There is no better way to start this post than using the picture above. Last week, I wrote a post about our suggested strategy of starting a startup. As promised, here is the followup post on what motivated us to think of a better strategy for startups.
I worked on 2 startup ideas for the past 6 months. Both didn't work out quite well. One may argue that it is hard to determine if a startup will be successful within 3 months. In this post, I am going to share the process that I used to determine the viability of my startups.
Failure 1: Resohub
My first startup (which I started working on since April 2015) is called Resohub. Resohub was a search engine for software developers. It was a problem that I was interested in solving because I had the pain of not being able to find software development information easily on Google. There were a few problems with Resohub but the major one was people are not willing to pay to use it. Unfortunately, I started out with the assumption that people would be willing to pay for it. This means the business would hardly be bootstrap-able.
Getting funding, nowadays, is in general tough. The best way to get them is to show traction. It was hard for us to get other people to use Resohub instead of Google (which means that there wasn't much traction). Furthermore, our team wasn't very experienced so our credibility was not as high as other grey-haired team or some young shot who sold their companies even before they made any sales. :)
The lesson learnt here - make sure you validate your assumption if your product is sellable (or you can grow users quickly). This is actually a very important part especially when your target market is a small niche.
P.S.: in the future, I still hope to work on Resohub. But, perhaps it might be better off being a free/open-source tool. Whether it can be a business, that would be another topic for another day.
Failure 2: Build-2-Master's concept of teaching teenager to code
This is actually an interesting failure. To summarize the failure, there was no market for selling coding lesson to teenagers.
So here is what happened. I started out by asking around teenagers (during the summer) about their views on learning coding while building their own project. I interviewed about 50 teenagers and they generally like the idea. However, selling it was a different story. There was actually little motivation for students to learn coding during the school year.
I did not understand why that was the case. So, I tried to understand more about high school students' life by offering tutoring service. Surprisingly, I can get 3 to 5 tutoring session every week. By tutoring students, I understood that most students priority is to get good marks (or pass the exam) so that they can get into good universities. Getting good marks requires a lot of time and effort for them. It would be absolutely natural for them to choose not to learn coding because they cannot see it something that will help them to get into good universities.
So, the lesson is - unless you are a superb salesperson, you should always sell to your customers' priorities.
The main problem with these failures
Failures will always be part of entrepreneurship. However, the main problem with my 2 failures was that it took me too long for me to realize these ideas will fail (exactly 3 months each). This is why we believe that there is a need to fail fast in the world of startups.
One possibility that I have been thinking is to sell even before doing any market research is performed. This will validate that your product/service is indeed sellable. There are framework out there that suggesting doing a Problem Interview and a Solution Interview. Sometimes, I really question this approach because 90% of the time people will be nice to you and say that it is a good idea. However, asking them if they will pay you for it right now, then they will start to speak out their thoughts.
Our Proposal for First Time Founders
For first time founders, we are proposing that you first ask if people will pay to pre-order your product or service even if you don't have a full product yet. This step should be done in the 3rd stage of our proposed strategy (i.e. Initial Customer Acquistion). You should try to create a very simple prototype at this point to make your idea more sellable. Often, it is hard to predict what exactly people will buy and why they buy it. Therefore, we believe that it is better to start experimenting with selling and see the feasibility of a business.
If you have 1 or 2 people who willing to pre-order it, you know you have some market. Now, if you want to do the Problem or Solution Interview, then please feel free to go on ahead because those interview can help you improve your product/service.
On the other hand, if no one is willing to pre-order or buy it, then you should really re-evaluate the idea. Try to understand people's priorities and their concerns of buying. Is there any way that you can address those concerns? Can you align your product with their priorities? If not, it is probably a good time to switch.
If you have any comments about this topic, don't forget to leave a note below in Disqus. Next time, we will do a simple mathematical analysis on the importance of pivoting.