Omitting Impracticality in Startup Ideation

By Ritvik Rai (2018B1AB0615P). Within his first 3 years of undergraduation, he founded a failed incubated startup and is currently focused on building another venture. Two tech startup experiences gave him knowledge on how to go about with the ideation stage in building a start-up from scratch.

Behind the bright side of success and hefty net worth of founders in the field of entrepreneurship lies the bigger dark side which one has to surpass to see the light of the day. Meanwhile, while every entrepreneur dreams of being on the brighter side of the show, only a fraction of them actually are able to. 90% of the startups fail within 5 years of the inception of the idea, while most of us only see the failure rate, that is, 90% part of it, one should even give a thought to the later part, that is the years that you lose with the startup that ultimately failed. The point behind this blog is not to make you aware of the harsh reality of the startup ecosystem, since failure and success is part and parcel of life, and even because as the first law of thermodynamics states that energy can only be transformed from one form to another so is the case with experience, it can only be utilised in some or other form but cannot be destroyed and neither can be created without actually getting your hands dirty. The further blog will discuss an aspect that can help one to minimize the chances of failure.

The aspect we are going to talk about is to avoid the impracticality of the idea or solving a problem that does not even exist. I have personally been in the same trap around two times now so I assume I will be able to explain this well. Founders often tend to fall in love with their idea, and no matter what think of their idea to be revolutionary and the next multi-billion dollar problem to solve, but a long time after falling in love trap with such an idea which has already become a unicorn in their head end up to realise that this was not something worth solving or the problem that one actually thought was a problem, never was a problem. The blog is directed towards first-time founders, more specifically student/dorm room startups.

Seeking validation

One might argue that reaching out to people is difficult, talking to them and understanding whether a problem really exists is time taking. Conducting a survey might even seem like a bulk of a task, that too, to get an unbiased opinion. But let me tell you, building on an invalidated idea costs, even more, it costs time (years of time!), money (might as well put you in debt) and motivation (you don't regain the same confidence that you did with your next idea). While if you have worked hard in validating your idea, it boosts your confidence, doesn't let you down when someone tells you that your idea is crap since you have already done your homework.

Often Kunal Shah is questioned about his idea and if he is even building something valid by pouring in such hefty amounts of money in CRED or he is just building it based on his name as a brand in the startup ecosystem. But little do we know about the validation and the survey Kunal Shah did before starting to build CRED. Here is what he said “We did a lot of surveys. We had around 50 interns who went to malls who tested our products before we launched. We did this for 7-8 months before we launched. Why can’t we plan better? It takes a lot of user feedback to understand what the core user motivation is. Every time I decode an idea, I test it before taking to to the market. Unless I get thousands and thousands of positive replies I don’t even think of building a team or writing a code. For example, for Cred we started researching in November and we launched the company in November after that. So 12 months of building and researching. Out of which 8 months was researching and 4 months was building. Founders can benefit a lot from this method. I believe we don’t ask each other questions. When I ran Freecharge I had an understanding of most of India’s internet consumption behaviour. There is curiosity missing from our ecosystem that does not allow us to create original ideas. I believe that a lot of global players that come have much sharper insights about India.” (Link)

Solving a valid problem

Your idea has to solve a problem which the society considers to be a problem, not a hallucination of yours that you consider to be a problem. As founders, we tend to prove ourselves right every time and live in our own imaginary fairy world where whatever we think is right. But, the definition of a ‘Problem’ in the startup ecosystem is a loophole in any system which has a decent number of sufferer attached to it and is scaling at a substantial pace while you have a solution which can help you curb the same and earn money out of it may be directly or indirectly (let aside social ventures which solve for a cause and possibly do not aim to earn but cause a greater impact in the society.)

The main problem that Apple Inc. solved with the launch of the iPhone was the traditional way to interact with the device i.e. through keypads thus increasing the screen size, which ultimately opened the doors to the App Store and multi usability of the device providing a plethora of opportunities signalling to hand-held computing.

Deriving a purpose and the right audience

This is when you pen down your idea, and structure your data into a product, understand the problem that you are trying to solve while checking its legitimacy and collect secondary data to support your case and build the case strong. This helps you recognize your target audience, who obviously faces the problem you are trying to solve. This step helps you understand the different use cases of your product, which you can list and will be helpful in the later stages of product development.

Often you might find multiple use cases and multiple sections of the audience hit by the same problem, but at this early stage, it is not viable to launch each use case and build a solution for multiple communities of the audience. An inverted funnel approach is a way to move, wherein you pick up a small part of a problem that is tangible enough to create an impact and the corresponding small set of audience which face a similar problem and grab this community to build around and improve the efficiency of you solving the problem by reaching to the roots of it. Further addition of features and increase in outreach helps you capture the rest of the audience facing the same problem and scale.

Mark Zuckerberg started up with the purpose of increasing interaction in the community, more specifically within the college community. People in the university did not interact and socialize with each other, neither did they know each other well. Facebook bridged the gap between the two individuals at starting at the university level and later scaled on to any individual beyond millennials.

Knowing your market well

Knowing your market well is very essential to be able to make the best out of different opportunities that come your way. You need to be able to speculate the future of your product and stay ahead of time so that you meet the market requirements well at the time. A delayed launch or an early launch both have devastating effects, what you require is the right timing. A delayed launch will not leave any availability of market share for you while an early launch might sound unfamiliar to the customer which might lead to reduced acceptance of your product and even less customer satisfaction.

Nithin Kamath justifies this as being an elephant but running like a cheetah and the reason behind Zerodha not requiring to raise any venture capital and still being a unicorn was due to the nimbleness and their subtle knowledge of the market ahead of them which they could capture. They knew people in India don't have knowledge of trading but are willing to earn, they even knew that if they had leveraged their knowledge to earn people money so they would be able to chalk out a decent commission from them. Knowing all this, they had a fair estimate of the market that they were going to cater to which is willing to earn but not learn and in return and won't hesitate to pay for the service. This is what led to the formation of Zerodha and helped them scale as they could foresee the future of the stock market wherein more customers were adding in each day.

MVP and early prototypes are Basic

What millennials refer to as “Basic” in their phonetics is the definition of an MVP or a Prototype for a startup. Minimalism has often succeeded in the startup world, you start with solving the basic problem and scale up to provide your user with the luxury in the future, but you hook your users with the very basic features. Providing your user with a plate half full of features helps you ascertain the features of the future based on the recommendations and requirements of the customer. More importantly not doing so and providing with all the features that you had thought of at the beginning itself creates a mess as the user is already not used to your product and at the same time has to hustle through so many features in a single go, this leads to a disinterest in your product. From an investor perspective, providing an MVP or a minimum viable product / a prototype encourages the chances of investment, since it lays a foundation for the investor to believe in you as a founder and gets the initial look and feel of the product that he is investing in and on the basis of the same can loosen his pockets.

AirBedandBreakfast, the abbreviation of what you now know as Airbnb, spoke its MVP in its name itself, an air mattress and cereals in the form of breakfast was all that they provided for a night at a very affordable rate. All this started when they rented out their apartment in San Francisco during a design conference which brought with it a huge surge in the requirement of rooms for people to stay in and affordability was an issue. Their MVP consisted of the extra air mattress that they had and a room which they could lend along with a box of cereals and milk which was the only thing which they could afford considering they were themselves almost bankrupt, but they saw an opportunity of using all this situation to their favour and found in customers who had affordability issue and were looking for a place to stay in. This led to the formation of Airbnb and also was the MVP or the prototype that they tested out.

Validating the social acceptance and regulatory clearance

As mentioned previously that a product should align its launch timing with the requirements of the customers, but there is a slight catch here. You might do all the above process and find your idea ready for a final go-ahead, but this fine silver lining is often missed by us, the social and regulatory acceptance of a product. Assume you got your product validated by millennials and got all the required approval but the rest of the world does not accept it the same way or the regulatory body doesn't approve of it.

To give you a perspective, Google Glass, when it launched, would surely have done all its homework but it had a camera on it, little did they assume that this could cause a major social unacceptance and people might consider it as their loss of the right to privacy. What millennials would have considered as a technology upgrade didn’t see the light of the day due to its early launch, sooner or later we all know that smart spectacles are to come but the right time is still ahead of us and by then it will gain its acceptance in the world as law and humans are meant to evolve, and startups drive this evolution!