Market discovery and validation are the two most important jobs for startup founder. They are important to avoid relying too much on the heroic intuition of the founders.
From my experience, I would suggest the following simple steps to follow:
Step 1: Target Dreamers with a Deadline
A story said: “During the gold rush toward the West in the United States, entrepreneurs who were selling shovels, Jeans, and wheelbarrow carriers to the gold seekers made more money than the gold seekers themselves, and still are in business today”
* The goal here is to discover what are the desires or priorities of companies/group of population which already have money or lot of money, are growing, then proceed to find out what kind of products and services would better serve their desires.
Step 1: Action Plan
1. Make a list of companies/group of population which are already successful or growing very fast, and have money to spend / or have lot of time (eyeballs business).
2. Put in front of each entry, the kind of human desire that is their current priority (to expand to new markets, to be elected, to be famous, to be recognized, to be distinguished, etc.)
3. Then, enter in the next 2 columns how old is the desire, and how hard was it to realize it
Step 2: Build a List to estimate Market size
This is the core activity of any business. There is no business without a prospects list or past clients’ database. So this is the first thing to do.
Step 2: Action Plan
1. Make a list of 100 companies with the same “desire”. At this stage the list will be based on assumptions
2. The list should have the companies’ name, address, email, telephone and a quick description of what is their business, what are their current expansion plans, or what are possibly their currents challenges or threats to their industry or business
3. Make sure every company on that list share the same desire, and now, try to quantity how many in total are these companies in your city, country or in the world. (Just to give yourself an idea of how big is your market).
Step 3: Ask What problems they need help solving
At this step, the point is not about selling any idea or product, but finding out more about the problems these companies have, what are their current desire (or priority), how old is the desire, and how hard was it to realize. (Get the real field information).
The goal here is learn from the customers themselves their business “pain points” and their dream of must-have-yesterday solutions, because as the saying go “Customers rarely pay for fancy, nice-to-have solutions.”
Step 3: Action Plan
You don’t have a product or solution yet. So the job here is to conduct interview to find out what problems these companies or people are ready to pay for.
1. Take the list you’ve made on step 2
2. Pick 3 to 5 to meet for Interview
3. Ask bluntly «We are a group of IT experts . We are competent and ready to work. What problems do you have, we could help you solve?»
Step 4: Find out solutions
“Great entrepreneurs start their business venture with phrases like “I want to bring this innovation to market”, or “I’m looking for innovation that could solve this pain/problem”.
Step 4: Action Plan
1. Make a list of solutions that would solve your target list problems
2. Create customized proposals for your prospects
3. Review them carefully and send them out or go to present them
4. Be Polite, flexible, and honest to build trust and connections
Step 5: Put a system into please to measure
Here you need to put a business system into place to measures your performances:
Step 5: Action Plan
1. Create a model for your presentation to clients or proposals
2. Track when you call your clients and make sure you have a place to write down what they’d tell you
3. Track how long it takes you to close a new customer
4. Track how much revenue do you make per customer
5. Track what are your fixed expenses
For more information on the process described here, check these articles too:
– Startups: Prescription BEFORE Diagnosis is Malpractice!
– The Best Customers A Startup Could Dream About
– Where is the problem?
– The God Approach: A Guaranteed Path to Success in Business
– Entrepreneurship is NOT about Innovation, But Commercialization
– The Prototyper Mind: How Successful Entrepreneur Think
– Sequoia Wisdom for First Time Entrepreneur
– A Model to Predict Failure
– In God We Trust, All Others Bring Data
– The Servant Mindset: How Successful Entrepreneurs Think