The other day, a friend pitched me his idea for a startup.
In fact, I hear many ideas from friends all the time. Some of them are great ideas, others not so much. But in the spirit of being truly helpful, I’ll never outright state that an idea is a “good” idea or a “bad” idea. It’s much more helpful to analyze and take a stab at predicting challenges and strengths of that particular idea.
In my experience, this are the most recurring challenges that come up in other people’s ideas.
- Not understanding the difference between features and value – I’ve found that many people often think of products or services with a ton of features without really thinking about what value it adds to the customer. For example, a feature for a service can be a lower price, faster process, etc while the value is something along the lines of helping people be more efficient, introducing them to the people they want to meet, etc. When looking at a product or service from the angle of understanding value, you can much better identify your target audience and segment the market.
- Not using the pay-certainty technique – In order for a business to be sustainable, it has to be profitable. (unless you’re doing a labor of love out of the goodness of your heart) Profitability is a big challenge, especially in a world where everything is accessible online and online is free. As Ramit coaches, the pay certainty technique is nothing more than looking at your audience and asking 1. does this person have the willingness to pay and 2. does this person have the ability to pay. Those two questions, combined with pricing psychology and market size determines how much revenue and profit an idea can generate.
- Not knowing why they are uniquely equipped to solve this problem – Anyone can come up with an idea for a product. I think of multiple ideas everyday. But the reason I don’t pursue 99% of my ideas is that I know that someone else can do it better or someone else is doing it better. In order to build a successful business or product, it helps for the entrepreneur to have the right credentials, meaning the combination of experiences, connections, or otherwise that will propel them to success.
- Not being practical enough and knowing how to test their ideas – Generally, I have not found that people have a hard time dreaming big enough for the vision of the endeavor. However, much more common is not being practical on a day to day basis and focusing on the things that truly matter. There are a million different things that startups can spend their time on, but there are very few things that ultimately is worth a startup’s time. The core thing that a successful startup needs to do extremely well is building a product that adds immense value to the customer. I like to ask myself what I’m doing on a regular basis improves the customer’s experience.
- Not being clear with what they want – Fuzzy goals breeds fuzzy results. If you aren’t clear with exactly what market you want to be in, exactly what value you’re adding, and exactly how you want to grow, it’s hard to know which opportunities to take when they present themselves. It’s easy to get caught up doing a million different things that don’t really matter, and it helps to identify the exact things and opportunities that a company will take before they even present themselves.
- Not understanding the challenges of scale – There are many things that don’t scale. For example, personally emailing every single customer that buys your product. This may be okay in the beginning, but quickly begin consuming way too much of your time as your product becomes more popular. Knowing how and when to scale is crucial to tapping into exponential growth.
Just a couple thoughts. Many of these are challenges of my own, and as I ask others these questions, it often helps me solidify the answers when it comes to my own ventures.