Think You have a Million Dollar Idea? Put it Through This Test

This is the second part in a three part series by the author. You can take a look at the first part here.

Picture this – you’ve been working at a job for some years, and the entrepreneurship bug has bitten you. You’ve decided to go solo, chart your own path and disrupt the ecosystem. You might have a few exciting ideas bubbling in your mind but need to figure out which one to pursue. Or you might still be searching for that unique, zillion dollar idea behind which you can dedicate time and effort. What to do next? What tools are available to research your ideas? How much time do people take to decide on “their idea”? Who can help at this stage?

Let’s use an example to make this more real. For the past few months, I’ve been ruminating on creating the next generation of a task list manager – essentially a “To Do” app. I live my life by my “work to be done” lists, and these have served me well over the last decade. Having my work list spread across everything from Post-It notes to text files, Excel and Outlook, I need a better solution. Something that is mobile, captures and categorizes my work, and enables me to retrieve them easily on various platforms and applications.

Clearly the above idea – of creating a list of tasks and managing it across multiple platforms - is not unique. However there is a clear problem that is not getting solved today – at least for me! My goal here would be to find out if this is a real problem or a minor inconvenience, if there are enough people other than me who face this problem and if sufficient value would be generated for me to make money(now or eventually!).

Become an expert: We’ve all heard Newton’s famous quote about “innovating on the shoulder of giants”. Well the only way to “climb on giant’s shoulders” is to know and understand what all has been done in a sector before you. While search engines have made research convenient, be more comprehensive. Top entrepreneurs and venture capitalists tend to give great information in their blogs. Industry forum websites are a great resource to understand the state of affairs. And analyst reports can provide a valuable expert view of the landscape from the public markets perspective. In the case of our task list app, a good resource is the Flurry blog – they are a mobile analytics company and provide great (and free!) market level data on apps, platforms, customer behaviours etc. Another useful resource might be Vision Mobile that provides the developers point of view on platforms. Guardian UK also provides interesting perspective on apps in their blog. Read away!

Network like a maniac: The first lesson I learnt as an entrepreneur was how critical networking was to success – everything from the first customers to early hires came because of a serendipitous meeting. At the ideation stage, networking is even more critical. If 5% of the relevant knowledge is in text, the rest 95% is in the heads of people around you, and speaking with them is the only way to get access to that! Initially cast a wider net and meet people across the ecosystem. In case of my task app, I would start with potential customers – for example, office workers – and get a sense of how they manage current tasks and if they face any issues. Also I would speak to productivity software vendors to understand their approach to task lists, and what their customer feedback has been. Also some investors/angels who have invested in and around this space can provide a valuable perspective on the dynamics of this space – both domestically but also internationally. Most entrepreneurs and VC’s are generous with their time, plus you might be able to catch the hard-to-get ones at conferences (setup the meetings before you get to the venue). I’ve found the most relevant inputs come from people who’ve tried something related and failed – they can not only give useful feedback on your idea and but also be great future hires. So no excuse to not put your networking hats on!

Understand your customer: In vetting out the market opportunity there is none as important as your potential customer. Often times there is a danger of playing into the “I like this so everyone must need it” mentality. Be careful! This is especially true when exploring consumer Internet or mobile ideas, where one might easily get convinced of the value of the idea based on personal preferences. So try to identify potential customers and spend time understanding their problems – at this stage don’t focus on your solution. Use tools like SurveyMonkey to conduct surveys about user preferences, current alternatives and willingness to try new solutions. Survey design is critical so think about what information you’re trying to collect and how best to ask the questions – a few tips on survey designs are available here. Survey data can become an invaluable reference guide in case you decide to move ahead with your idea, plus early investors love to hear the customer’s voice so make those survey results visible!

Find comparables, and competitors: While trying to do something that has never been done before is laudable, for most ideas there is some part of the problem that might have been tried before somewhere. Even though we tend to think of competition as something negative, it can be a good thing. Having good comparables clearly shows that someone else also saw a similar opportunity and was able to create value from it. Of course, trying to blindly copy a competitor will not work; but understanding what problem their solving, why they succeeded and what opportunities are available for you will provide a useful “outside-in” perspective. Also try to get a sense of the market size from your competitors’ size – do you see billions of dollars of value, hundreds of millions or few millions? Remember that even if you think you’ve selected a space with no competitors, you’ll come across half a dozen the night before you launch – so might as well do the research today!

Once you’ve spent some time to become knowledgeable about your space, spoken to the experts, understood the customers’ problems and examined what competitors are doing – you should have a 360-degree perspective to re-evaluate your idea. Does it still sound as relevant as it did when you started? Maybe you even got some new ideas that you can add-on to make your vision more exciting. So now thinking is done, time for some action which I’ll cover in my next post.

About the author: 

Nishant Verman has 8 years of operational, finance and entrepreneurial experience across Asia and the US. Prior to Canaan,Nishant was co-founder at Groovebug, a personalized music platform for the iPad. Nishant was part of team since inception and focused on multiple aspects including product development, venture funding and launch. Previously at Microsoft, Nishant was a Senior Business Development Manager for the APAC Online business. Nishant focused on strategic partnerships in India and China, including Microsoft’s partnership and investment in Affle, a mobile ad platform. Nishantjoined Microsoft in their Corporate Development team in Redmond where he was involved in acquisition of aQuantive and Tellme.

Twitter @venturadventurs