Someone was asking Fiona and I about our views on validating an idea for a startup, they had been prompted by, amongst other things, posts on Pollenizer. Over lunch Fiona and I came up with our 5 stages of validation of a business idea for startups.
Our view is there is no such thing as validation of the complete business proposition until you’ve actually made a shedload of money, which thus provides the validation. It’s fine to test your ideas to a limited audience, or small groups of informed experts, but you are still guessing when you assert that because they all think it’s a winner, you can go slap a deposit down on your private island. Or super yacht or whatever bauble you are planning to spend your billions on.
Stage 1 – Run the idea past domain experts
Talk is cheap. So talk a lot. Go find people in your market, buy them lunch, ply them with booze and sketch the idea for them. If they respond “fabulous” then great. If they express concern, then listen to their feedback and revisit your proposition. It doesn’t mean it’s a bad idea, you may not yet have learnt how to present it. Rinse and repeat.
Stage 2 – Build prototype MVP and run past potential users/trend setters
Make something people can try. Doesn’t have to be all the bells and whistles, but sufficient that a potential purchaser can gain a good understanding of how your product will work; what it might do to make their lives easier, save them money – showing them how you intend to solve their pain points is essential because people will pay you money to alleviate pain. Rinse and repeat.
Stage 3 – Get pilot users for prototype
Build out your prototype and find a small group of users/customers/suckers to use the product for real. Make sure these users are friends, family or people you have strong relationships with for when you have a catastrophic failure. Because you quite likely will. Rinse and repeat.
Stage 4 – Sell it to someone for money
Make a proper version, with the feature set you have distilled down as being the core proposition. Take money off someone for them to use the product for real in the big bad wide world. Then go sell it to another customer. And another. Nail down the sales funnel, process and cycle. Rinse and repeat.
Stage 5 – Sell it to shitloads of people for shitloads of money
Do Stage 4 but x 100, or x 1000, and preferably x 1,000,000.
Congratulations you have validated your business idea. You can now subscribe to Private Islands of the World.