Identifying and eliminating bad startup ideas is crucial. A framework with three pillars is presented: evaluating real risks, predicting organic growth potential, and converting early customers. An AI solution for improving communication and customer interactions in the service industry is proposed. Understanding and addressing risks is important, as well as starting with a specific problem to propel your business. Ethnographic research helps in understanding the customer experience and identifying problems.
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Quick takeaways
Identify and address the biggest risks from the customers' perspective to turn them into strengths for your startup.
Target processes rated 4 or lower to offer significant improvements and motivate customers to adopt your solution.
Deep dives
Identifying and Flipping the Core Risk for Customers
Entrepreneurs need to view risks from the customers' perspective to understand their biggest obstacles. By addressing and flipping these risks, businesses can turn them into strengths. Customers are more willing to try something different if it helps them overcome urgent problems. Plus, businesses should call out the perceived risk and provide counterintuitive explanations for why their approach is less risky and more advantageous.
Predicting Organic Growth Potential with the Delta 4 Scale
To predict organic growth potential, entrepreneurs should identify the current process customers use to solve a problem and determine if their product offers a significant improvement (a "delta 4 jump"). Replacing processes rated 4 to 7 out of 10 is unlikely as incremental improvements won't motivate customers to adopt new solutions. The key is to target processes rated 4 or lower, which customers will gladly adopt and share with others.
Finding a Wedge Product and Ensuring Conversion Logistics
To acquire the first batch of customers, entrepreneurs should offer a "wedge product" that solves a specific, urgent problem within their broader business idea. This wedge product gives customers a reason to buy and helps the startup gain momentum. Through ethnographic research and closely observing customers' daily routines, entrepreneurs can identify the critical obstacles and design their products to address them effectively.
Today, we'll lay out a framework to help you identify and kill bad ideas. It's hard to objectively evaluate your idea early on - this framework helps you rise above your idea to do it effectively. A side-effect is that the framework will help you find and pursue the good ideas.
We talk through 1) Finding and Evaluating the Real Risk, 2) Predicting Organic Growth Potential, and 3) Predicting the Likelihood of Converting Early Customers, using a startup idea from a listener as an example.
00:25 - Killing Bad Startup Ideas 02:00 - The Three Pillars of the Will Your Idea Fail Framework 02:45 - The Startup Idea - AI Messaging for Plumbers and Electricians 03:15 - Dig out of a Hole Markets link to episode 05:56 - Smooth Jazz 06:24 - Part 1 - How to Find and Evaluate the Real Risk 07:35 - Flipping your biggest risk to your biggest strength 11:00 - Decisions aren’t made in a bubble 13:45 - Part 2 - Predicting the Organic Growth Potential 14:00 - Kunal Shah Delta 4 Scale 17:41 - Part 3 - Predicting whether you’ll actually be able to get first customers to convert 18:49 Managed by Q
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