Validating an Idea Part One: The Problem
Validating an idea is typically a struggle for entrepreneurs, but it’s the first thing you must do successfully. Looking back now, there were several key aspects I stumbled upon in validating my startup idea on the journey to creating $1 billion-plus in value that I didn’t consciously realize then. They’ve since become more concrete and helped me succeed in other endeavors. This multipart series will help you do the same. Let’s get started.
Idea Validation Starts with Problem Validation
Before getting to the idea, you have to start by validating the problem you’re solving. Focus less on your way of solving the problem. First, determine whether it’s a problem worth building a successful business around. Many founders get so excited about the new solution and idea they’ve come up with and immediately jump into the building and pitching without acquiring the deep knowledge that comes with problem validation. Great success is in problem-solving, not idea generation.
Creating a Learning Advantage to Help Validation
You can give yourself an advantage and shorten the validation process by starting with a problem you’ve experienced or acquiring significant knowledge of the problem space as the first part of your validation journey. This isn’t always necessary, but knowing the problem well can give you a head start because you know where to go, who to talk to, and obvious solutions to rule out. If you’ve experienced the problem, you will also have a general idea of the market. This will help you have more meaningful validation conversations more quickly.
In my view, the ideal problem is one that you’re very familiar with but not necessarily an expert in. If you’re an expert in the problem and its existing solutions, it can be a disadvantage because you may have blind spots. It’s important to remember that the best approach to a solution may not be the approach that currently has the most traction in the market. If you’re an expert, you may risk defaulting to the approaches you’re familiar with. You may inflate how pressing the problem is to the general market if you have an in-depth understanding of its ins and outs. At the same time, if you’re a novice, it can also put you at a disadvantage. Being a novice increases the difficulty of validation – you’ll have to spend a lot more time learning the context of the problem. This is why I find problems you’re familiar with but not an expert in to be the best ones to try and solve. This doesn’t mean you can’t try and solve problems you’re an expert or novice in, but you need to be aware of your knowledge level and how it could impact the process. If you’re an expert, build in extra rituals of reflection and evaluation to hold yourself accountable. If you’re a novice, allow for more customer discovery conversations to get you up to speed. Talk to more subject matter experts and problem owners.
When I first ran into the idea of building software for the mental health space, I knew very little about the mental and behavioral health space. I had never been a counselor, behavior analyst, or anything close. I did not know how payments or insurance worked. Nothing. My first step was to get a ton of knowledge by talking to several counseling and behavioral health centers about the problems they faced. I even created tools to help in the day-to-day for the company that became my first customer. Those learnings were invaluable, not just in building the product but in knowing the market, daily workflow, and the problems I needed to solve for the customer.
Urgency, Importance, Frequency, Impact, and Problem’s Owner Influence
Once you’ve started exploring a problem, you need to rank it based on the factors that will be key to building a successful solution. Is it a problem that needs a vitamin or an aspirin? In other words, would a solution to this problem make someone’s life incrementally better? Or would it take away a major pain point? Talk to others who have the problem. Ask them directly how frequently they experience the problem and how urgently they have to solve it when it happens. What’s the impact from the standpoint of the number of team members affected? Is just one person at the company affected? Or is this problem widespread across a full team or even company?
Try and tease out where this problem ranks compared to the other problems the person you’re speaking to has within the overall context of their role. Try to assign a score on urgency, importance, frequency, and impact from these conversations on a scale of 1 to 5 or 1 to 10. Remember that you’re not ranking your idea or solution – you’re ranking the problem state. You want a problem that ranks high in urgency, importance, frequency, and impact. Do your best to be brutally objective in your ranking. Even if you have a great solution in mind, if you’re not solving a highly urgent, very important problem, you won’t grow. Also consider the influence of the problem owner. If the person with the problem can’t drive decision-making, you’ll struggle to close deals. They need to have some level of influence over choosing to buy a solution.
Side note: Notice if some people don’t rank a problem as urgent and important but others do. This can be a signal to you that you need to niche down. Some market segments may rank a problem's urgency and importance differently. Focus on those ranking the problem as high in both categories. Are they in the same role at their company? Do they belong to the same affinity group? Investigating this will help you find your niche.
This is just a start to the process, but selecting and understanding the problem you are going to solve is essential to validate your idea. Dig deep and give this process time and energy it is worth.
In the next newsletter, we will discuss the buyer as part of the validation process. The knowledge of the buyer is critical to the success of your company. Overlooking this sets you up for failure and needs to be part of your validation process. Keep an eye out for the next installment of this series.