Ideas and Validation September 29, 2020

Step by step process to find business ideas.

Franzou @Franzou

Hey there!

I started the entrepreneurship game a few years ago with my business partner @vladwulf. My main fear was to not find a good business idea at the beginning of that journey.

I say "good" because we all thought that our first business idea would be the one that would make us successful. And it's not.

Actually, it's not that much the business idea that matters. But the execution.
And we had a lot of ideas [spoiler alert: shitty for most of them].

Our process was:

  • Have an idea of a cool SaaS;
  • Make a [very] few research about the problem we’re trying to solve
  • Avoid making research on your competitors [helps to think that you're the first one that taught about the idea]
  • Convince yourself that your cool idea answers that problem [even if it does not]
  • Don't talk to anyone about your idea. Never. They could steal it.
  • Spend hours on the name of your "venture", and its logo.
  • Believe that your product will sell itself.
  • Spend hundreds of hours of work on development [especially on minors details]
  • Give up after hundreds of hours of work because the idea is finally not "so great"
  • Go back to step 1

But I was supposed to know that.

We all read Lean Startup, Zero to One, and other "top 10 books to read to be an entrepreneur". However, it is hard to extract a clear process from business books. The value is always distilled over 300 pages. As such, it is extremely time-consuming.

I've done a checklist [500 checks] (https://www.thechecklist.io) of everything that needs to be done to find a "good" [profitable] bootstrapped business. It is not the recipe for success. Take it as a way to derisk your next project.

Here are the key takeaways:

General principles

  • Manage your expectations vs reality. Try to not jump the gun and necessarily aim at being the next billion-dollar company. Chances are high you will be disappointed.
  • Embrace the Pareto principle. 80% of the results will come out of 20% of your efforts. Don't focus on details. Kill perfectionism.
  • At this stage, you're having an idea. At best a project. Not a company.
  • Everything starts with a hypothesis. Hypotheses must be confirmed by the market [potential clients]. Success comes from the confirmation by the market that your hypotheses are good.
  • Spend 5x more time thinking than rushing and developing
  • Sell before building.
  • From inception, build your mailing list (they will be your first customers)

5 Steps process:

1. Find your business Idea

Formulate hypotheses that will be confirmed in steps 2, 3, and 4.
If at some point you realize that the idea is not that good, cut the loss.
Come back to step one.

A. Start with the problem - How to find it? Identify flaws in your workflow at work, inefficiencies in a market, or simply get inspired by other businesses. Are people talking a lot about the problem? Is the problem expensive to solve? Are people really annoyed by the problem? Is it something that prevents them from sleeping?

B. What do you aim at? A solution that helps you to be better in social, security, physical, economic, recognition, achievement (i.e: be more productive), growth.

C. How sizable is the problem? Is it a problem encountered by many people, or are you focussing on a niche? If you're focussing on a niche, is the niche "accessible" and open to innovation?

D. KISS [keep it simple, stupid]: Is your idea explainable in 15 seconds? Can you explain it without describing the features?

E. Avoid: businesses that require high capital, volumes (in terms of users), and legal challenges. (i.e.: fintech, social networks, gambling companies].

Avoid the "I created this because I would personally use it" approach. You're not your customer. As such, nobody cares about your opinion. What counts is the feedback of the market on your idea.

2. Embrace the competition

A. Find your competitors - Limit yourself to 5-10 competitors. Research of G2, Capterra, Alternativeto, etc. Talk to industry experts and hear their opinion about the problem you're solving and understand how they solve it without your solution (they most probably use a manual approach or a competitor).

If you don't have any direct or indirect competitor, go back to step 1.

B. What are the killer features of your competitors? - List the top 10 features of each of your competitors. Keep the top 3 features. Focus on how to achieve them in a better way.

C. How do they communicate their Value-Proposition? One of the most difficult tasks is conveying the right message to the customer. They must understand directly what your product is about and how you can help them to solve their problem. Get inspired by the competition, and aggregate everything in word clusters.

D. Identify the flaws of your competitors - Try their product. Check customer reviews (g2, capterra, etc). Talk with their sales team and customer support. Understand why their customers are choosing them over other competitors. Discover inefficiencies in their product.

3. Innovate - Talk with customers

A. Contact the right people - Experts in the industry, key stakeholders at companies. Pretend you're making a press article or a blog contribution about them. They will be more likely to talk with you.

B. Ask them the right questions - Try to be as neutral as possible. Don't talk too much while interviewing them (you must talk at most during 20% of the conversation). Don't ask questions for the sole goal of having the confirmation you're right about a topic. Show them a path, and let them talk about their frustrations.

C. Understand how they currently solve the problem - How do they deal with the problem that would potentially be solved by your solution? Do they use one of your future competitors? Why did they choose that solution over another? What they like about the solution they're currently using, and what they don’t like?

4. Your buyer persona

Who will, in the end, use your product? Who is the key stakeholder that will validate the purchase of your solution and who will actually use it? (i.e: a CFO is not the buyer persona of a marketing solution). What is their budget allocated to solve the problem they are encountering? What kind of companies are you targeting (Startups, SMEs, Corporate)?
Who would not buy your product?

5. Put your idea into words

This one is a difficult one. Fill this famous sentence:
We help {target audience} to {problem you're solving} by {your solution}.

--

If you're keen to learn more about my process, take a look at our checklist on "How to find a business idea" (https://www.thechecklist.io). We've opened our early bird access.

Good luck to all of you,

  1. 2

    Wow, that part with "Our process was:" hit the chord with me.
    Hope one day we all will be smarter.

    1. 1

      That's why entrepreneurship is all about iteration. Having hypotheses and let the market confirm them. Stay tuned on https://www.thechecklist.io, I'll put much more content :)

  2. 1

    Is there a checklist of how to create a service SO good that they have to tell their friends, and what are the criterias of a service that is so good that it spreads through word of mouth?

    1. 1

      I think they are many ways to create products that users love. Products that customers love so much that they will recommend it.

      It's called the product-market fit.
      And I'll tell you something: everybody is looking for it.

      Typically the "product that sells itself".

      But don't expect it to have it overnight.

      It requires iteration, and iteration, and feedback collection (subscribe to the waiting list of https://www.talo.live ; they have an amazing product).

      1. 1

        Some detailed ideas I have area:

        -Product that solves a customer need better than competing products
        -Product that a user keeps returning to (high stickiness and loyalty)
        -Product that a friend has to tell other friends

        Anything else you might know about?

        1. 1

          I've read your comment. My answer was too big.. about 5000 words. As such, I made an article out of it. I'll publish it in the upcoming days :)

  3. 1

    How could I validate some concepts of Problems.com?

    How can I improve upon the Fiverr/Upwork/Clarity experience?

  4. 1

    You may have a point about legality. I'm currently validating an app that would connect users of different political views to connect in person. The idea is to help with political polarization. Think like a Tinder for politics that reverse matches users who disagree. I think I may disagree about there needing to be competitors for it to be a valid idea. I guess you could say X hasn't been done by anyone because it isn't a valid idea. But maybe no one came up with the idea or just didn't execute it well for any number of reasons. I'm currently conducting a survey to validate this idea and shooting for 400 responses. I'll have to look into legality but obviously users could abuse this service. At what point in your opinion is legality an issue? Is this just a bad idea because it could be abused? Here's the survey link for anyone interested, thanks!

    https://www.survio.com/survey/d/U1B4R9M0M7J8C7W1U

    1. 2

      Very good question - I've got a lot to say about the product in itself (as product guy), but more generally:
      1] Agree with you. Some ideas have been done, but poorly executed which results in failures.
      2] It seems you're trying to create a match-making system with people that disagree on opinions. I don't know if you've noticed but political debates on Facebook conversations lead often on people expressing their point of view, and other disagreeing. As such, I don't really get the value that the users will have. [I haven't seen your product, so it's hard to say].
      3] How would they abuse from that service? what legal challenges have you spotted?
      4] How would you monetize that? [I never do low margins / high volumes because these are startups that are the most likely to fail]
      5] You need to send the survey to unbiased people. Avoid friends and family. They will say they need your app even if it's not the case.

      1. 1
        1. The value is that users get to meet those types of people in person. Or if they aren't getting different views they get to break out of their echo chambers politically and talk to people they disagree with. I think many people are disatified with Facebook arguments and would like to see a different outcome of the expression of their views. For those types of people in person debates could be a breath of fresh air.

        2. As far as legal issues, the most obvious one to me is that in person meetings get violent and then an argument could be made that the users were enabled to meet someone they would already be at odds with. Or political extremists would use the app to find members of the opposite extremist group to attack those members. One counter to this is to match users with some sort of common ground. So instead of matching extreme right with extreme left spectrums we could match extreme left with moderate conservatives and extreme right users with moderate liberals. Or users could identify "hot button" issues that should be off topic and don't match those users with others who have a strong viewpoint of that issue.

        3. My current monetization isn't very fleshed out. The best I have right now is ad revenue and in app purchases similar to Tinders modal. More matches, better matches, ect. So far very few people have responded that they would be willing to pay a monthly fee for the service.

        4. I have been avoiding friend groups and strictly posting in political threads and posts / communities. I didn't want to annoy my friends and family with my constant berage of surveying.

        All in all I'm in the very early stages. I'd like to build this service but I'm also ok with not doing it. Just trying to get an idea if people would use it. Thanks for the quick response and feedback.

        1. 1

          I really like your mindset. Would you be keen to jump on a call?
          If not - 3] Solvable with video call + better with the COVID environment.
          For monetization, let's make a market validation based on a landing page with a disabled check-out button.

          1. 1

            Perhaps at a later time I could jump on zoom. In responses to your comment on number 3, right now I'm trying to avoid going with the video call route because it in some ways defeats the purpose of physically connecting these people so that users can connect on a deeper level. As far as covid is concerned if i do go with developing this it will be at least a year out before MVP so hopefully covid will be less of a factor.

  5. 1

    Avoid the "I created this because I would personally use it" approach. I definitely identified with that, I have a seriously dificulty to have an idea outside my IT scope. I will appreciate if someone on this post tell me any tips to find business ideas.

    1. 2

      Of course! Let's try the process with you ;)

      1. What are you specialized in? (in IT)
      2. Are you looking for an idea in your IT scope or outside?
      3. What are you passionate about?
      1. 1

        1 - I have 7 years of experience in IT infrastructure (Customer support, Windows, Linux, Networks, monitoring and management, etc..), I'm also a developer, it's not my main function in the company that I work, but I already developed some solutions to facilitate my job. Some of the solutions that I made was a Terminal Server Management software and a simple VPN configuration file generator (https://ovpnconfig.com.br).

        2 - I'm looking for and idea outside IT scope.

        3 - My passion is technology, but it's the question, I think that I don't need to be stuck at technology scope, like a famous brazilian entrepreneur, Flávio Augusto, Said:

        I don't need to know English to sell an English course, nor do I need to use tampons to run an tampons factory.

        The point is, Do I really need to only develop products in my IT scope? I think that I'm ignoring a great market share doing this, but I have difficulties to find some idea.

        This is a thought i've been having some time, tell me if i'm wrong.

        1. 1

          As long as you can code, the possibilities are infinite. Would you be keen to jump on a call to talk about it? It would be cool to record it and share it with the Indiehackers community! Send me a Dm on twitter, @splinterchain !

          1. 1

            I couldn't send a DM to you, please contact me:

            Instagram: deyvissonbrenoveras
            Twitter: @DeyvissonBreno
            E-mail: [email protected]

  6. -1

    This comment has been voted down. Click to show.

    1. 1

      I don't see the link between writing and finding a business idea, but thanks for sharing your website!

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