The entrepreneurial playing field can seem complex from the outside.
But the more you immerse yourself in it, you would understand that the product idea is basically half the battle.
Why is that so?
Sure, we all have ideas. But to have the ones that actually are viable and can turn enterprises profitable are quite rare.
And usually take a lot of time to emerge.
As an aspiring entrepreneur yourself, you might have a product idea of your own.
How you do you know if your product idea is worth being pursued?
Well, that is why we bring this blog to show you exactly how you can figure this out.
Why should you evaluate your product idea?
Aspiring entrepreneurs have a lot of virtues. Determination, passion, resilience, people’s skills — they are an amalgamation of the right skills that allow them to make things happen.
These virtues are however just the springboard for whatever they wanna pursue and build. These do not guarantee success on their own.
An entrepreneur can be good at the what and how of doing things. But if the product idea itself is not something that can make a buck, then no amount of effort can change that fact.
It is better to know beforehand if working on such a huge undertaking makes sense.
Also, being virtuous or skilled does not automatically guarantee that your ideas themselves are anything out of the ordinary.
Self-confirmation aside, evaluating a product idea (and possibly successfully validating it) can help you attract capital and talent much easily.
This could happen in so many ways — word-of-mouth, where people just hype around the potentials of your product or an online award and mention from g2.
In any case, there is nothing to lose and a lot to gain from evaluating your product idea.
Now, let’s get on with the how-to.
Evaluating your product idea
Identify the assumptions you have around your product idea
If you are a human, then you have a confirmation bias around your values or skills. There is no escaping this.
This is not generally bad for projects that are pursued individually.
As it often happens at startups, to increase the feasibility of the product’s success and enhance the company culture, like-minded people are hired to get the work done.
Similar people, similar confirmation biases.
The compounding effect can be so huge that talented teams can sometimes fail to make a standout product.
Or have a startup go off its rails, like WeWork.
Product ideas generally come along with three types of assumptions.
|Wrong (Quibi)||Right (Dropbox)|
|Problem Assumption||People want content that is exclusively made for smartphones||People want to be able to transfer files with ease|
|Solution Assumption||Create short-form content that will be movie-quality||Create a platform that can handle and store every file|
|Implementation Assumption||Being able to produce enough content to attract a huge amount of early-adopters||Being able to sync files across multiple devices|
Of course, other than these two assumptions, there are the market and the product’s uniqueness assumptions.
The market that Quibi was trying to capture, to provide content for people who primarily entertain themselves on their smartphones was never unfulfilled, to begin with.
Instagram & other social media, YouTube, and Netflix & other streaming platforms provide enough entertainment to smartphone users.
Especially YouTube, which has been at the forefront of on-the-go content and has billions of hours of content in every language.
And is free.
If Quibi had appeared on the market a decade ago, then things might have turned out to be different.
Like Dropbox, a pioneer of personal cloud storage.
To test your assumptions, you will have to:
- Write everything that you know or have thought about your product
- Match it with similar products (which brings us to the next point)
Compare your product idea with that of a competitor’s
Unless you are a pioneer like Dropbox, there are high chances that someone has already built what you want to.
If you still think that your idea is original, then consider this — even an innovative product like that of Google.com wasn’t original.
This part is highly easy to explain but would require you to spend a lot of time and thought regularly.
Just search for the keywords that you think describe your product best and then filter them based on your niche and similarities between your offering and theirs.
Here are some sample questions that can help your thought:
- How does their product solve the problem?
- Can you do it better?
- Do they have something that you do not?
- Why do people like their products?
- What are their most-obvious weaknesses?
The last question is your low-hanging fruit as solving that alone can get you a lot of customers. For example, the problems of traditional bulky CRMs like Salesforce are solved by lean competitors like Less CRM.
Take it to your customers
All research and strategy aside, the best thing that you can do is get your idea evaluated by your customers.
And it is not just what they say, but also what they feel about the product that matters.
You can create something that is quite functional, but if the customer base is not attracted to it, then it would fail.
Doing this alongside your market research and competitive analysis would give you a clear idea of what your users actually need.
Run a marketing campaign for your product idea
Most B2C companies manage to make sales via advertisements. You can run an ad for your product idea to see how eager the market is (and if it even exists).
This might seem like a simple exercise but actually can give you a lot of insights.
Customer Acquisition Costs (CAC) should never exceed the Recurring Revenue if a startup and its product want to stay afloat.
And, to reach profitability, CAC should gradually decrease.
Depending on how well your product-market fit is, CAC might become nil as well (think Google Search).
If a mere ad with a basic description of your product gets you a lot of impressions, then you can be sure that this is something worthwhile.
But, if you don’t, then your market might be one that needs a lot of awareness-based content.
That just implies a lot of CAC which might not pay off at all.
This exercise should just be one of the metrics that help you decide how good your product idea is.
Check how strong the product idea’s USP and UVP is
We’ve already established that new product ideas are not always completely new.
However, certain aspects of your product can be iterated to bring out a unique offering.
Vague ideas like “let’s make an app that lets them book taxis” do not work.
- Bring out the Unique Value Proposition (UVP) that tells you and anyone who will build the product what truly differentiates the product.
- Frame a complementary Unique Selling Proposition (USP) that boosts your product’s value.
|Uber||The smartest way to get around||Get 10% discount on every second ride|
When you define a UVP for your product idea, not only do you inspire your team to put their best foot forward, but also offer users something irresistible.
The UVP also lets you show the investors that your product is capable of gaining a competitive advantage over time.
Here are some more Unique Value Proposition examples:
- Airbnb: Book unique places to stay and things to do
- Uber (for drivers): Get in the driver’s seat and get paid
- felyx (e-scooters renting startup): Travel through the city in a fast, affordable and sustainable way
- Asana Rebel (yoga startup): Design Your Perfect Day
And some templates that will help you define your product’s value proposition —
What makes a product idea viable?
The pointers until now would have given you enough insights about your product idea. Now, let’s look at the things that would suggest that it is truly viable.
The demand side of your product
- Size — If a lot of people have the problem that your product intends to solve.
- Growth — If product similar to yours have gained a good traction and hold a certain popularity in the market.
- Urgency — Some problems are huge experiential gaps that plague users. If you are solving that, then users would adopt it in no time.
- Frequency — Most products that get quickly successful tend to solve frequent and common problems, like trying to get a cab on time.
The supply side of your product
The ideal solution
Intending to solve a problem and actually solving them are two separate things.
To win in the market, you would have to offer something that:
- Does not take long for users to figure out
- Does not need users to invest any additional resources
- Has an intuitive UX so that the user just can solve the problem without thinking too much about it
- Clearly shows users what the product is capable of
- The founders of Uber experienced the difficulty of finding a taxi in San Francisco themselves.
- The founders of Airbnb experienced the challenge of making cash as students while their apartment remained underutilized.
Further, the ideal solution allows hooks people into using the product over and over again — because a) it just works b) it gives users a sense of satisfaction.
All these things are part of the Hook Cycle, as described by Nir Eyal in ‘Hooked’.
The target audience
You should clearly and completely know the people you are building the product for.
This means knowing —
- their exact needs
- how often they would interact with the ideal solution
- the intensity of their problem
- how they behave when they face the problem
But this does not stop here. You’d have to take it further by realizing all of these insights into user personas that can be referred to at any point.
User personas are quite useful as they let your whole team discuss, brainstorm, and develop solutions with complete clarity.
Once you pinpoint them all, it makes for a smooth sailing for your product’s journey.
Coming up with product ideas is quite hard.
You’d have to wrack your head, observe people, follow the market, and in essence, understand what makes the industry tick.
But that is just half of the journey.
The next part is realizing your product idea.
Building it is a whole new set of challenges and can overwhelm an aspiring entrepreneur.
Worry not, as there are quite some digital product agencies out there that would love to work on your product it.
Or at least put down the right processes for you.
Thanks to their varied experience, digital product agencies can also help you with the whole process of evaluating your product idea as well.
What are you waiting for?
Start up, now!