Scribd
Upload
11 views3 pages

Notes Lecture3

The document outlines key metrics for validating startup ideas before launching a Minimum Viable Product. It emphasizes the importance of addressing a significant, growing, and urgent problem, as well as the potential for emotional connection and customer lock-in. The notes provide examples and frameworks to evaluate the viability of startup concepts effectively.

Uploaded by

Ashutosh Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
11 views3 pages

Notes Lecture3

The document outlines key metrics for validating startup ideas before launching a Minimum Viable Product. It emphasizes the importance of addressing a significant, growing, and urgent problem, as well as the potential for emotional connection and customer lock-in. The notes provide examples and frameworks to evaluate the viability of startup concepts effectively.

Uploaded by

Ashutosh Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

Note3: Validating startup ideas -

Lecture Notes by Dr. Rahul


Kapoor

It is typical you will have multiple ideas before starting up. “Real” validation will
happen when you actually launch a Minimum Viable Product in the market and see
the results. But there are some frameworks you can use to evaluate your idea,
before even starting to build a product.

What does a good problem look like?


Below I have mentioned 8 metrics that can help evaluate how good your idea is.
No idea can score well in all the metrics, but you would want to score high in as
many as possible. For example, you are in a big market, but the industry might be
declining!

1. A LOT of people have the same problem: Quite simply, you are in a large
market with millions of potential users.
Starting businesses that cater to basic necessities like food, transportation,
relationships, education, healthcare, fitness, jobs, finance, etc. will fetch a big
potential market.
For example, you decide to start a business for household cleaning services or
personal chef services. You will likely be able to target a large market of
working professionals and nuclear families in urban areas.

2. The problem is growing: Covid-19 has accelerated the digital transformation


of traditional businesses. Export of IT Services is still one of the most
profitable businesses in India. IT Services and Consulting giant of India, TCS,
grew 16% in its latest revenue figures year on year.
Many states in India have targets to achieve adoption of Electric Vehicles
(EVs). Various studies have reported phenomenal compounded annual growth

Note3: Validating startup ideas - Lecture Notes by Dr. Rahul Kapoor 1


rate (CAGR) of 36% to 90% in the EV sector by 2030. It might be a good
industry to make a contribution!

3. The problem is urgent: Solutions that solve an urgent problem are likely to
command much higher prices. Solutions related to healthcare and emergency
services come in this category. For example, you have a solution to prevent
loss of life and property during emergency monsoon flooding.
But there are several other ways urgency works. Sometimes it can simply be a
“starving crowd”. Think sanitisers and face masks during peak covid times. Or
what if you can open a food stall outside a sporting venue or a night club? You
get access to a hungry crowd who will likely pay more than standard prices.
Urgency can also be catering to people who are faced with a deadline. Blinkit
offers 10 minute delivery for common grocery items. A large part of their target
market are people who require something urgently. Imagine you have
unexpected guests at home!
Think about your own startup idea. Can you cater to a group of people for
whom the problem is urgent? Faced with a deadline? Brainstorm a bit!

4. The problem is frequent: Ideally, you want your customers to have the same
problem multiple times. Subscription services are a good example to evaluate
your startup idea using this criteria. We use subscription services for
broadband, groceries, apps like youtube, and so many other things!

5. The problem is mandatory to solve: Schools and colleges are a big and
profitable business in India. There is really no alternative for parents other than
sending their children to schools. In order to get a decent job, you will have to
complete a graduation degree from a recognised institution. This is an
example where it is mandatory to fulfil some criteria!
These scenarios happen often when industries have accreditation and
certifications. Suppose you can help do consultation and documentation for a
restaurant who wants to obtain or renew their Food Safety License (FSSAI). Or
help companies achieve ISO quality certifications.

6. Problems where you have an unfair advantage: This has a lot to do with
“founder-market fit”. For example, I have obtained a PhD in Patent Analytics
field. I worked at the cutting edge of the field for several years. This made me
in a good position to convince clients for consulting projects in the field.

Note3: Validating startup ideas - Lecture Notes by Dr. Rahul Kapoor 2


Jessica Ennis-Hill is a former female heptathlon athlete who won the gold
medal in 2012 Olympics. She recently launched her startup app that helps
women athletes train around their hormonal cycles. Many women worldwide
look up to her as a role model and that gives her an almost unfair advantage to
recruit users for her app!

What are your strengths that can make it easy for you to capture the market?

7. Problems that customers feel emotional about: If your product or service


caters to a strong emotional need of a person, you are likely to fetch a big
audience, as well as people who are eager to pay. Let’s say you create a
device to relieve back pain. People suffering from chronic ailments have
strong emotions for solutions to their problems.
Similarly, products catering to children have a strong emotional connection
with their parents (actual customers). Children education, health, growth,
safety, all come within this category. Imagine you have a product that installs
CCTV cameras with Artificial Intelligence based notifications in play schools,
play grounds or homes!

8. Problems that can create “lock-in”: Imagine there is a factory that uses
essential third-party tools. When your goods are an integral part of your
customers’ systems, “switching” is not easy. Such “lock-in costs” can bring
perennial revenue as long as your customers are in business!
We use Google Cloud and several third-party SaaS services. Some of them
are an integral part of our system. Another example can be online premium
storage services like iCloud, Drive, DropBox, etc. Once you store large
quantities of data, it is difficult to move in the future. You’ll literally be
subscribed for life.

Many software companies have extensive training programmes for their own
products. For example, Salesforce has certification to train personnel in their
CRM and ERP systems. This creates a pool of talent who know how to use
Salesforce software. Companies often adopt Salesforce owing to the
availability of talent!

Think how you can create “lock-in” with your products or services!

Note3: Validating startup ideas - Lecture Notes by Dr. Rahul Kapoor 3

You might also like