Build Your Next Unicorn With These Three Simple Steps
The startup scene is pretty rife with founders using a problem that they have themselves in order to build a billion dollar business. If you look at many of the billion plus dollar businesses of today, they came from a founder, or sets of founders, having a problem:
- Why isn’t there an easy way for me to do X?
But solving your own problem is only a small part of the program. There are three key elements that you need in order for your startup to survive and thrive:
Step 1: Solve Your Own Problem (Passion)
From this, most founders, having an entrepreneurial streak, will likely try and figure out some way of doing X easily. This may happen while they are in your employ, or it may happen when they are running their own business. They may, on their own, or with like minded people around them, (who may eventually become co-founders), simply go ahead and build “an easy way for them to do X”. Sometimes, if they feel that they don’t have the ways or means of being able to simply build something to “do X”, they may, if they are a social person or an extrovert, may be able to find others that they know and convince them to help to build “X”. This happens a lot. If they don’t have the connections, they may try to build it themselves, or fund it themselves, and hire a team to develop X for them. I’ve seen this happen a lot as well, we’ve done it ourselves for a number of startups, on their way to becoming their own unicorns.
Now a lot of founders actually stop here. They figure that, hmm – I have a problem doing X, and I would pay for something which would help me do X, and many of the people who I know are also willing to pay for someone to do X for them, ipso facto, there MUST BE a demand for X. Since everyone I know needs X, and I know a lot of people, I’m almost 100% sure that if I built X, it will be a huge success.
Not to go back to election talk, but isn’t that what most people said about Trump being elected? If I had a nickel for every time I heard someone around here say “I can’t imagine how he won the election, NO ONE I KNOW voted for him” (Maybe, that’s another thing that our hyperconnectedness does to us, make us feel like we really know what is going on in the world, even though it’s only just going on around us. Here is a good case for hyperpersonalization basically tricking us into thinking our candidate was going to win? But I digress.)
You have a great idea. It solves your own problem and therefore you love it. You tell your friends about the idea and they love it. (Of course they do, they are your friends, and they may also love it) You figure that there must be tons of people out there just like you, who would also benefit from the problem being solved. So in your zeal to be agile about it, you start throwing money (or time) into the development of said X, without really doing the market research to determine if there are enough other people out there just like you, who will pay as much as you will for X.
I’m all for jumping into building something first, then seeing if the market will buy it. However, it’s important to stop for a bit and think.
Step 2: Figure Out How Many Others Are Like You (Demand)
Who else will be happy that you solved this problem? How many of those people are out there – and specifically not people you know – unless of course you are a rock star or some other kind of internet celebrity with hundreds of thousands or millions of followers. If that’s the case, no matter what you launch, it will probably be successful, since you already have audience, building traction for your future unicorn is much easier. But I digress again. Reach outside of your social circle and find out how many people out there are like you. It’s fine if there aren’t that many people out who do need an “easy way to do X”, the number of people who need what you are building can be large or small. This will indicate the price that you will set for being able to do X for them. Your target market is important, without demand, you may have a great idea, but not a great business. At its simplest, here are the parameters you could use:
- Low-End consumer or small business: low price, high quantity, possible lower quality, or huge cost savings
- High-End consumer or mid-large business: high price, low quantity, higher quality or huge time savings
Anything less than huge savings in cost for low-end and huge savings in time for high end is not worth doing – you will simply not get enough traction in order to survive. Homejoy was a perfect example, great idea, problem was the founders to solve, but there were not enough customers who would pay that price for that level of service. There is no need to go nuts and spend tons of money on market research – just go out and do some informal polling outside of your echo chamber and attempt to get some solid results at a number of different price points.
Even better – pre-sell your product or service on a service like Kickstart or Indiegogo, or set up your own demand website which takes pre-orders. Set up your value proposition, then work to drive people to your demand website. Here is a great post on measuring demand for a possible product, just by using freely available tools that are out there.
Step 3: Once You’ve Unearthed the Demand, Go Ahead and Build It (Skill)
Now, you’ve got the solution, and you have the demand. Once you have those, go all out – feel free to learn, code, hire, build to your hearts content, knowing that your idea will have a slim chance to succeed. Yes, unfortunately, even if you have skill, passion and demand, 90% of startups still fail. But that should not deter you – wouldn’t you rather look back and say “well, at least I gave it a shot”, one way or another? A full 10% of startups succeed, and some of them even become unicorns.
Once you have all three, you will have reached what I call startup nirvana, the perfect combination of passion, demand and skill which probably means that your startup will be one of the lucky 10% to survive.
Now is the time. Go do it.
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