fad will be, and none of this is related to the quality of the product. It's a crapshoot.

      In the past when there was less competition, it was easier for a game to stand out on its own merit. For example, Blizzard's RTS games were best-in-class by a wide margin in the 90s. But today it's nearly impossible to stand out, unless your budget is in the billions. Hell, you even see massive studios like Blizzard fast-following whatever the unpredictable hit successes happen to be, because finding it on their own is so difficult.

      ------ end of long rant on gaming ------

      One of the central takeaways of Indie Hackers (I hope) is that we shouldn't try to copy billion-dollar unicorns. They often got very lucky, took advantage of some limited opportunity that will not come again, and/or raised hundreds of millions of dollars. They aren't good role models for fledgling bootstrappers. Your chances of replicating those successes as a bootstrapper are minuscule, even if you do all the "right" things. VCs are okay investing in hundreds of failures and a few successes, but as an indie hacker you don't want those odds.

      It's better to try to be a WP Engine, or a Buffer, or a CoderPad, or an egghead, or a Nomad List, or a Ghost, or a Discourse, etc… something with a much higher chance of success.

      It's also good to be wary of denominator blindness. Sure, we can always point to examples of those who stumbled their way into success, who didn't have a target audience in mind, who didn't know anything about their distribution channels, etc. But what's the denominator? You need to know how many people are stumbling around like that who don't succeed if you want to calculate your % chance of success going that route.

      My guess is that the number of businesses who stumble around and yet succeed is higher than the number who are meticulous about validation and succeed. However the denominator for the former is disproportionately higher, and it actually has a lower % chance of success.

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        WhatsApp, GitHub, Epic Games, and Automattic all raised hundreds of millions of dollars.

        To the best of my knowledge, like WPEngine, they were all bootstrapped far beyond the point that would be considered an indiehacking success.

        • Github was covered pretty well in the "traditional" startup news like HN, Mixergy, SVN and others:

        • Whatsapp got some traction and their iPhone app released pre-angel funding. They later ignored emails from top firms like Sequoia for so long that they actually had partners pounding the pavement trying to find the founders

        • Automattic wasn't even formed until WP had been used to power nearly 100 million sites

        • Epic Games bootstrapped profitably for many years before taking money. They had years, or decades of increasing success before hitting on Fortnite.

        Discourse was an interesting company I wanted to mention but didn't due to Jeff Atwood's considerable wealth when founding it. Nomad List was more of a trend driven "lucky win" than any of the companies above, even Minecraft... and I think Notch would have broken through to at least a moderate win with something else if not that first hit game (ditto for John Carmack, Shigeru Miayamoto, Richard Garriot, Hideo Kojima, Chen Tianqiao, etc).

        The idea that the gaming industry is no longer an open opportunity is really interesting to me. I'm probably not in the age demographic to have the most insight on that anymore, unfortunately. My impression is that new entrants keep finding ways to win by innovating a new category, much like Blizzard did with RTS in the mid 90s. Even Carmack thought he was "too late" and had missed all the opportunities! At least of the many creators I followed on Kongregate, I saw a higher success rate than I've seen in other forums. I've never been on a forum aimed at B2B SaaS, though so perhaps those have even higher hit rates.

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      I think it's about comparing multiple business ideas against the checklist and seeing which ones score the higher to help decide what to work on. There is a better chance of success for business ideas that score highly than for lower scoring ideas.

      Maybe the web app should show a percentage rather than an "out of" number?

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    Very nice! This’ll come in handy for my new experiment:

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    Hah, very good.

    Can you create a printable/pdf version too?

  4. 0

    Awesome work Chris. Great idea and nicely executed.

    Joe from Budibase

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