This article explains the process designed by Brent Freeman, President, and Founder of Stealth Venture Labs, a Studio with 10 years of experience in e-commerce and marketing. In this article you’ll learn the idea validation according to Brent Freeman.
In the last article we discussed idea validation according to Jake Hurwitz, this is not the only method. Let’s see some alternatives together.
You can read the article about Jake Hurwitz here.
Before starting, here are the articles you can find all the articles published in our blog about Startup Studio Model.
- The Startup Studios advent in Italy
- History of Startup Studios Model: a 30-years journey
- Types of Startup Studios
- What’s the difference between Accelerators, Incubators, and Startup Studios?
- Startup Studio approach to market
- The Startup Studio Benefits
- How startups are crafted by a Studio
- How to validate an idea according to Jake Hurwitz
Now we can start!
5 things to keep in mind
In the startup context, the idea validation process is fundamental to check if the product or service really works.
According to Freeman, the validation process takes a maximum of 5 weeks; in that period you have to understand if it works or not.
This method is longer compared to Hurwitz, he said that the idea validation must take no more than 3 days. Both methods show you how important it is to perform crash tests to be sure that the idea to be developed can survive the go-to-market phase.
5 criteria to remember when launching a product:
- Passionate target people: know deeply your target audience, you will tailor a product/service that is perfect for them.
- Large target market: the larger the market segment, the easier scaling the product.
- Disruptive value proposition: truly innovative and revolutionary value proposition is fundamental.
- Compelling market economics: draw up an economic prospectus and a business plan before starting the business. Always keep in mind the P&L (Product and Loss Statement). This will help you to be able to estimate as accurately as possible future gains and losses.
- Solving market pain: is your product a “Must Have” or a “Nice to Have”? No right or wrong answer, but this strongly influences the growth of your business.
Through these criteria, it’s possible to measure the Product-Market Fit that represents the ability to satisfy a real need in a given market.
The computer scientist Marc Andreessen defines it as follows: “the Product-Market fit means being in a good market with a good product that can satisfy it”.
Now we can proceed to illustrate to you the idea validation according to Brent Freeman.
Exploring Freeman's methodology
Here are the main steps to be followed to launch a product.
Use platforms based on algorithms (social networks like Instagram and Facebook) to understand if the audience addressed exists and how it expresses itself and its internal dynamics.
Always try to identify your target audience, it is not important the target size (few thousand or millions, it is irrelevant).
If possible, identify the sub-segments of the target like different declinations that the same target can have, the goal is having a spectrum as precise as possible.
If you’re targeting a limited market, you can’t aim for a big return: it has a low possibility of generating large profits.
Identify a Total Addressable Market (TAM), composed of the entire target audience. The sales funnel slowly gets narrower, not all the target will buy or use your product/service. In this way, you can identify your “Core Target” in the funnel.
You can either consider an existing product/service and add and improve with some new features or you can design it from scratch, creating something never seen before.
The Profit & Loss have to be clear in your mind to understand when the losses are no longer sustainable, and when you are generating profit reaching the break-even point.
Being able to determine the net margin allows discounts, promotions, sales, and other economic strategies to make your product/service more attractive.
Solve a Market Pain
Which pains does your product solve?
- Is it convenient?
- Does it save time?
- Does it save money?
Now, you know how important it is to know your product and target audience; a deep analysis of these two elements will definitely help you to get rid of uncomfortable questions and future problems.
In the following article
Now you know the validation idea according to Brent Freeman, in the following article we’ll show you the validation idea method by Francesco Cardoletti.
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