Escape the City: StartUp School - Launch Your Business Idea!

Exercise: Generate New Ideas

1. Choose a Customer Segment you're curious about: e.g the elderly or new Mum's

2. Now write down 50 problems for this demographic in a maximum of 5 minutes.

Consider a day in their lives. What problems do they encounter as they go through their days, weeks and lives? What are their emotional, physical, financial, psychological, and even spiritual challenges? The more micro or focused you can be the better. 

3. Identify the top 3 problems from your list.

Make this decision based on your curiosities, where you think the biggest 'pain' points might be and what you think is potentially underserved. Don't overthink this part!

A set of 3 clear problems for the elderly might be:

- Its hard to move around town to see friends and do errands.

- New communication technologies and culture are making many elderly people feel more isolated from their families.

- Its hard to understand how to best manage their finances as they get older.

4. Next, take a piece of paper and divide into 8. Pick one of your top 3 problems and spend 5 minutes coming with simple solutions.

Frame it as a question.

For example: How might we help elderly people feel less isolated from their family?

Solution: A tablet with pictures of their family on that when you touch them it calls.

Solution: A video diary sent from the family every month.

Solution: A grandchild-grandparent interview tool.

and so on... the ideas can be really basic and it doesn't matter what they are (even if they already exist) as long as they try to tackle the problem.

5. Pick one solution based on the criteria in the next video and you have your startup idea :)

Ideajam: 7 tips to help you decide which idea you should start working on

“I’ve got lots of ideas. In fact, just look at my little black notebook — literally overflowing with world-changing, industry-disrupting, home-run-hitting, unicorn-jackpot ideas.”

For those of us who enjoy playing with ideas, we’ve all been here. We feel a paralysis of action and the excuse we often of use is: ‘I’ve got too many ideas and I don’t where to start.’

The problem with this as an excuse for inaction is:

1. It assumes our ideas are actually worth something before we do anything with them. Sorry, but they’re not. As Derek Sivers says: ‘Ideas are just a multiplier of execution.’

2. Simply generating ideas — even one’s that have never been attempted by anyone, ever, anywhere (they have, just not by you) — is a useless exercise if your goal is to create something of value beyond yourself.

3. It often masks a different problem — not that we have too many ideas but that we have fears around failure, imposter syndrome, or just having the confidence to do something different. These are all justifiable emotions that we need to deal with if we’re going to turn any of these ideas into some kind of reality. Otherwise its just another exciting chat about this ‘genius idea’ that will never be.

I’ve heard this all too often over the last few years working with over 300 people who are trying to decide which idea to start with.

Consider it another way: Thinking about ‘dating’ our ideas is not a blocker for most aspiring entrepreneurs. The problem is when we need to actually go on a date with just one of our ideas, even on just a few occasions, at the ‘expense’ of all the other pretty ideas. But what if the other idea was ‘the one’ we say to ourselves? The problem with this strategy is we don’t know because we haven’t tried. We have to try. We have to commit, a little. After all, a ‘one-night stand’ might just turn into a life-long partnership…

So how do we decide which to date to go first?

1. THE ‘MOM TEST’

Don’t ask your Mum (or other close family member or friend) which of your ideas they think is the best. They will lie to you. Not deliberately, but they honestly don’t know (unless they’re an industry expert for your target audience) and they will tell you what they think is right for you: ‘Its wonderful, you have to do it’ or ‘Its terrible, don’t do it’ — neither is helpful. They don’t know.

2. WORK OUT THE RISKIEST ASSUMPTIONS TO TEST

Of all your ideas and the riskiest assumptions you have for each of them which one would be the easiest, cheapest and fastest to test?

Should I bake gluten free cakes (assumption: people will buy gluten free cakes) or start a school for social enterprise (assumption: people will pay for social enterprise education)?

I’ll bake the cakes. Then I’ll know whether people will buy them and whether this is something I really want to do more of, or keep it as a hobby and move on.

3. GOOD IDEA CRITERIA

Cross check all your ideas with your ‘good idea criteria’.

Your good idea criteria are your top 3 drivers in life that should be considered whenever your make a decision about a project, career direction or startup.

For example they might be:

• The idea has to be able to generate £x income within y number of months.

• The idea must allow me to be able to work remotely/flexibly all of the time.

• The idea must match my core values.

For each idea, check, do I get three big ticks against my criteria? If not, dispose the idea and move on.

4. TOOLS

Like good idea criteria but more even more practical. What tools do you currently have at your disposal?

• How much time a week do you have to work on your idea?

• How much money, if any, do you have to invest?

• How much knowledge do you have about the industry (does that matter)?

• How many potential target customers and early adopters could you easily reach through your network and communities your part of?

Cross-check all your ideas against these resources. You will be much better equipped to test some ideas over others. Start where you are.

5. TIMING

Search all the key word trends for each of your ideas on google and twitter. The one with the steepest upward trajectory wins.

6. IN THE SHOWER

Which idea do you get distracted by the most? If you’re not thinking about your idea on the loo, in the shower, on your commute, in the middle of the night…then its probably not worth pursuing.

7. DECISION MATRIX

Use our idea decision matrix to help you decide. You can put extra 'weight' on criteria that matter more to you:

Assumptions and why they matter

I’d got as far as to say that 99% of startup mistakes are based on misplaced assumptions. These are the things you are banking on being true, in order for success to follow.

No business is immune: Google assumed people wanted to be walking down the road wearing camera-wielding glasses. Sky assumed millions of people would want to watch 3D TV at home.

They both bet a lot of money on some very simple assumptions - and lost.

Some assumptions are more conscious than others. There are some basic things that you might find you’re assuming to be true, without even realising that you’re assumption is just that - an assumption. These are the most dangerous blindspots of all.

The success of your business idea is determined by how true your assumptions are. Which means it makes sense to get really clear on what they are, how you’ll test them, and what you should work on first - so there’s no stepping forward in the dark.

How to understand your assumptions

Step 1: Brainstorm all your assumptions

What are you assuming to be true in order for your idea to work?

Assumptions normally fall into 5 categories

• Your users e.g. who yours users are, what they want, what they’ll pay for

• Your product e.g. which features are most important, how the product will be used, how it solves the customer’s problem

• Your business model e.g. what your costs will be, how much you can charge, what your repeat custom will look like, how quickly you can scale

• Your marketing e.g. what customers want to hear about, where to find them, how much it will cost

• Your operations e.g. how the supply chain or ecosystem works for your product/service, how your team will work

Make a list of all your assumptions. The first 10-12 will be easy - but don’t stop there. Dig a bit deeper to make sure you’re getting to grips with the assumption blindspots that are harder to notice. Make sure you’re covering all areas, the canvas below will help prompt you.

Example: Airbnb's Assumptions

Step 2: Rank your assumptions in order of risk

Some assumptions are more critical than others, knowing which ones are critical gives you a priority order to start working on. Some of the riskiest ones (i.e. I can scale this [insert idea] and still make a margin) you can't tackle straight away but work your way down the list and find the riskiest one you can start working on straight away.

Step 3: Design tests to work on your riskiest assumptions

Design tests to help answer your riskiest assumptions. They may be research, speaking to customers or building minimal viable products to solve your customers problems. All tests should take between 5 minutes and a week or 2. If they are taking you over 2 weeks the tests are too big and you need to scale them back. The trick is to learn fast. The faster you learn / fail the more likely you are are succeed as it is very rare (almost unheard of) to be right about your assumptions from the start.

Below is a test card to help structure your tests.

Map out the main assumptions for each aspect of your business idea, once you have an exhaustive list (20-50), this will become your to-do list. The next step is to distil each assumption into a series of tests and break each one down into manageable and quick tests (2 weeks or less) to either prove or disprove your assumptions.

Defining the problem and your customer landscape

Every successful startup genuinely solves someone's problem. The need must be real, and the solution has to work.

Many founders fall into the trap of focusing on the product - making sure it works perfectly, developing an array of features, making it slick and user friendly. Doing this work without knowing exactly who you’re creating a solution for is a recipe for wasting time and money. You run the risk of building a beautiful product that no one wants to buy.

So, who is the ‘someone’ whose problem you’re solving?

The temptation is always to say ‘well, everyone!’. Your product is so good at solving its problem, that surely loads of different types of people would get value from it. Why rule out potential customers, when they might want what you’re selling?

The reality is that the most successful startups are dedicated, particularly in the early days, to serving a specific target customer. Facebook started with university students before it became the world’s most used social network; eBay initially focused on collectors looking for Beanie Babies and Pez dispensers before turning into the ‘everything’ marketplace we know today. They served a small group of people really, really well - giving their product and business model a chance to establish itself and create firm foundations for scale.

When starting out, the key is to know who your product is for, and who it’s not for.

As Seth Godin puts it: “Just about every brand you care about, just about every organization that matters to you - this is how they got there. By focusing on just a few and ignoring the non-believers, the uninvolved and the average.”

The smart way to picking a niche

Step 1: Map your customer landscape

Your customer landscape is the entire list diverse range of people that you think you are helping solve a problem for. This exercise helps you think about the wider group of people and focus your efforts on one particular small group.

Even though you won’t be trying to help everyone, it’s helpful to start by defining what ‘everyone’ looks like.

Exercise - Mapping your customer landscape

Take a piece of paper, and scribble down all the types of people you can imagine getting use out of your product. These could include anything from mums, students and 30-something city-dwellers, to cooks, marathon-runners, online-grocery-shoppers, and book-lovers. Get creative with it, and take the time to be as thorough as you can.

Looking at everyone you’ve written down - are there any you can discount straight away? Perhaps they’re really difficult to access. Or you know that their specific problem is already being solved successfully by another product. Or you’re building an app, and none of them own a smartphone.

Think about some criteria that are important for your business and product. (Revisiting your assumptions and your Good Idea Criteria may be useful inspiration here). Criteria might be things like:

• You know them well

• They have a particularly high need/pain point

• There’s no solution currently available for them

• They can afford your product

• They own or use the products/services that your product is dependent on or interlinked with

Analyse your personas with these criteria in mind.

Step 2: Pick a [test] niche

You’ll still have a lot of people in front of you but you'll need to narrow it down. The more specific you are the better. Based off the criteria you have selected select a niche you want to serve and want to test. The key here is selecting a niche that you can easily access, has a high pain point and is hopefully valuable to you in either monetary value or in an other way (feedback).

Your working assumption (back to the Assumptions Canvas) is that these are your target customers. If, when you do your customer research and development they are not quite right you can revisit your persona map to pivot to a new focus persona. And repeat.

Step 3: Draft a persona

You may know a fair bit about your niche, maybe because you are the niche in which case jot down everything you think you know about them. For example details about their demographic, pain point, how they are currently solving the problem, how much they are currently spending to solve the problem, where they hang out (online or offline) and anything else you think is important.

It's also worth considering what do you not know about them? What are the open questions you have?

In truth unless you have conducted a lot of user research most of this will be assumptions based so the next thing you need to do is validate that these are true and fill in the open questions.

See attached our persona canvas.

Some ideas for Customer Development:

1. Signup for Typeform and create a survey to test your product and customer assumptions. Before you share it be sure to read through this ultimate list of customer development questions.

2. Get videos of real people speaking their thoughts as they use your website or mobile app.

*** This is THE most important step of all *** 

Obvious thing to state but the reason why most ideas either never make a sale or flop is because they do not create products / deliver services that customers want. It's actually surprisingly hard hard to really understand your users because people inherently lie to you when you are trying to get feedback or do research.

Now you’ve got your niche (or test niche), challenge yourself to get to know them inside out.

It’s your job to understand the nuances of what they need, the specifics of their expectations, and the intricacies of their current behaviours. This is where customer development - or user research - comes in, and it’s something you’ll continue with at every stage of your business.

You can use tools like Typeform and User Testing to do one-off surveys and observe real user behaviours. Also consider what information you can capture from new customers when they first sign up to or buy your product. Not forgetting good old fashioned conversation at every opportunity.

Get in the habit of gathering information on the four pillars of customer development:

• Problem Validation: Is there a problem?

• Solution Discovery: What are potential solutions?

• Solution Validation: Is your solution possible?

• Solution Optimisation: How do you improve the solution?

Standing in the way of reliable, actionable user insights are a couple of hefty stumbling blocks. They come in the form of false positives, quietly guiding you to pursue a path that isn’t necessarily right. Here are some golden rules for conducting customer development research, to avoid red herrings and maximise the reliability of your data.

1. To get to know your niche, speak directly to your niche.

2. Your friends and your mum will tell you what you want to hear - and not give you useful data on which to build your product. Consider their inputs to be the fantastic moral support that they are - but not the foundations for developing your business.

3. Ask about behaviours, rather than opinions.

4. Any variation on ‘Do you think it’s a good idea?’ is going to give you a lot of hypothetical opinion, and little in the way of actionable data (it’s also a leading question - to be avoided). Ask instead: ‘What else have you tried? Did it work?’ If your idea’s a good one, they’ll have looked for solutions and found them lacking. If they haven’t tried anything - perhaps your problem isn’t a real one.

5. Talk about value, rather than price.

6. Ask someone what they’ll pay you, and they’re likely to be more generous than they would be when standing at the checkout. Much better to test different pricing structures and analyse the results - and in the first instance, to ask ‘What do you typically spend on solving [X] problem?’ Gauge what your solution is worth to them by thinking in terms of value, rather than pinpointing price.

7. The past is much more useful than the future.

8. ‘What would you… [do / buy / pay]’ is a shaky foundation for understanding real behaviour. People are likely to be much more optimistic about the lengths they’ll go to, or their willingness to engage with new products. Get closer to the truth by asking about specific past behaviours: ‘Last time you needed to [X], what did you do?’

9. Ask about problems, not solutions.

10. People are experts on the problems they face and the needs they have - focus on understanding these in depth, rather than asking users to come up with solutions. ‘What would your dream product do?’ is a distraction from understanding ‘What do you find difficult about [X] problem?’ Use these insights and translate them into your product’s solution.

Good questions / Bad questions

Checkout this following cheat sheet of question do’s and don’ts, and keep it next to you when speaking to customers.

Alongside real-time purchase behaviour from your early customers (who’s actually buying your product?), these questions will help you continue to validate your persona focus, to ensure you’re targeting the right people.

And of course, while using the above to understand their relationship to the problem you’re solving and the product you’re building, continue to gather information about who they are. Where do they hang out? What other brands are they fans of? What do they do in their spare time? Continue to populate your Persona Canvas to develop a richer, more detailed picture of your target niche.

(If your target customers tell you that they don’t need a solution, they’d never buy your product, or they’re looking for something you can’t give them - rewind to Step 3 and choose a different niche.)

Understanding your niche is in many ways the most important of all. Get comfortable here - you’ll be revisiting customer development throughout your product launch, and well beyond.

If you’re like most early-stage founders, you have a fully-formed picture of your product in your mind. You know what you want it to look like, and what it will be able to do. The path from here to there is to design, build, polish, and sell. Then put it front of customers who (fingers crossed) will want to buy it.

Of course, if they don’t, it’s all too easy to feel disheartened and assume ‘my product doesn’t work’.

But just as there are many possible niche target users to choose from, so there are multiple ways to build your product.

The trick is to hold it lightly. Know that your first solution for your chosen niche may not be the right one - nor might the second or third. But being adaptable - ready to adjust your product/service design, key features, or even use case - will mean you can quickly pivot towards product-market fit.

Exercise: Generate solutions and different business models

The exam question is what is the simplest way to solve my niche’s problem?

Try to detach yourself from any existing vision you might have of your product. Think as widely as you can around the problem itself:

• How are other people solving it?

• Is there more than one part to it?

• What are all the different angles you can take to solve it?

Aim for at least 10 different solutions, to make sure you’re really stepping off the well-worn path of any previous thinking you’ve done.

As well as creating different product/service ideas, this exercise will likely throw up new possibilities for business models and revenue streams, which you can explore in Step 6…

It's helpful to consider the Business Model / Revenue stream canvas below. Go round each box and list out all the different business models / solutions to the problem you're solving.

Which ones do you want to test? Why are you picking them? Is it because you are attached to the solution or that it really does help solve the problem.

Identify your potential revenue streams and your "Key Drivers" business model with our two worksheets, print off and complete with your own costs and ideas for your business. 

For many first time entrepreneurs, business models seem like daunting, complicated things requiring Excel wizardry and a head for numbers.

But in the first instance, the numbers you can scribble on the back of a beer-mat are all that really matter. These are everything you need in order to check if a business idea is viable. No complex modelling or advanced calculations can (or should) disguise whether your idea has legs.

Exercise: Sketch your numbers

Starting with your preferred solution from Step 5, estimate the absolute basics:

• Monthly revenue: (What will you charge) x (How many could you sell?)

• Monthly costs: (How much will it cost you to deliver) + (Any other costs e.g. salaries, office, internet)

If revenue minus costs is above zero, you have a business case. Sense check whether this seems right to you, and adjust as needed.

If revenue minus costs is below zero, revisit your thinking from Step 5 and choose a different solution. Keep sketching your numbers for different solutions until you find one with a viable business case.

Make a copy of our FINANCIAL SANITY CHECK SPREADSHEET and get to work!

Download it here for free: https://docs.google.com/spreadsheets/d/1hUlhvjy0f2rFGNzP3xpGQGb1IXwh_v9HV5dZPR7RiLY/edit

What is your skateboard?

That’s right - it’s Step 8, and we’re only now starting to talk about building a product. Now you understand your problem, your potential customer, and the basic numbers for your idea, it’s time to create something and put it out into the world.

The point here is that whatever you create should be embarrassing. If it’s not, you’ve waited too long to launch or wasted valuable time polishing it. Your first product should be one that you later look back on with your head in your hands, wondering how the hell you got away with it.

This is because:

1. Perfecting something you haven’t tested puts you at risk of wasting time and money on something you’ll only need to later change.

2. if your customer wants your first, embarrassing product, you can be sure they’ll want your future versions. Whereas if you start off by dazzling customers with something beautiful, it may mask flaws in the concept that will take longer to uncover - leading to more wasted time and money.

What exactly does ‘embarrassing’ mean?

It doesn’t have to mean sloppy, and it doesn’t have to be held together with gaffa tape (literally or otherwise).

• If your product/service is likely to have an online presence (which it almost certainly will), you only have to spend a couple of hours using tools like Strikingly and Fivr to create something that looks the part. The design can be completely overhauled down the line, so don’t worry that you’re committing to anything.

• If it’s a physical product, focus on getting together a simple version of it. It’ll have hardly any extra features, just the core function relevant to your idea. And even if future-state includes a whole range (of flavours, colours, complementary products) now’s the time to focus on just one. Don’t worry about fancy packaging (use Canva to create some labels, if you really need to).

• If there’s a technical element to your idea - such as an algorithm, matching, or auto-shipping - put this to one side for now and create the basic, hands-on, manual version of it. It won’t be sustainable at scale, but that’s OK.

When it comes down to it, people don’t care how slick your product is - they care that it solves their problem in a meaningful, practical way.

(If creating this first, simple, embarrassing product is taking too long, head back to Step 5 and revisit other, more straightforward solutions.)

So - got a basic, no bells-and-whistles version of your product to tell the world about? On to Step 9.

If you’ve got a target group of customers giving you money for your product and telling their friends about it, then you’ve hit the ‘startup jackpot’. This is the holy grail for any business. You’re making sales, and each sale multiplies to become more sales. You’ve minimised churn (one-off customers who don’t return or refer) and you’re on a solid path to growth.

The chances of hitting the jackpot first time round are, of course, slim. Tackling Steps 1-7 (and revisiting earlier steps where you need to) will massively increase your likelihood of success.

But should you find that your target niche doesn’t want to buy your product, or refer you to their friends, there are some questions you can ask yourself (or ideally, ask them) to uncover clues as to how you can adjust things. Go back to Step 4 and get stuck into some more customer development.

• If your target customers aren’t buying your product:

• Ultimately they don’t need your product/service for the price you’ve offered.

• Is the problem you’re solving really as big a problem as you thought?

• Are you solving it for the right niche of people?

• Is it being solved somewhere else? (In a better way / for less money?)

• Are you communicating the value of your solution in a way that your customers relate to?

• If you have first-time customers but they’re not referring your product to others:

• Great - people want what you’re selling. But getting limited referrals is a signal that you need to find out what’s working and double down on it.

• What, specifically, is making people buy your product in the first place? What do they care less about?

• What, specifically, is stopping people from referring you?

• Are some customers referring you while others aren’t? If so, say no more - just focus on the customers you know you can satisfy.