A friend once said to me, “dude, I have an idea for a billion dollar website.” I’ve heard this type of thing many times before, but I entertained him, “oh yeah? What is it?” I asked. His enthusiasm growing, “it’s a professional social network for small business owners.” Puzzled, I responded, “that sounds a little bit like LinkedIn.” He said, “it’s exactly like LinkedIn, except my idea is specifically for small businesses instead.”
I didn’t want to crush his hopes and dreams, so I entertained the conversation with some back and forth chit chat. The truth is, I didn’t think it was a great idea. It might have been something that he could have executed on and built a niche network with, but it just didn’t seem like he was trying to solve a problem that LinkedIn wasn’t already solving. Anyone who is already interested in professional networking uses LinkedIn, even small business owners.
Before joining Treehouse I launched a mobile app of my own. Before my team and I launched it, we took a considerable amount time to make sure we were building something that people were actually going to use. Our pre-launch research efforts paid off big time and we were able to avoid some key mistakes by validating our idea first, which helped to ensure we headed in the right direction from the beginning.
A good exercise, for any entrepreneur or wannabe entrepreneur, is to validate your idea before getting started. It’s super important to the success of your venture to ensure you are building something that people actually want and will use.
1. What problem are you solving?
Successful products solve problems – plain and simple. Most successful entrepreneurs take a problem/solution approach to their startup brainstorming. You can do this by first identifying a problem and then building something that is a solution to that problem. If you can solve someone’s pain through your product then that product adds value to the user’s life and he or she will continue to use it and even pay you for it.
A great example of a startup that solved a problem is Uber. I used to live in New York City. I can tell you firsthand that before Uber came along it was a very painful experience trying to catch a cab on the streets of NYC. You’d stand on the corner next to half a dozen other people, who are all competing for the same cab, with your hand raised in the air trying to identify if the cab whizzing down Broadway is actually available. You’d wave your hand frantically, only to discover that the taxi already had passengers and it would whizz right by you. You’d repeat this process until you were able to flag down an available cab. This could be a 20-30 minute process during rush hour.
Uber launched and solved that problem instantly. Now you can push a button and your Uber car arrives within minutes. Problem solved. Pain killed. And now Uber is valued at over $50 billion dollars.
2. Would you use it?
One of the greatest litmus tests for validating your idea is to honestly ask yourself if the thing you are building is something you would personally use. It is important to build something that you would use personally. If you don’t understand the end user or the market well, it is going to be a more challenging road to building a successful product and business. If your expertise is in consumer products and you are trying to build the next great biotech company, you might want to rethink that. Anything is possible, so don’t let me stop you if you want to go after a totally new space than you are used to, but your path to success will be less bumpy if you stick to what you know.
3. Would other people use it?
You’ve identified you are solving a problem. Check. And you are building something that you yourself would use. Check. But, will other people use it? That’s your next big question to answer.
This question is actually a simple one to answer. Build a simple online survey and send it out to your family and friends. You can even use Google Forms for this. Write out a set of generic questions designed to uncover the pains and problems your product will solve. It’s important to make sure that other people view these issues as pains and problems too. Make it anonymous so your friends and family feel comfortable answering honestly.
If you need more responses to gain statistically significant survey results, you can use a service like Survata. For $100 you can get 100 people to answer your survey and you can target a specific demographic. The results of a survey won’t lie. You’ll get real feedback from target users. Listen to what they say!
4. Does your idea already exist?
You may have an awesome idea. It may solve big problems. Users may love it. But, did someone else already create it exactly like you were planning on doing it? If your great idea already exists in the same way you planned it, that doesn’t necessarily mean you won’t be successful. It does mean your market exists and there is a demand for your product.
If you do feel passionate and motivated to forge ahead, amidst a competitive landscape, your next objective should be to figure out a way to differentiate and position your product as the best solution in the marketplace and why it is different and better than the other options.
5. What is the size of the total addressable market?
Total Addressable Market (TAM), is the indication of how much revenue opportunity there is for a product, or what the overall universe for the business opportunity is. If you could capture 100% of the available market for your product or service, what would your annual revenue be? That’s another way to look at it.
Let’s assume a real world example by looking at the pet industry. If you are building a mobile app for pet owners who want a way to find other pet owners with the same dog breed in their neighborhood for the purposes of scheduling doggy play dates, that’s going to be a niche product and small TAM. The pet owner has to have a dog, has to have a smart phone to run your app, and has to be interested in doggy play dates. But if you are creating a mobile app that connects pet owners to virtual veterinary services, for instance, then your TAM is every pet owner in the world with a smartphone. Now, that’s a much bigger TAM.
Successful products solve problems – plain and simple.