Last year, when running MinuteBox, I listened to the below talk and started to understand why my journey with that company had been a difficult battle.
“ ……is this a market risk company or a technology risk company? It turns out that some startups are actually having both risk. And when they do, that is when you go Ow…., are we sure we want to do this?” Steve Blank
“Fxxk, I have both”.
We were building an eBay-type marketplace for buying and selling knowledge via video chat. The concept was still new to most people (Market risk), and our video chat failed from time to time due to firewall issues (Technology risk).
Three month ago, a strong technical team joined me to form our new startup, Acrossio. We believe in a similar vision to MinuteBox; to make human knowledge instantly accessible. I recently watched this video again, it reminded me that I have some valuable lessons to share:
1. Analyse your idea before you do anything
Once you have a ground-breaking idea, you are probably super-excited. If you can code, you probably want to build a prototype in just a few weeks. DON’T.
Ideas are cheap. The winners are always on the team who execute the idea the best. Before you jump into the game, it is always good to examine if you have the capability to do that early.
2. Know your market risk and pick a simple business model
If you ask me, market risk revolves around two key questions:
Are people going to use my product?
If you are offering a me2 service but do that better or smarter, your risk here is probably lower. Again, if your product is not exponentially better or different, you might fail.
As Andres from Lookk said; “First time founders do social and/or marketplace startups”.
If you are one of them, your risk is very high. You need to reach critical mass to make your product useful, and this will require some very smart market entry strategies. It will take you a while to experiment and find the right one.
After my battle with MinuteBox, I can tell you THIS IS BLOODY HARD.
“Will people pay for that?”
You probably will not know this at your idea brainstorming stage. But, you definitely can think of possible business models to generate revenue.
Probably all of the business models you can think of have been done before, and you can easily find some case studies. If you think you have a “NEW” business model, it is probably a complicated or hybrid version of some existing ones.
Do not try to be too smart.
Keep your business model as simple as possible. If your business model doesn’t work, you’ll find it far easier to identify the problem if you kept it simple in the first place. Then, you can pivot.
It is always a great exercise to capture your business idea on Business Model Canvas.
Create a different canvas for each business model you want to explore. Once you’ve done that, you can then analyse the pros and cons of each (Saas, Freemium, marketplace, etc). Quora is a great place for you to do that. Many entrepreneurs are sharing their experiences and execution challenges in detail.
This process will give you a great idea of the market risk on your product services.
3. Examine your technology risk before you build
This is where I failed badly.
I did not know how difficult real-time communication technology can be. I thought if Skype could do that, it would not be too hard, right? Wrong!
Forget about Skype’s awful UI, their Peer2peer communication technology is really smart. It is not something a few php developers can put together!
Most ideas from non-technical founders are probably not much of a technical challenge. But wait! Don’t misjudge.
Ask for second opinions from your techie friends. If you are a techie yourself, you probably have a good idea if you can execute.
Still excited about your idea?
If you are still excited about your ideas after analysing your market and technology risk, then congratulations! Your analysis has probably helped you to get a good idea of how to find people with complementary skills to minimise risk, and execute the idea.
So what’s next?
It is time to get serious and get out of the building. You can start to ask your ideal customers whether your product idea really solves their problem. Once you reach the problem and solution fit, that will be the time to build.
If you do not know about the Lean Startup yet, I would recommend any of the following books: The Lean Startup , The Entrepreneur’s Guide to Customer Development, and The Startup Owner’s Manual. Their methodology will give you a great roadmap to follow towards success.
Best of luck with your startup journey.