Episode 16- How to validate ideas?
Podcast Transcription
Ravi: Hi there, welcome to episode number 16 of Spontaneous Conversations, This is Ravi Gundlapalli, founder, CEO of Mentor Cloud.
Rajesh: And this is Rajesh Setty, a serial entrepreneur, and a co-conspirator with Ravi for this series.
Ravi: [laughs] Yeah, it’s truly a conspiration. So, the topic, Rajesh, we selected just before we hit the record button, is how to validate ideas. They say ideas, anybody that takes a shower has ideas. Ideas keep coming into our head and I also heard ideas are a dime a dozen. But, how do take… you’re an expert on of bringing ideas to life, which is fascinating way to describe yourself so, that’s why maybe that idea came to my head is how do we help people validate that idea which can eventually see the light of day?
Rajesh: Yeah, so Ravi, I’ll start, and then of course we’ll have a conversation about it. See I always believe that if the idea is really, really compelling, somebody will be willing to pay for it, even before It’s manifested in your life. So, whenever I work with someone, people tell me that I have this brilliant idea. I ask them, have you tried to sell this to someone? They said, but I don’t have a product yet. So, assuming the product was going to be there, I would try to sell this to someone. Some people always say no, but what if they ask me, but show me the product and everything. So, although they over-analyze what might be the conversation looking like, and in reality, they are afraid that their idea is not good, and they’ll get exposed so, they don’t even try to talk to someone to say like the product was good, we’ll buy it. and if you’re going to buy, can you make a deposit?
If you don’t want to make a deposit, can you sign an MOU? So those hard conversations will really, really help, but they don’t want to do it. The second reason people tell me is that don’t work because they’re not doing it. I don’t want the idea to get out, which means that somebody else might steal it. Seeing a big company, Ravi, let’s say like Boeing or some company like that, there are trade secrets and everything. So, nobody wants to give away what’s coming up in the next [inaudible 2:20] or something because it can be disastrous. In the startup world, I always believe that it is very difficult for people to steal ideas, because people aren’t waiting… OK, where is the idea? Next idea I can steal. I’m just waiting to steal somebody’s idea, nobody is doing it. So, my advice to all these people is, if you have a really good idea, you’ll know who you are targeting. Just have the conversations with them and see whether they will buy the idea. Now did they make a deposit. If it is that good, what work will they put something at stake for them?
Ravi: Correct. I think that those are excellent inputs, Rajesh. I remember I used to work at [inaudible] technologies and the founder of [inaudible 03:09 ] sold the idea first. The idea of supply chain management. And he went to a company and said, I have this idea, and just the sheer passion, the way he described the idea, the way he wanted to build a product, he got a $5,000,000 check saying you’re just your passion, your energy, and your innovation. We love it. We think if there’s anybody who can take the idea into reality. It’s only you so that’s how we built [indiscernible 03:37] technologies into one of the greatest supply chain companies, but we didn’t wait to build the product. So your first thing about finding somebody who really sees the passion and the seriousness about your idea. I think it’s extremely valid and excellent advice.
Rajesh: Yeah, plus Ravi, you and I know that good ideas are very helpful. Good products are very helpful. But without good distribution, both of them are useless, so somebody has to make that idea and the product built on top of the idea make the market, which means the distribution has to be there. So, when I tell people, start talking to people. I’m just telling them to test the distribution channels. Like one of the distribution channels for [inaudible 0433] is Intel [indiscernible 04:22], because she is believing in it passionately, working day and night, weekends, early mornings, late nights, everything. So he or she has to have the ability to settle the value of the idea. The second thing on that front is sometimes people think that because they have had a problem, they think the whole world has a problem.
Ravi: Correct. That’s a really important point is that the fact that this so-called customer validation comes in. Because definitely as an entrepreneur you have to have a problem, because most startups are… here I tried to do this, it didn’t work. Very quickly I realized I’m not alone. There are 10 million people that have this problem. So, let me create a product or the company, I think that’s really important to get that validation, very quickly. Is it only you or are there enough people like you? I think that’s the first point of validation.
Rajesh: Yeah. Totally agreed Ravi. So, it starts whether the problem is painful enough with somebody who’s willing to pay anything. And sometimes there are problems, people live with it. They say it’s good enough and the cost of changing with the solution that comes to solve the problem is so high that it’s better to live with the problem itself.
Ravi: And you used the magic word, they are willing to pay. So we are living in a world where there are lots of lots of things that are free. So, one of the things that the new economy has actually taught us is that they’re paying with money, or paying with their time. , the fact that people are spending time on Facebook is they’re paying with their time; on Twitter, on Instagram. There’s no money exchanging hands there, but people are sort of drawn to your product. They’re willing to spend time, which is indirectly gives you a business model once there are enough people using it. So, paying with their attention is as good.
Rajesh: Yeah so, we live in the economy which is called the attention economy. So, if they’re paying with their attention, that attention, can be monetize because somebody else needs that attention. And they can broker that attention. We can sell somebodies attention for somebody else’s money. So, one more thing I want to bring up Ravi, for the founder, he or she should be able to highlight the problem for which they’re creating a solution to amply wherever the amplifying the problem itself in the story such that people. Be able to amplify the problem itself in a story such that people will say, yeah, that’s right, that was a problem. I was living with it. Why am I living with it? I can solve it and there is a solution for it. I didn’t know that this was a big enough problem. So they should be able to define the problem so well that people say I see it.
Ravi: Correct. I think what you’re highlighting is not a solution looking for the problem, but a problem being identified everybody relates to and then you have a solution for it. So a lot of people come up with ideas, and there’s really no problem, and it’s not big enough. It’s not painful enough like you said. So that’s a way to validate your idea is that did you get the idea in the first place because of the problem that you had? Ninety-nine percent, that’s the case. Like you’re trying to watch a game and you couldn’t watch it. That’s a problem. Now, six months later you probably got an idea how to solve it, but don’t talk about the idea. Quickly kind of dig deeper into what was the problem that happened yesterday, last week or six months before that kind of got your brain to think, this is an idea?
Rajesh: Makes a lot of sense. The good news Ravi, is this, if you’re an introvert, for example, they’re a brilliant thinker, but they are an introvert and they are also a little bit conservative, just to add to the complexity, but do think you have a great solution. And you want to talk to the customer but you are not ready because you feel somewhat, I don’t have it. This is the first time I’m building a company. How can I go with [indiscernible 08:30], let me actually put some money in; build a product, and everything. Our theory here is before that, go and validate, but you’re an introvert, so how do you do it? The good news is 15 years ago you could not do it. Now you can just see, this is the target market that I’m going after. What are the keywords that people will be using when they have a problem, when people in this target market have a problem [inaudible 08:57] and then use that, put some money for advertisements like Google AdWords or something. Create a compelling landing page and offer them something white paper or basic preview or something. And then actually see if somebody bites that. So, for a thousand dollars, bring an introvert, conservative, and everything, and another $500 dollars to create the copy landing page. You can actually test the idea. Because if somebody is even interested to download anything related to that idea.
Ravi: Yeah, I think two thoughts come to my mind when you say that there’s one, that’s probably not an introvert problem as maybe an engineers’ problem, right? Engineers don’t want to look stupid in front of other people that… hey, what a silly idea that you want to look good. And the more intellectual you are, or the more smart you are, the worse it is to kind of expose yourself or be vulnerable. So, most people end up spending a lot of money. And I have done that. I have done that spending so much money up front. So now when I mentor entrepreneurs, I’m telling them, don’t spend a single money, single dollar until you have talked to enough number of people and there’s somebody out there to say, yeah, this is good, so you don’t need a pretty product. In fact, Reid Hoffman said, “if you like your product, you have waited long enough, too long.
So being able to put the idea out there, being able to put something that something has been cooked up, it doesn’t matter. Even if you are to hold two wires together to make a point, that’s good enough. So, encouraging entrepreneurs really to not be afraid about sharing ideas. Like the second point is people think, oh, they’re all the people kind of have their antennas up to listen to ideas, but everybody’s so busy in today’s world. There’s so much going on. You know, when I was starting, Mentor Cloud, people would say, hey, why are you open to talking about it? Wouldn’t Cisco do something? Wouldn’t LinkedIn, do something. You know, they have their own things and the story I always give is, just because my friend talks about going to Hawaii, I will not go because I have the money. It has to mean something to me. Right? So, similarly when ideas are shared, companies don’t jump and implement them. They have things their own things They have the money. Can Cisco do something? Yes. Do they have the smartest people in the world? Yes. But it doesn’t fit into what they are doing. So, Ideas should be shared.
Rajesh: Yeah, I’ll tell you one place where people have to be careful. Some really thinks they have an idea and they have an idea for a company, but in reality that idea is just a feature for another product, but they think it’s the full company product. First of all, they think it’s a company, that maybe wrong. Or they think it’s a product, that may also be wrong. It probably is just a feature. That is when somebody might steal that idea because for them, oh, this is just a feature for our product. Let’s just incorporate it and put developers there and everything. When somebody says some big company stole their idea, in most of the time it was just a feature. The whole product itself, like you rightly said, companies are not waiting. OK, let’s look at all the startups, which can we steal? Because they the move very slow, first of all.
Ravi: Correct, they have their own headaches, they have their own internal bureaucracy, and so on. So, I think the point that I want to highlight in what you just said is, is the idea just a feature in a bigger product, or is idea a product itself? I think entrepreneurs or anybody that says they have an idea, this distinction is very, very important. Because then their own expectations of what can be done with this idea will become a lot more real.
Rajesh: Totally agree Ravi. Makes a lot of sense. So, we are at about 13 minutes so, should we give some closing comments?
Ravi: Yes. So, I think I highly encourage all our listeners to look to write down every idea that comes. The first thing is when an idea comes into your head, the problem with our mind it starts to come, and ideas vanish. So, they should have a notebook in their car, in their room or their website, that they’re writing down these ideas, and then validate them. And the idea that bugs you the most over a period of time is the idea you should work on because it’s entrepreneurs something bugs them. That’s where they just jump and do something. Out of 10 ideas, if one is constantly coming to your mind. That’s the one you want to probably most likely be successful at that.
Rajesh: So, my closing comment is this, in addition to what you just said. I always believed that the only way, a surefire way to have a good idea is to have a lot of ideas because most of them will be junk and a small percentage of them will be good. And, when I talk about validation, I also want people to think that ideas can get validated, not just by customers, but by investors or people who say, this is really cool Ravi, I’m willing to put some $50,000 if you do it. That’s validation. Not directly as the customer validation where somebody is willing to put something at stake. Or somebody will say, you know Ravi, if you do this, I’m going to quit my job when I come and join you. That’s again, putting something at stake. And we’re always looking at will somebody put something at stake because they’re so [inaudible 14:36] to the idea. The potential that comes with it. So, the only way to know it is by sharing it with many, many people. We talked about the idea getting stolen, and if it gets stolen, there’s a really good chance that it was not a product or a forgettable company, it was not the product, it was just a feature in somebody’s product.
Ravi: And I think one of the other things should keep in mind is people can copy an idea, but they can’t copy you.
Rajesh: The structure cannot be copied.
Ravi: The structure cannot be copied. Right? So, that’s one thing people should remember is, look, if yours is a simple idea and somebody can copy it, then it’s probably not what you worth your time to take it and create a company and then have some surprises later.
Rajesh: Yeah. If there could be that easily copied, even when you build it, it’s out in the open anyway. Somebody else will copy it.
Ravi: Exactly. So, you spent all this money and time, and somebody copied it. So, really it is a reality check. The more you share, you are actually saving a lot of agony by realizing early on that this is a feature, like you said, that nobody’s willing to, how many people are willing to pay for it with their attention or with their money, and you know it only by sharing, not just building a product in a vacuum for one years, spending a lot of money and then ta-da, here’s the product. And then what’s a big deal know? So, sharing is the only way to validate your idea and saves you a lot of agony as an entrepreneur.
Rajesh: Very good. So, signing off, this is Rajesh Setty, and you can find more about me at Rajesh Setty dot com.
Ravi: And this is Ravi Gundlapalli, you can visit us; you can learn more about us at Mentor Cloud dot com. Thank you for listening.
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