I just finished talking with a friend about a new idea he’s currently vetting. The idea is definitely interesting, but it got me thinking: how do you know if an idea is actually worth pursuing? I didn’t think about it long because the answer is obvious: an idea is worth pursing when it promises to provide a solution to a “hair-on-fire” problem. When we started WePay, we set out to solve a very real pain point. That continues to be our goal today.
“Hair-on-fire” problems create victims who know they have a problem without you having to tell them, want and actively look for a solution, and are willing to overlook switching costs and to pay you to use it.
So how can you find out if you’re idea has the potential to solve a “hair on fire” problem without building it first? The following are three experiments you can try before you build your product.
1. Identify your target customer. Moms between the ages of 30 and 45, you say? Great. Organize a “focus group” of twenty random moms between the ages of 30 and 45. Ask them: “Do you currently have problem X”. They will all answer: “Yes, definitely. I have problem X, and I hate it.” Next ask them: “How would you like a solution to problem X.” They will answer: “Well, we would obviously LOVE a solution for problem X.” And then ask them: “How much would you be willing to pay for solution to problem X,” and they will all say (this time in unison): “A lot!”.
And then you’re done, right? Well, not exactly. Most founders will stop there thinking that their idea has been validated. You can’t just listen to what people say; you have to watch what they do. Right before you end the session announce that “the solution to problem X will actually be available TONIGHT at www.[startupname]ly.com.” This is obviously not true (since you haven’t built it yet), but at www.[startupname]ly.com, you will have a beautiful landing page that says: “enter your email address here, and we will give you the solution to problem X”.
At this point, they (your target customers) have heard you, the founder, define the problem you are trying to solve and extol the virtues of the solution you want to build… and they said that loved it! It’s the best pitch they (or anybody) will ever hear about your product. If they don’t remember to come to your website (and willingly enter their email addresses) within the next few days (on their own, and without any push from you), you are probably not solving a “hair on fire” problem.
2. Identify your target customer. COLD email 20 of them and offer to pay THEM to use your product if they are willing to offer some feedback. See how many respond. If anybody responds, tell them that the offer is oversubscribed and that it is no longer available. See how many of those people still ask about the product.
Sometimes you can’t PAY somebody to use your product, let alone get them to pay you for it. It’s probably good to know that before you decide to quit your day job.
3. Identify your target customer and ask a group of them to define their problem and what they are looking for in a solution. Take those responses, chop them up into “key word lists”, and plug them into Google “search traffic estimator.” If there’s a ton of search traffic, then you’re scratching a pretty big itch, right? Probably.
But you should take it a step further: put up a beautiful landing page, a giant call to action, and a 10-step registration process. Then buy a bunch of ads on Google targeting the keyword lists you just tested. Drive as much traffic as possible to your landing page, and see how many steps people are willing to go through before they quit. The more steps they are willing to suffer through, the more they will be willing to pay you.
If these recommendations are too extreme, treat them as a thought experiment. Just don’t lie to yourself.
A quick (but BIG) caveat: there are VERY notable counter-examples. I think they generally fall into three categories:
Products that solve a problem that people don’t know they have (or one that they can’t articulate), but offer a solution that is so compelling and elegant that it can overcome this obstacle: Dropbox.
A product that predicts and/or capitalizes on a dramatic shift in how we communicate and interact: Facebook, Twitter.
A product that can catch your attention without you looking and hold it without you necessarily wanting it to. These products tend to be viral and engaging: Zynga.
sheesh. your 1st point is wrong already. you shalt not ask “do you have problem x”. instead, ask “what are your problems”. as with the first question you already made them aware of a “problem” they might not have identified themselves if you did’t mention it. this invalidates your very first claim as you’d had to make e.g. 1 bn moms between 30 and 45 aware of a problem before they even try to solve it and before they might potentially stumble upon your offered solution. what you want is to provide a solution for a problem people are aware of, that they actively search a solution for in a socio-space where they’ll naturally stumble upon your company (i.e. on facebook, google).
this is the ideal case. it is very very very rare, so don’t even try it unless you are a rocket scientist.
This post is about how to validate an idea…not how to come up with an idea.
Presumably, you would ask “what are your problems” before you came up with the idea. In another blog post, titled “how to come up with startup ideas”, that will be recommendation #1. But once you have an idea that you are super excited about, I think my advice is pretty relevant.
If you were testing a specific idea, it would be an awkward focus group if you asked “what are your problems”. You’d learn a ton about why people hate taxes, aging, and weight gain, but you might not get such great feedback about your particular idea.
I was being a little tongue in cheek with my focus group example. You could accomplish the same thing by *telling* a bunch of your target customers about your solution, and *seeing* how many of them actually care (by measuring how many subsequently visit your website).
I think point 1 is already wrong. An overwhelming majority of businesses are not solving new problems; they’re solving old problems in new ways. In fact, people may not even realize their problem can be solved in a better way.
If you had asked me, in 2003, if I had a problem with Yahoo! search results, I, like most people would have said no. When I used Google, I immediately realized that there was a problem. and when I tried to tell people about it, they said “Yahoo is fine.” Now, I do not personally know anyone who uses Yahoo.
I recall once hearing Steve Jobs say that Apple seldom uses focus groups, primarily because people do not know what it is they want. They have to be shown a solution; they cannot just tell you what they want.
“If you had asked me, in 2003, if I had a problem with Yahoo! search results, I, like most people would have said no.”
I agree. I think the same is true of Dropbox, which I cited as a counter-example.
“I recall once hearing Steve Jobs say that Apple seldom uses focus groups, primarily because people do not know what it is they want. They have to be shown a solution; they cannot just tell you what they want.”
Completely agree. I was not suggesting that a focus group would help you build the right solution. If you asked a normal joe to design a car, he would come up with this. I was actually mocking the idea of focus groups altogether. If you read the post carefully, you would see that the whole point of this focus group is to tell them that you already have a solution to the problem they claim to have in order to see if they come to your site. The focus group is just a pretense.
““Hair-on-fire” problems create victims who know they have a problem without you having to tell them, want and actively look for a solution, and are willing to overlook switching costs and to pay you to use it.”. I love this analogy! What’s interesting and frustrating to me is this – what has my hair on fire does not have the hair of others on fire. Perfect examples of this are paper checks and the digital wallet. I wrote a blog post on this using the infamous Snuggie – most people didn’t look at the blanket and think, “Ugh! I can’t find my arms or the dang remote!”. But, *somebody* did, and we all know the rest of that story.
To tie the hair-on-fire and Snuggie analogies together, I think it’s important to get feedback from a diverse group of people within your focus group. I’m curious… Does this happen for most Silicon Valley startups or is the research mainly done there? Some of my ideas (I think) would solve hair-on-fire problems there, but in small town USA, most people are just sniffing the air wondering what that smell is.
Good article. This is similar to an article that I wrote back in Aug: http://techneur.com/post/935550443/the-startup-idea-filter I call it the “Startup Idea Filter.” I believe that it’s critical for founders to do these things before they build their startup. Too many times have I heard someone say “I have a great idea for a startup…” and then proceed to tell me how they want to build Facebook for cats.
@JP
Why should Facebook for cats not take off. Dogster took off.
There are already social networks for cats doing very well.
I think this post has link-bait-itis. You say “this is how to invalidate your startup idea” but then give three major caveats.
An equally appropriate title would have been “A set of steps that might help to invalidate your startup idea unless your startup idea is in any way out of the box — or they might not work; I’m not really sure”
Kudos for writing, though. I know it’s hard. Keep at it.
Great idea. I will change the title immediately.
I really question the ethics of #2… seems pretty sleazy to me, imho…
Relevant:
How to determine if your business idea is worth pursuing
http://www.seomoz.org/blog/the-internet-marketers-checklist-for-determining-if-a-business-idea-is-worth-pursuing
Relevant:
So you want to start a startup?
http://www.youtube.com/watch?v=u6gZ4vk_Tw4&feature=autoshare
I am not in entire agreement that a business idea, in order to be worth pursuing, has to solve a /hair on fire/ problem. An idea may still be worth pursuing if it is intended to solve a problem whose basic premises are far-fetched, or ‘ahead of time’. Like you are trying to solve step number eleven when steps one to ten havent been built yet. You only have to be able to hold out long enough to keep you afloat until the right time comes.
There may be a longer gestation period for returns on investments in ideas ‘far ahead of their time’, but when the time eventually does come, you will have the first mover advantage – ‘the person who thought of it first’. So may be, just may be, you can turn that influence into ‘something commercially viable’… But history track record shows otherwise… The person who imagined ‘electronic mail’ got no money from it while the person who only made it ‘free’ (Sabeer Bhatia-hotmail) makes billions… and that was after ‘email’ was made into a tangible product by someone else… Bhatia was never involved in making the idea of email ‘tangible’ – Turning something that is already made available by ‘others’ into a ‘free’ version doesnt deserve the kind of money that Bhatia made… Totally unfair…
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