Do Your Research!
By David Horowitz
So you have decided to start your own company. Congratulations and welcome to the wonderful world of entrepreneurship. You will be joining thousands of individuals all over the world who this year will be starting new innovative businesses.
For those of you who know me well, you know that I am a big fan of trivia and game shows (more on that in a future blog post). So in that spirit, I’d like to try to incorporate trivia and games into these blog posts going forward.
Today’s Trivia Question:
You have decided to start your own business, the first thing you should do is: A. Immediately seek venture capital investing B. Begin to build a prototype that articulates your vision C. Go hire and form a team that will impress investors and can build the product or deliver your service D. Do your research – speak to as many external parties to validate your idea
Of course the answer is D, but you already knew that from the title of the blog post.
You will be amazed at the number of entrepreneurs that pitch us ideas at Genacast without having spent the time to research and receive external validation from their product or service. It is one of the easiest and cheapest things to do but for some reason the hardest to execute on for entrepreneurs. And by showing up to an investor pitch and not doing your research is even a foreshadowing to the investor of how you will execute the business going forward. Let’s drill into further detail on what it means to do your own research.
Research is defined as conversations with third parties to gauge their interest in buying your potential product or service, the urgency or timeliness of the product or service (does this solve an imminent problem or pain point that they have), the competitive landscape of who else may offer similar or substitute products, and finally how much they may be willing to spend on the product.
There are three main constituents you will want to speak with in your research: (1) decision makers at potential customers, (2) potential partners who sell related products or services to that one you are envisioning, and (3) industry experts.
You should identify a list of potential people to speak with (of course, try to meet in person whenever possible). Use LinkedIn or other social networks to get warm introductions to these people. Take no more than 30 minutes on each conversation and be prepared with a list of questions that you want to run through. Be respectful of people’s time, but do ask them if you can contact them back in future – you may want to run them by the next iteration of your product or certainly contact them back about their interest in becoming a beta customer. The beauty of this whole exercise is it should cost you next to nothing (although always be generous and buy them a cup of coffee if they are taking time out of their busy schedule to meet with you).
You will be amazed at how much you will learn from this exercise and more than likely you will have even changed some of the key features of product or even convinced yourself that the business is not viable (all on your own dime and before you even speak to a single investor let alone spend investor’s capital.) And most importantly you will impress potential investors with your thoroughness and thoughtfulness on the market you are targeting. I absolutely love when an entrepreneur comes up to me and shows me all of the research they have done that validates why they are moving forward with their business idea.
On a related note, I like the advice that Gabe Weinberg at DuckDuckGo gives around seeking out entrepreneurs who may have already failed at previous companies in and around the space that you are targeting. Read Gabe’s post here.
Also my friend Frank Rimalovski (@rimalovski) of NYU’s Innovation Fund suggested including this great quote from Steve Blank. Thanks Frank!
“Founders will almost certainly commit to 20,000 hours of their lives…to deliver a breakout success: a sustainable, scalable, profitable business...Why, then, are so many founders so reluctant to invest even 500 or 1,000 hours upfront to be sure that, when they’re done, the business they’re building will face genuine, substantial demand or enthusiasm” -Steve Blank’s blog
Feel free to get in touch with us at Genacast if you have done your research and ready to speak with us about investing in your exciting business.