Are You Guilty of Self-Validation?

This is a big bias entrepreneurs tend to have when starting up. I have been very guilty of this.

How do you know your business idea is good? Do you feel it or do your potential customers say that? A lot of the times we feel that there ‘should’ be a need which our product/service caters to. This should can be quite risky. Before proceeding with the idea, a proper validation is a must. Self-validation, i.e. validating the idea yourself, is a trap entrepreneurs often tend to fall into.

A proper and adequate validation involves doing the following:

Assessing whether a need exists: Some good ideas to do this are

- Talk to/survey potential customers

- Identify whether customers are interested in your product by analysing their current behavior

- Create a MVP and test out your hypothesis

- Conduct a comprehensive research (including primary and secondary research)

Is the market big enough: Try to estimate the potential market size the idea is catering to.

Will the customers be willing to pay for your product/service: Analyse whether your business idea has advantages and customer would be willing to pay for it.

This is very crucial as following up on an idea which has not been adequately and appropriately validated can result in waste of time, energy and resources.

Top Reasons Why Startups Fail

Startup Failure is considered a taboo in many parts of the world. However, it is a phenomenon which is highly prevalent and cannot be avoided. Nearly 90% of startups fail within the first 3 years of operations. Top 20 reasons why start-ups fail include the following:

#1 – Building a solution looking for a problem, i.e., not targeting a “market need”

#2 – Ran out of cash

#3 – Not the right team

#4 – Get out-competed

#5 – Pricing/Cost Issues

#6 – A “User Un-Friendly” Product

#7 – I got this product. Now I just need a business model.                

#8 – Poor Marketing

#9 – Being inflexible and not actively seeking or using customer feedback

#10 – Release product at the wrong time

#11 – Lose Focus

#12 – Disharmony with Investors/Co-founders

#13 – Pivot Gone Bad

#14 – Lack Passion and Domain Expertise

#15 – Location, Location, Location

#16 – No Financing or Interested Investors

#17 – Legal Challenges

#18 – Do not use your connections or network                

#19 – Burn Out

#20 – Failure to pivot when necessary

Source: CB Insights via Seraf Investor

The Power of the “Crowd”

We live in a world where customer is the king and her preferences are changing ever so quickly. For an entrepreneur, it becomes very difficult to understand customer preferences and requirements and to find a good product-market fit in the process. Hence in this world we are living in, tapping into the “Crowd” makes complete sense.

The “Crowd” refers to a mass of people who may be connected or not connected to you. Crowdholding is a platform which tries to connect entrepreneurs with the “Crowd” so that they can derive the host of benefits the latter has to offer.

The benefits of the “Crowd” are listed below.

Diverse Opinions – The “Crowd” is a heterogeneous lot of people coming from different backgrounds and demographics. They all come together as they have 1 common interest – engaging with entrepreneurs around their business ideas. This ensures that suggestions and opinions received by entrepreneurs on the platform are diverse and focus on different areas of the business.

Unbiased Feedback – Since the entrepreneur has no previous attachment with the people engaging with his/her business idea, the feedback received can be safely assumed as unbiased.

Implied Agreement – Any opinions which are reiterated time and again can serve as implied agreements by the “Crowd”. Since these implied agreements are opinions of a number of people, the entrepreneur can use the same in further design and development of the product.

Statistically Significant – Even statistically, data collected from a bigger sample of people has more significance when compared with data collected from fewer persons. This data collected can be analysed by clubbing into categories and trends can be identified which again can be used in product development.

Cheaper – Finally Crowdsourcing feedback and ideas consumes lesser time and lower cost when compared with other means to do so.

So if you are a budding entrepreneur and have a business idea, put it on Crowdholding and let the Power of the Crowd assist you in realizing your dream.

Startup Idea - Marketplace for Unconventional Advertising

The Problem – Limited advertising options and increasing advertising budgets have led to steep rises in advertising rates of these options. This has affected the return advertisers can get on their advertising spend, at times making it unreasonable for them to do so.

The Solution/Startup Idea – A marketplace connecting sources of unconventional advertising with potential advertisers. This includes adverts in places like gyms, hotels, salons, educational campuses, residential areas etc.

Rationale – A host of unconventional advertising sources exist which are largely untapped. Tapping these would tend to bring down the advertising costs of advertisers, help them target better and also generate additional revenue of vendors of these new advertisement options.

Target Market –

Customers – Advertisers (especially local businesses, SMEs etc.); New vendors of advertisements (local options like gyms, schools, hotels, salons, spas etc. and online options like blogs, personal websites).

Geography – Global (launch can be in a particular city/country)

Current Competition – This unconventional advertising market is still untapped.

Competitive Advantage – The market is largely untapped. A first mover advantage can prove to be a significant competitive advantage. Also the volume and quality of the data will create barriers to entry in the future.

‘The Brexit Effect’ in Business

A human tendency we often tend to ignore in business is what I call the “Brexit effect”. This is when some people find fault with a product/service and spread their discontent to their near and dear ones. This tends to spread quickly and eventually becomes a movement. This may be a difficult task as negative feelings spread much faster than positive ones. The mood in this group of people becomes one of “we want change”, without assessing clearly the alternate they may be changing to. This effect can prove to be a big risk for any established business and must be addressed before it gains significant traction.

This effect may sound unreasonable and trivial. However, I feel this is the effect which has had serious implications on public decisions in the recent past (some events which we all know about ;) and is a problem established businesses are always grappling with.