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Kacharagadla Featured Article

5 Ways to Validate a Business Idea, Right Now

Don't let your day job or lack of capital stop you from finding and testing a business idea. Here's how.
Last year, I embarked upon a personal challenge to validate a business idea in 30 days. To make it even more difficult, it was a random idea chosen by my readers. They asked me to do it without using my existing website, traffic and business connections and without spending more than 20 hours per week on the project. On top of that, I limited myself to spending no more than $500 validating this idea. The experiment was a success.In just two weeks, I built an email list of 565 subscribers without having an actual website. Then, I reached out to a handful of those subscribers and pre-sold 12 copies of a book that didn't even exist yet, all in less than 30 days. I wrote about the experiment in real-time with in-depth weekly updates, successes, failures and lessons learned along the way, right here in my validation challenge. Today, I want to share with you the five most effect…

The Right Way To Launch A Successful New Product

The vast majority of corporate R&D is done by well-established companies investing in relatively low-risk, medium-return, N+1 (next-generation) products. These products and their business models seldom need more than a few tweaks. For development and go-to-market teams the N+1 process is quite routine.
The Challenge
Problems present themselves on big gambles: new products and markets. They bring new technology platforms, customers, use cases, and even channels. Despite the considerable resources and experience that established companies have, new product development is a heavy lift for any team.
Additionally, new-product teams – engineers, designers, marketers, and general managers – typically lack the shared, face-to-face customer experiences and layers of data it produces that they have with pre-existing products.
To address this, teams buy market research, conduct focus groups, do A-B web testing, and assign a marketer and technologist to interview prospective users. This produces a single-layer of survey data that the team uses to deduce their new product and business model.
The flaw in this process is that customers are not exposed to the results until beta or worse – at scale — when bad news arrives that’s too late to fix.
Some companies address deduction risk with market validation. They walk their business model and test-sell their product. What they test, however, is often visionary and vague and produces false-positive conclusions, the worst kind of result.
Prospects still didn’t see the product, its use cases, specs, limitations, roadmap, use cases, implementation requirements, support services, or price, all of which are common sources of bad news which only reveal themselves at purchase and first use.
Solving these problems takes a process and skillset that most N+1 teams don’t have.

Minimum Viable Product
Develop the Minimum Viable Product (MVP), that which has the highest return-on-investment versus risk. It’s the product that’s ‘big enough’ to sell in volume, with good margins, but not so big as to have exponentially increasing risk and investment with each new feature.
The MVP is also a mindset of the management and development team. It says, think big for the long term but small for the short term. Think big enough that the first product is a sound launching pad for it and its next-generation and the roadmap that follows, but not so small that you leave room for a competitor.
A team can be its own worst enemy when it comes to ‘minimal’. Their imagination, pride, professionalism, brainstorming, etc. heap one idea atop another unbounded by risk and investment considerations.
For example, Symphony from Lotus, the company that invented the spreadsheet was too big, the equivalent of Excel, PowerPoint, and Word in a single product. It failed and dramatically devalued Lotus.

Get on the Right Track in 90 Days Using the Scientific Method
Hypothesize the product and business model; design ways to test them, conduct tests, and pivot until you succeed or realize you’re doomed no matter what you do.

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