How to Validate a Startup Idea? 6 Steps Packed With Real-Life Examples
How can you make sure that your idea is as brilliant as you think it is? Read on and learn how to avoid misaligning a product with the market’s needs.
Jun 7, 2022 | 14 min read
Almost everyone who worked in the startup industry has seen up-and-coming products collapse. Despite awesome teams, great marketing, and extremely motivated founders, thousands of applications have failed to gain traction and eventually had to be abandoned by their creators.
Most of us insiders know that the most common pattern of failure lies in original sin: misaligning the product with market needs. Everything that follows later - bad team vibe, lack of cash, and exhaustion is often just a consequence of the initial problem.
Our observations at MasterBorn are confirmed by research reports that point to the lack of market need as the most common reason for business defeat.
Unfortunately, most founders realize that their ideas are too flamboyant when it’s too late and there is not enough time and money to pivot.
In this article, I will show some examples of failed startups and show you 6 steps in which you can validate a startup idea before you lose your VC fund or spend your entire life savings on bootstrapping.
Examples of startups failures
Kolos was a seemingly simple yet brilliant idea. Its Bulgaria-based founder decided that he can bring the gaming experience of smartphone and tablet users to a new level. He and his team designed a desk-mounted steering wheel with a device holder in the middle. It seemed ingenious to fix an iPhone to the controller, launch a racing game and drive much more conveniently than by turning the device on its own.
The problem was that after a successful Kickstarter campaign and three years of development, the product was destroyed by reviewers and never made money for the founder. The simple reason was that not many people wanted to play mobile games this way, and it was actually the CEO’s head that saw potential, and not the market itself.
“With Kolos, we did a lot of things right, but it was useless because we ignored the single most important aspect every startup should focus on first: the right product.” - Ivaylo Kalburdzhiev, Kolos CEO
Another example of a startup that failed was Woodero. As a manufacturer of wooden smartphone and tablet cases that aimed to tap into the demand for green and natural products.
After a successful crowdfunding campaign, Woodero failed to both find investors and customers. Post-mortem analysis showed that there were really not so many people who wanted a hard case and that crowdfunding usually hypes up even bad ideas.
The importance of the correct interpretation of research can be illustrated by the failure of Dinnr. The web platform allowed customers to choose a recipe on the website, and order ingredients together with a step-by-step recipe to cook them.
Michael Bohanes understood the importance of market fit, and that’s why he ordered a series of research studies to validate his idea. Over 70% percent of respondents were interested in the idea, which seemed to confirm there was business to be done. A good product/market means offering a product which can satisfy the specific market you're in.
However, the study failed to grasp that a general interest does not mean there is an actual problem that the startup is meant to solve, and sadly Dinnr failed after just two years.
“There was never a need for a service like ours in the UK in the segment that we picked (urban professionals, couples without kids or with one baby max). And I deluded myself into thinking that this was because I was eager to start my own thing and thought that this was something that I myself would use.” - Michal Bohanes, Dinnr CEO.
The above scenarios are sad, but fortunately, you can avoid them. So, how can you make sure that the idea you have is as brilliant as you think it is?
What Makes a Good Startup Idea?
There are a few things that should be taken into consideration when thinking of a startup idea.
The best way to start is to reverse the logic and begin with a problem. Is there a real problem I can solve? Is there something that bothers potential clients? Can I make their life easier? If the answer is “no” or “not sure” this probably means that the concept needs a little more groundwork.
If the answer is “yes” think of another aspect. How many people will benefit from your startup’s offer? Hundreds of millions? A good startup has the potential to scale, so if you’re only targeting left-handed Formula One drivers, you might as well move on. If your clients can potentially be all women around the world - you are on the right track.
Success can also be achieved by nailing the niche, which means finding a narrow specialization. This can be a service for dentistry students, first time-car buyers in Africa or Americans migrating to Canada. You don’t need to be used by half of the world’s population like Google if your idea can gain traction among a very specific user group.
What is Lean Market Validation?
Startup founders use the process of market validation to verify if their products are interesting to a certain market (market fit). The process involves interviewing potential customers from the target market and helps make informed decisions before a significant investment is made.
The advantage of lean market validation is that you don’t have to build prototypes or minimum viable products (MVPs) to gain insights. It's based on user research and thought experiments, which is way cheaper than having the solution developed early to test it.
Now - after years of working in software development and observing numerous startups struggling with their (not always) great ideas, I will share some tips on how to validate market ideas in 6 simple, yet powerful steps.
As they say: Don't try to run before you can walk so let’s move forward steadily, step by step.
6 Steps to Validate Your Startup Idea
1. Start with WHY
At MasterBorn, every product starts with filling in the MasterCanvas. This is our own take on a Lean Canvas. It describes the most important information about the future product. With better knowledge of the main problem we are trying to solve and the potential early adopters, we can make better and more accurate decisions along the way.
I cannot emphasize enough the importance of defining a proper early adopters’ group. These are the people who are excited about the product and cannot wait to use it because it addresses their needs. They will be most keen to answer your questions, talk about functionalities and test your app.
Additionally in this stage, we analyze the competition and gain insights into our competitive advantage.
One of the best examples of a company that understands “the WHY” is Apple. According to Simon Sinek, the author of Start With Why, the Cupertino giant owes their success to understanding their purpose.
“If Apple was like everyone else, their marketing message might be: We make great computers. They’re user friendly. Want to buy one? Here’s how Apple actually communicates: everything we do, we believe in challenging the status quo, we believe in thinking differently. The way we challenge the status quo is by making our products beautifully designed, simple to use, and user friendly. We just happen to make great computers. Want to buy one?” — Simon Sinek
2. Interview potential customers
Once we understand both who and why someone will be using our product, let’s ask them about their opinion and confirm our assumptions. It is important to ask detailed questions about real problems. Just asking whether the clients like the idea may lead to a Dinnr-like failure.
So are the problems real, and painful?
Will solving them actually change somebody’s life to the extent that they would want to pay for it?
What is the current way to solve these problems?
What's the actual cost of solving them? Are they really worth solving?
To help organize our thinking we may use the Eisenhower Matrix or the Kano Model.
While conducting the interviews, remember: even the best idea and the most exciting product will not succeed if nobody pays for it.
MyCity.io was a tool aimed at local authorities to help them build relationships with residents. The problem with the app was that even though it was built at a considerable cost, nobody validated the idea with the users. It soon became apparent that the founders failed to reach out to local authorities to ask them if such an idea is worth pursuing. In the end, after the startup was dissolved, the founders admitted that they followed their instinct and failed to focus on research.
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3. Find out how many people are interested
Once the target group is established and its problems are well-defined, let’s focus on the quantity. How many people are really interested? Is it possible to count them? Or at least test the potential?
One of the ideas to test the size of your target group is to run product campaigns before you write the first lines of code. You can also set up an early bird newsletter and see how many people would be interested enough in your application to share an email address with you.
Surveys can also help you understand the wider market. By simply calculating the number of responses you can better understand if there is excitement among your target groups.
Patron.ai was a gamification platform for developer teams. Initially it seemed that the market was very deep as it aimed at millions of software engineers around the world. Initially a few hundred developers signed up, but they soon left and few new users could be lured to the app. While the market was seemingly deep, it was obvious that it was too costly and too difficult to migrate to the platform, thus not many users were interested and Patron.ai had to fold.
4. Get creative & experiment
Below are some examples of products that have nailed it and creatively tested their hypotheses way before the products were launched.
In the early stage, Dropbox did a good job of explaining their service with simple adverts and great storytelling. In just over two minutes, the innovation was laid out and practical examples presented.
Another way is to design an attractive UI, but not turn it into an application immediately. This is the direction Zappos took and tested the look and feel of the product before launching it.
Sometimes it’s also worth thinking outside the box when building a product. Amazon Echo is very successful, but would it be widely adopted if the voice wasn’t natural?
Being ready to experiment sometimes means pivoting. One of the most famous successful pivots ever attempted was Twitter. Originally, the startup was called Odeo and offered a directory and search destination website for RSS-syndicated audio and video. As it failed to gain traction, its founders - including Jack Dorsey - kicked off a completely unrelated public messaging platform which later became one of the most influential social mediums of all time.
5. Prototype and test
At MasterBorn we do what we call “Phase 0”, which is a discovery phase in which our clients are involved. During this step, we analyze and polish ideas. We define the minimum viable product (MVP) with them and based on that we build a clickable mockup, which imitates the actual solution.
The clients can show this prototype to investors and pitch it to them. They can also show it to end-users, so that they can get a good look at it, play with it and help design a successful user journey. It helps to determine if your value proposition adds up.
In this very inexpensive way, idea validation is possible without writing a single line of code.
Of course, you do not have to use the Phase 0 method, but it is important to design and test the prototype before the final (expensive and time-consuming) version of the product is created.
If you search for Facebook’s MVP, you will find out that Mark Zuckerberg did exactly what all startups should do - he prototyped. The early version of Facebook was a very basic, poorly designed app, that was virtually a text version of the later iterations of the solution. That being said, it was enough to show fellow students and get their first reactions from it. What happened later became history.
6. Learn and adapt
Don't be scared to modify or even kill an idea - that’s the basic edict of any agile framework and can save you a lot of unnecessary cost in terms of development. By making the ideas available to users, we can quickly verify the ideas and draw conclusions.
Maybe our assumptions were incorrect and there is no real interest? Maybe the users are interested but they have some insightful comments that can help us make the product better? Or maybe the product is great, but the target group should be modified?
Software testers know that the faster they find an error, the cheaper it is to fix it. The same applies to testing ideas - the earlier we test them, the more room for adaptation we have.
Product design and development is a never-ending process that makes it possible to change and modify the application based on market feedback and the ever changing environment.
MySpace was once the coolest social networking site. At its peak it attracted almost 80 million active users a month. However, when Facebook was launched it offered a far superior and more user-friendly service. MySpace failed to follow suit and was too slow to react. As a consequence, it fell into oblivion and is currently a niche service for the music and video industry.
Idea validation tools to use before building a Minimum Viable Product (MVP)
When it comes to idea validation, you no longer need to walk in the dark. There are many tools on the market to help you do that:
Start with a search. Go as deep as the second or even third page of results. Try to find if others have had similar ideas and learn from their mistakes. Also, analyse how many search results your phrase generates.
Ahrefs, SEMrush or Moz
These are powerful analytical tools that can help you dive deeper into your competitors and SEO. You will gain insight into their website, their most popular bookmarks (and products) and you’ll see publications causing the greatest buzz on the web and way more … It’s really a vault of information!
See what people talk about. What kind of questions they ask and what problems they discuss. It’s a massive and free tool to help you understand your potential users.
See how people's interests change over time. What’s hot and what’s not. If you see a decreasing interest in a topic or a problem, you might be too late to the party.
Figma / Invision
Build clickable designs that behave almost as your app would. Show the interactive designs to investors and users to get their initial feedback.
Pen & paper
Draw on a paper, whiteboard or print your designs and give them to people to comment on. Sometimes old school methods work best.
Bonus TIP for Founders: Keep Calm and Carry On
Instead of a conclusion, let's finish with some good advice.
As a Founder, you should not identify with the product and have an emotional relationship with it. It’s “not your precious idea” - it’s just a business concept your company or startup is exploring. Too much attachment to it can lead to burnout and disappointment.
I hope this article will help you look at your idea in a different light and inspire you to reach a healthy level of emotional detachment from your product.
Table of Content
- Examples of startups failures
- What Makes a Good Startup Idea?
- What is Lean Market Validation?
- 6 Steps to Validate Your Startup Idea
- 1. Start with WHY
- 2. Interview potential customers
- 3. Find out how many people are interested
- 4. Get creative & experiment
- 5. Prototype and test
- 6. Learn and adapt
- Idea validation tools to use before building a Minimum Viable Product (MVP)
- Ahrefs, SEMrush or Moz
- Google Trends
- Figma / Invision
- Pen & paper
- Bonus TIP for Founders: Keep Calm and Carry On
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