Successful startups come out of big ideas, great ideas. When Bill Gross, someone who is considered a startup guru, studied 200 different startups to understand factors most crucial to success, ‘Ideas’ made the top 5, at number 3. Behind ‘Timing’ and ‘Team’, but above ‘Business Model’ and ‘Funding’.
But a lot of the ideas that startups grapple with tend to be unproven, and thus laden with a lot of risk. The sensible thing to do is to validate them before work can be started in full earnest to bring those ideas into fruition, as either products or services. How does one do it? Even though hypothesis testing is a mature-enough science, startups do not often have the wherewithal for the time or effort that any such data-gathering exercise would take.
Building a prototype or an MVP (minimum viable product) is often the correct thing to do to test hypotheses, but for most startups, the prototype is often the product, and entrepreneurs will be loath to spend resources and effort, with the knowledge that they may have to ditch what they have built. In a sense, this is a variant of that old problem of entrepreneurs loving their solution too much, something we have talked about in the past in this column. This is why we often have solutions that startups are very taken in with, but are not really solving any problem. Detaching themselves from the solution and attaching themselves much more strongly to the problem instead, is therefore, a great first step for any entrepreneur wanting to validate their ideas.
There is another big advantage that comes from worrying about the problem more than the solution. If one studies the problem comprehensively enough, it makes it easier for the entrepreneurs to find parallels in either a different problem, or a different market. And importantly, they can find such problem parallels where there are proven solutions. It allows you to abstract out the problem and its ecosystem, instead of trying to solve for the specifics right away. For example, if you are trying to come up with a solution for last-mile connectivity from Metro railway stations in Bengaluru, you can study how this problem was similarly solved in other Bengaluru-like cities around the globe, when the Metro first came to their cities. And then see how similar the solution hypothesis that you are testing is, to the solution that has successfully worked in the parallel problem ecosystem.
Of course, a crucial follow-up step after finding appropriate parallels for the problem ecosystem, where a solution already exists, is to be complete in understanding how the two ecosystems are different. For this determines how the solutions vary too.
Like any heuristic or thumb rule, this method of validating ideas does not guarantee complete success. However, it will definitely be more fruitful than jumping into a solution completely unvalidated, and takes far lesser time and effort than any sort of rigorous hypothesis testing of the ideas. In other words, perfect for entrepreneurs.
