An Expensive Spark: Validating Before Investing in your Ideas
5-minute read covering cost-effective ways to validate a startup idea with minimal upfront investment.
Welcome to A Founder’s Life for Me! I’m Alek, and based on my experiences building companies, I provide practical recommendations on developing your company and career.
The Spark
I was sitting on the couch talking to nobody. For the past year, as I’ve developed my AI meeting assistant, Solidly Meet, I’ve spent a surprising amount of time talking aimlessly to my computer. Nobody was there to listen; it was just me and my microphone. I’d do this to test Solidly’s transcription efficacy. How well was it determining the words I said? How well did it summarize the content?
The tests were going well, and then Jason Bateman responded. He talked about his experience acting and directing. Will Arnett and Sean Hayes chimed in shortly afterward. When testing Solidly Meet, I needed to simulate a meeting between multiple people. I couldn’t just monologue; I needed someone on the other side of the phone. So, I’d queue up an episode of the podcast “Smartless” and transcribe portions of the podcast.
This time wasn’t like the others. I’d run hundreds of tests in this way over the last year, but this was the first time a spark of an idea came to mind. I can learn a lot from podcasts, but I don’t have the time to listen to them all. What if Solidly could listen to podcasts for me?
The Expense
Part of the reason I’m a repeat founder is that I get obsessed with ideas. Sometimes, an idea dies immediately after someone thinks, “It would be cool if…” Other ideas are pushed a bit further over several months. Too few ideas become real.
I’ve had ideas that fall into each of the three buckets. When I come up with an idea, my brain immediately asks, “How would I build it?” I mentally map out the technical system required to solve the problem. The map comes with a little scale bar that helps me gain a rough estimate of “How long would this take? How ‘expensive’ will this be?”
Typically, I try to conceptualize a simplified version of the idea that could be executed quickly (e.g., in less than eight weeks). But, the opportunity cost of my time is expensive. I’d be forgoing income from contract work or spending less time with friends and family.
The obvious answer is, “Hire someone.” I’ve previously worked with teams to build out the initial version of an idea. But that’s not cheap either. Ballpark — I’d expect this to cost $20k to $30k for a 6 to 8-week project. It’s not a bad option, but it’s still expensive. If you’re fully employed and want to take your idea as far as possible before disclosing it to your colleagues or marketing. Then, hiring help is a great move.
Shameless plug — I’ve worked with people to help them build an initial version of their idea. If you want to breathe life into your idea, contact me at newsletter@alekhagopian.com. I’ve built a startup, brought it to market, sold it to another company, and I’m helping others do the same.
A Less Expensive Alternative
At the risk of losing potential clients, I’ll share a less expensive strategy vs. “Hire and build.”
For the few ideas that do come alive, most are short-lived. You hit inevitable “go-to-market challenges” or never find “product-market fit.” You’ve lent your time, energy, and money. And, a lot of the time, your idea doesn’t pay you back. Rude!
But, how do you minimize that risk? How can you be sure that your idea will work before you invest?
For my podcast idea, “WatchdogAI,” I’m spinning up a marketing website. I’m building nothing. I’m validating whether people want the thing before I create it. This goes against my nature; I like to build things. But I’ve built plenty of things nobody has wanted, and I’ve learned to validate before investing. I need to prove people will pay for the service.
OK - but how can you prove people will pay for a service if doesn’t exist?
I’m launching the marketing website with a special offer: “Pay $50 today and receive a guaranteed discount on your lifetime subscription when we launch.”1 This upfront monetary commitment will prove whether people are interested enough in the service to pay. With this strategy, the “worst case scenario” is that few people are interested. In that case, I would decide not to build WatchdogAI and refund their money.
But how “expensive” is this strategy to build and launch? End-to-end building marketing pages for my website and a simple payment system will take far less time and expense — $2k would be the ballpark price tag. And in my case, I’ve learned to do all of this myself. I can gradually build this as I have free time, making the opportunity cost, effectively, free.
Lessons Learned and Moving Forward
If you want to take the first steps toward turning your idea into reality, you have two options: 1) build it or 2) start marketing it. Each strategy has its advantages:
Build it
Pros: Proves your idea is possible. No need to broadcast your work.
Cons: Expensive. Delays knowledge of whether customers will pay.
Marketing & Sales:
Pros: Inexpensive. Pulls forward knowledge of whether customers will pay.
Cons: Hard to do this silently. Delays knowledge of whether your idea is possible.
What you should do depends on your situation. As a self-employed individual who knows his idea is possible, I have the flexibility to take advantage of the “marketing first” strategy. Think about the right strategy for you, and feel free to contact me if you want to get started but don’t know how.
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By sharing my experiences, I hope to provide insight and advice to entrepreneurs facing similar hurdles. Please leave a comment or email me with any questions.
If you’re interested in hearing when this idea launches or want to take advantage of this special offer, email me at newsletter@alekhagopian.com.