5 mistakes in idea validation

Let’s say you have an idea for a new business that you want to validate. Maybe its well developed to the extent of a prototype. What do you do? A number of things but there are some you shouldn’t do. Here are 5 mistakes that I’ve made or seen others make.

1. Ask an expert: The first mistake that many people make is to ask an expert to save time and effort. Usually the expert gives a general answer because there is little more than he can do. Sometimes the expert points out earlier similar ideas and their outcomes. A slightly better situation is when a senior industry executive has been asked. In the least, the answer is better informed. However none of them are a good outcome. Consider that all of these experts know the world as it is; not what it can be with your idea in operation. Also they may not be intimate with the particular small part that you’re looking at since they are seniors overlooking large areas. A better way is to approach the users directly. It will cost time and effort but will cut out any ambiguities. The users will tell you all that you need to do and in detail. You would certainly uncover many things that you didn’t know or didn’t consider. So cut the switchboard in between and get to the source.

2: Only Listening to users: The second mistake is to only listen to the users. Many times users give misleading answers to look good to the interviewer. Many times they are just unable to express what they need or lack as they have constructed their lives to be satisfactory without it. If there is a focus group, users tend to converge on a few points though separatly they wouldn’t agree on the same points! The way out is to go and observe the users in their natural environment. Allow them to settle in their routine if you’re an intrusion and then only record the observations.

3: Ignoring Price: The third mistake is to not ask about price but only performance. Yes people buy for a the performance/features but at a particular price. Its a very obvious point that many forget. So please ask the users how much would they pay. A related mistake is to ask if they like the product and not ask if they would buy the product. Again makes a big difference.

4. Treating all users as same: The fourth mistake is to treat all users as the same. There are different kinds of users and they have different needs. This means that you need to meet a large number of users to arrive at any meaningful conclusions. In a large data set clusters would emerge that would help you decide which users need your idea more than others. Imagine meeting only a handful of users and not coming across many of this cluster and abandoning the idea. Conversely imagine not meeting the needs of this user set well enough.

5: Treating all parts as equally valuable: The fifth mistake is to consider all parts of the idea as equally valuable. This is seldom the case. Sometimes there are parts that the user is indifferent about as long as the core part is delivered. Now if you knew that then you may not waste time and effort on those aspects. So do ask the users what you can cut out and they would still buy.

These are the 5 mistakes on top of my mind. They apply differently in different businesses, teams, idea stage etc. Consider that when using these in your context. Also there are many more so please do share them here.

How to Demo your Product

I wrote this originally for folks who were doing demos at Headstart 2009. Cross posted from Headstart.

Headstart is a tremendous opportunity to connect with early users who can give you feedback and also buy. In order to make the most of this opportunity, its important to be ready with a very good demo. Also, the way of doing the demo differs when you’re in a presentation mode vs a stall talk mode. We’ve put together a few pointers below to help you with these. These are based on our own experiences of making demos and of being on the receiving end of hundreds of demos.

Before we get started, some links to great stuff on the web:

Guy Kawasaki

Jason Calacanis

Luc Richard

Irrespective of whether you’re doing a stall demo or on stage demo, these hold true
  1. NO slides, NO co intro: People will ask these stuff if the product hits the right notes for them. This includes co background, founder info etc.
  2. Just start with the best part: Best part is whatever looks the best or is the key feature. Don’t bother too much with login etc. You don’t have to completely reproduce all the steps that the user has to make. The faster you get to an “Aha” moment, the better it is. The idea is to hook the audience.
  3. Canned vs Live: Canned demo is absolutely fine. Keeps things predictable and under control. Canned demo essentially means a local copy of the web software or a movie of the software in use. Live demo has its advantage when you’re very confident of software’s capabilities; just make it interactive. If you’re on stage, use someone who’s recognized by the audience to be the lead user for the crowd. Can even be the announcer if he/she fits the bill for your average user. In a stall, it can be just about anyone. Do make sure that you do the things for the user instead of them doing it since they are unfamiliar with your system – keyboard, mouse etc
  4. Persistent questioner: On stage, the stage manager will usually pass them “so that others get a chance too”. In the case they don’t, it means that they think that the questions have a lot of merit. In such a case take the follow up question. At any point where there is discomfort, ask if it can be taken off line. If you feel that its getting too deep for a public forum, point it out. At the stall, see if others around are interested as well. If yes, engage. If no, take “off line” escape hatch.
  5. Stupid question: Others in audience too know its a stupid question. However, do provide a short polite answer and move on.
  6. Be enthusiastic: A cheery good morning/good afternoon is enough to make the audience come alive for you. Remember Munna Bhai 2 – “Good morning Mumbai”? Its simple and very effective. Similarly show energy throughout the demo through your body language.
  7. Practice, practice, practice: Catch someone from outside your team and do a rehearsal with them. Higher the no of iterations, the better prepared you are. Practice all steps – including exchange of business cards/stage entry
Stall demos: 
  1. Customize: Get the person’s card and see where the interest is coming from. Just ask them. Then modify the pitch accordingly by emphasizing or deemphasizing the features. Be ready to shorten to a few sentences if the visitor is not relevant. 
  2. Collect info: Ask a lot of questions when you meet someone from your target profile. See if you can sign them up as a user. Find what excites them and what’s a turn off. See if they can refer you to someone relevant.
  3. Build redundancy: If one person gets busy in post demo discussions, there should be someone else to take over and continue for the next visitor. Also be ready for simultaneous demos.
  4. Follow up using the cards collected. Be sure to respond to Unsubscribe requests.
Stage Demos:
  1. Stage roles: Only one person presents. Yes, you’ve two or more founders and all have made equal contributions but ONLY one presents. Change overs are discontinuities where you can loose your audience. There should be another person managing the system for the demo. The presenter needs to engage the audience while the other person needs to make sure that the screen is in sync with the talk. Q&A can be by the entire team if needed. For example, only CTO can answer the question.
  2. Double check the set up: Make sure that you do a dry run in the same order as the schedule and using the same equipment as would be used for the demo. If you loose time, it comes from your time.
  3. Feedback: Provide presenter’s email ID on a slide for feedback. People like that instead of “feedback @ xyz.com”

B Plan Contests – 10 Tips

I’ve been judging business plan competitions over a fair bit of time and see people make the same mistakes again and again. These mistakes are fairly unique to India and may not occur as frequently elsewhere. Recently I was a judge at the finals of Ideaz at IIT Bombay and pattern of recurring mistakes came back to me. Hence, this post. Do note that this is not the same as tips for a business plan though most apply there as well.


  1. Top Down Numbers: This one goes something like this: We’ve estimated the market size at $ xx Million (a few slides are spent on this if the team comprises of MBAs); we conservatively estimate 0.5% market share for us by the end of year 1…. This logic works well if you’re an equity analyst, an investment banker or a consultant (and even there the trend is towards bottoms up projections). However as an entrepreneur, you’re better off with doing a calculation of volumes and price based on your resources (eg sales people, conversion ratio etc), the offering and the competition. This keeps the plan grounded in reality. By all means compare against market size to do a reality check. But do not do a % of market calculation. Look at this way, the global market for several things is in billions which implies through the top down logic that making $ 5 Million is easy – after all its a very conservative 0.5%!
  2. Generic GTM: This one goes like this: We will participate in the relevant conferences and advertise in magazines that the users read…. Two problems here: First, GTM is first about positioning of the product and then only about the media plan. Spend more time on this. Second, how is your approach any different from what anyone else would do in a similar situation? If you’re starting something, you’ve to be very focussed on lead generation and conversion. There is no luxury of trying everything. So please be clear about what you’ll NOT do that someone else in a similar situation would do.
  3. No competition: There is one. Period. No one may have the same product but they may be addressing the same need differently. Even if you’re first to market, there will be others along. So pls in the least say that none found so far. Saying No competition just makes judges smile.
  4. Talking product before the need: This one goes like this: Good morning Judges, our product ABC is the best XYZ system…. The problem here is that the product features mean nothing to the judges unless they know the customer problem being addressed. This means that first few minutes are lost just trying to understand the need and then mapping the features to the need. Also some judges would get biased against you – here is another techy who has no clue about the customer. Yes, its an unfair situation – judges should be more competent and they should be more careful. But what else can you do except to play the situation?
  5. Pitch is copy paste of the plan: This one is really bad. Consider this that anyone can read your plan faster than they can read the slide you’re showing and they can read the slide faster than you’re speaking. So, if the slides are a copy paste of the plan and the pitch is a reading of the slides, then the judges get into Q&A long before you are done. More importantly, you’re no longer in charge of the flow and are put on defensive pretty fast. So put effort into the slides (they are to assist in the pitch and are not the pitch themselves) and the pitch. Practice and get feedback from folks you respect.


  1. Focus on validation of the idea: This is THE most important aspect of any business plan. Show that you got early users who continue to use your offering frequently or that you have a beta site with a customer who is willing to pay and you’re playing in a different league. This shows that you’re on your way to be a proper business and are not merely yet another idea. You’re seen as a serious player. I’ve even seen judges start answering each other’s questions if they see validation! 
  2. Uniqueness/defensibility get good marks: This is the corolory to the competition point above. Different positioning is essential but if you have something like a patent, license or customer base, then your plan is seen as superior to others. Its very seldom that judges get into the defensibility of patents for your innovation but are quick to see business method patents for what they are.
  3. Communicate communicate communicate: This cannot be underemphasised. Most people start talking with the intent to communicate every nitty gritty of their plan. They want to show that they have really thought it through and have done the hard work. However, no judge wants to hear all details in the first go and gets either lost or bored. What they need are the key points of the plan. Communicate these and provide support for these. Just to differentiate between key points and support, I’ll provide the following two thumb rules: First, do not have more than 5 key points. Second, in your pitch the key points should be put thrice whereas the supporting points only once. Rest assured that this will get the judges’ attention and they can still ask questions should they need more data.
  4. Do the numbers: A lot of times the financial projections have parts that do not tally with others. Lets take an hypothetical example to simplify matters : a revenue projection of 1 lac in a month with 1 sales person where the deal value is Rs 500. This means 200 deals in a month, over 6 deals a day assuming no weekends and near 100% conversion rate. This would be stupendous if only true! The judges see this since they corelate revenue with cost. Whoever wrote the plan saw the revenue projection and the number of sales people. In all probability, he didn’t even put down the deal value in the plan. The judges see that and the rest as well.
  5. Read the rules and structure your answers: This is downright silly. If you have been asked a question in a preliminary round then doesn’t it follow that judges have been provided a framework where there are marks for answers to each question? Many people do not seem to realise it. If A has been asked, they answer B! Another set of people seem to think that volume equals substance and they write lengthy answers just as in college exams. A third set refuses to answer questions on the grounds that its sensitive and that it would be revealed in the next round. In all these cases, a judge gives you low marks and that’s it.

The Calacanis controversy: What happens in India?

Jason Calacanis’ recently wrote a post on ways to save money. It quickly became controversial when others such as Jeff Nolan responded indignantly to it. A good summary is here at Techcrunch. Essentially, Jason said Fire all those employees who are not workohlics and the rest fired him for such a ruthless and casual approach to one’s own people. Jason seems to have missed the obvious: A start up aims at making money and not at saving money. It saves money to last longer to have a better shot at making money. Make cost cutting a priority by itself and you’ve shot your self in the foot. He seems to get it in his chair tip but missed it when it came to people. Maybe Michael Arrington got it right in his post that Jason didn’t mean it.

Later Gauravonomics asked an interesting question:

“Has anyone read an Indian perspective on the “startups need workaholics”
controversy created by the @JasonCalacanis post http://xrl.in/mz ?”
“Especially because part of the controversy was about “family vs work”
& Indians are supposed to be both more hard-working &

The answer is a bit complicated actually when it comes to India. I thought of providing an overview of what’s happening today rather than my views (which are not very different from others! Relaxed mind produces better and more).

In silicon valley, one quits a large company and takes a cut in salary for stock/stock option. However, in India one joins a start up for a higher salary plus stock. This is in an extreme form in the Indian Mobile VAS industry where the average life span for an employee is about an year before s/he hops to another VAS player for higher cash. This means that the bosses do demand more work and results. This also means that the future holds little incentive and doesn’t drive people. Only the founders and very early employees tend to motivated by the future ahead.

On the other hand, the Indian family man (or woman) doesn’t have the same concept of work life balance as in US (and certainly not Europe!). Almost everyone here works long hours without any protest; start up or not. Its common to sit around in office even without work because it doesn’t look nice to leave early. Amongst younger folks, the real reason is that there is nothing better to do at home. Older folks just can’t say no the boss who asks for one more thing at 6 PM.

The end result: Long hours almost everywhere. But some are working hard for the extra cash, some because they are too timid to say no, some are not working at all!

Its not all bad at office though. Most of the early stage startup offices that I’ve visited seem to be a bunch of friends or a family. They get along very well and have fun together. They also have pizza parties, siesta time, movie outings etc. Later stage ones may compromise a bit on location for saving money but offices are quite plush and comfortable inside. People are taken care of.

E-Summit 2008

I attended the E Summit for the first time. According to the people who attended the earlier ones, this is the best so far. The turn out was good – estimated at around 350 to 380.

I attended the panel discussion between Sharad and Ashish. The initial talk was something I had heard from both albeit in different settings. Both of them were very candid and frank in the Q&A. Sadly the questions were pretty bad. The worst was when a NITIE professor got into a self promotion mode by asking a question: why can’t entrepreneurship be taught from LKG? And then he told us about how they are very successful at doing so at NITIE where all MBA students have 30% grades dependent upon the performance of the company each has to start when they join. Not a bad idea. Just that success is measured using 30 parameters! He should probably refresh his corporate finance basics.

Another self congratulatory question was on how well have the IITians done in both India and abroad. Both panelist shot it down. In summary, IITians of an earlier generation made it to IITs and continued to do well later too because they were hungry. Training at an IIT had little do to with it. Today’s IITians don’t have the hunger and still have a big attitude problem. As Ashish put it, he doesn’t hire from IITs anymore. Pretty damning statement coming from someone who holds a Gold medal from IIT Kanpur.

This is something I completely agree with. The problem at IIMs is even worse. Lot more people with an attitude but not enough competency. I remember giving a project to 5 IIM students (will not name which IIM). Out of the 5, one did well, one was ok, rest three were bad. Sadly the three who didn’t do well had more attitude! Similarly, in tech projects given to 5 IIT B students in the same time frame, only one guy had some attitude. And one could even justify it given that he did well.

I would take an IIT guy over an IIM guy anyday given my personal experiences. But the experience of Sharad and Ashish who have seen it for far longer makes me think if I should just look at RECs.