Startup Mentoring Q&A: Establish Must-Have Demand Before Committing Resources

Time for another startup-mentoring Q&A: 1. Teams can become trapped in their own idea, convinced it is special and necessary. Target users may have more urgent problems. It is actually difficult to find an idea with no demand whatsoever; the priority of that demand matters. A user may acknowledge the need but rank it thirteenth, while the top three or five issues need immediate attention and the first three get any available money. That makes the idea a nice-to-have, not a must-have. Investors prefer must-haves to nice-to-haves. 2. Before committing resources to an early idea, I recommend complete customer-need interviews using the 1-2-3 rule: one-on-one, two hours each, thirty target users. Use open-ended rather than leading interviews. Open-ended means asking which problems matter most in their lives and having them rank them. Leading means immediately asking whether your particular idea is important or whether that specific need exists. 3. Only after establishing that the need is real and sufficiently urgent should you invest in product development, marketing, and brand building. If demand does not exist, everything afterward is unnecessary. 4. If interviewees consider it important, ask what price they would accept for a solution. Users willing to pay early on send a positive signal for later investment. 5. Early fundraising is difficult and generally starts with the 3Fs. Receiving money from target users is the best signal for investors. 6. Be cautious even with free tests and free field trials. A trial may be possible, but persuading customers to pay afterward is another hurdle. Ideally, receive real payments from the start. Validation involving actual payment is the most genuine. 7. Before validating technology, building a product, or raising money, confirm target users’ willingness to pay. 8. Recycling and remanufacturing ventures often face higher costs. Whether customers will pay them requires a fuller cost-benefit analysis. Everyone says ESG matters, but that does not mean they will spend more on it unless compelled. 9. Where possible, attend trade shows and approach established companies. Many already have scale and global sales channels. Rather than selling to customers one by one, a startup can position itself on giants’ shoulders. 10. Educating consumers or markets is expensive. Where possible, avoid a venture requiring that education. 11. Even an MVP costs money, so interview target users first, again using open-ended questions. For consumers, ask what problems they face and have them rank them. Ask what they might do to be more environmentally responsible and what they would pay. Remember to discount the amounts stated very heavily. For business customers, likewise avoid leading questions. Do not begin by asking whether ‘this startup idea’ is important. Let them describe operating or production problems first, then potential environmental initiatives, and rank those needs. If open-ended answers never mention your idea, carefully reconsider whether to make it your business.