From Idea to Validation

The Idea

In our new venture creation class, we are challenged to find new market opportunities that can be developed into companies. One of my role models, David Rose, challenged us to start with a problem that someone has, one that is so severe they would gladly pay you to fix it and one that they have already tried to solve themselves (so you know they are serious about fixing it, unlike my poor chat bot.)

I noticed that in all the entrepreneurial research I have done, three things jump out:

Thinking about my experience in processes at work (PMO offices and IT Support have a few) and how you can help people stick to them, I immediately thought of a software based solution. By building the equivalent of project management software but for startups (or product management), we could let nurturing institutions and mentors define milestones in an easy to visualize, easy to track way that founders could follow.

This would both help avoid founders jumping the gun and make mentors more effective since they could see the status of their teams at a glance, see who is stuck and what deliverable items are due. I was fortunate enough to pick up an amazing partner and we got to work.

Building Interview Skills

Wanting to follow what we were advocating, I fought off the urge to start coding and we read up on customer development interviews (Lean Customer Development by Cindy Alvarez is a fantastic resource for this.) We carefully designed questions making sure not to be leading or biased and reached out to people in industry.

We discovered that this was a frequent pain point - what we called mentors were spending a huge amount of time keeping people on track and getting milestones reached. The founders we spoke to were even enthusiastic - by having a simple dashboard with links to what to do next (and instructions and examples) they felt they could be more productive and focused.

The customer development and business model seemed to be coming along well with enthusiastic responses. Third party research pointed to an exploding market (dozens of new accelerators opening every year, whole new markets getting in on the startup game and corporations pushing innovation aggressively to survive new competitors.) We had found a problem that people were already trying to solve: several people we interviewed already had things carved out to attempt a solution (one had built a workflow in SAP, another had someone working part time to code the basics.)

A Roadmap to Success (and some technical fun)

As we concluded the first and second round of customer development interviews, we had a much clearer idea of what functionality and features seemed to be the most important. We spent time wire framing and figuring out the integrations for each feature and then built out a rough road map of most important (authentication, billing, process definition, milestones) through the least (theme customization, individualized branding, integration to Facebook) and then designed a high level architecture using .NET Core that could support the road map.

While we didn't do much in the way of coding (wanting to validate the idea first), I did take some time in the evenings to check out a few options for back and front end designs. The Blazor framework from Microsoft was especially appealing: being able to offload much of the processing to the users device using Web Assembly (and only writing in C# instead of Javascript) was a very appealing idea. We compared back end services in the major cloud providers and worked out a rough expense model at different scales and using different technologies (NoSQL vs. SQL or PAAS vs VMs running code.) It was a fantastic opportunity to take stock of the capabilities of the major cloud providers.

The Trouble with the Problem

The problem we eventually found is that many, many accelerators are tied to academic institutions (and expect steeply discounted educational pricing) or work on very thin budgets with staffing and facilities representing the majority of spending - research indicated that less than 2% of spending was on software and services.

While we suspect there is a market in corporate innovation hubs where funds are more plentiful, there is a much higher need for integration with existing enterprise software and processes seem to be much more varied in nature driving up customization costs significantly while there was little moat to prevent undercutting.

In short we found a great problem but not one people would pay us much to solve. Our time in the MBET program is short, so we decided to move on to the next idea having learned a ton about customer development, built a great network of people at accelerators & incubators, and researched the most popular and common commercialization frameworks (I do love a good framework!)

Check out the pitch deck here from before we found the revenue issues to see some more research.