Entrepreneur’s Idea Validation

Key points covered:

  1. Reasons for high startup failure rates
  2. Scientific approach to idea validation
  3. Focus on potential customers instead of fundraisin

Event Recap:
Entrepreneur’s Idea Validation

Simon, an experienced entrepreneur with over 35 years of starting businesses, discusses the importance of idea validation and the high failure rate of startups within the first five years. He mentions that despite the clear data on failure rates from sources like CB Insights and Forbes, startups continue to launch with such a high failure rate. He explains that entrepreneurs can get distracted by the exciting aspects of starting a business, such as branding and product development, while neglecting the necessary steps to ensure success. He also criticizes the system, specifically Silicon Valley and business schools, for prioritizing investment over the needs of the startup and its founders. As a part of a philanthropic organization, 12 Ronnies Foundation, Simon aims to help people launch businesses and reduce the high failure rate.

Further Simon discusses the common issues of entrepreneurs focusing on pitching to investors instead of validating their ideas with customers. Many entrepreneurial programs teach startups to create business plans that cater to investor desires, such as high returns and large markets, rather than the needs of their potential customers. However, investors are more interested in ideas with traction, customers, or data to help scale the business and make profits. The speaker shares his experience of observing this trend on a mentoring platform, where most entrepreneurs express their need for investment instead of focusing on customers. He emphasizes that the number one reason for startup failure is the lack of customer need, and encourages entrepreneurs to validate their ideas by finding their first customers and understanding their wants.

Simon underlines the importance of idea validation in the entrepreneurial process. He explains that communicating with potential customers about ideas is easier now with various tools available, but stresses that at the idea stage, a product doesn’t need to be built yet. The speaker criticizes the “fail fast” mentality, stating that investors don’t want entrepreneurs to learn on their paycheck. Instead, he advocates for a scientific approach to idea validation, which involves testing hypotheses, experimenting, and assessing the feasibility, viability, and desirability of products. The speaker also mentions the origins of idea validation, citing figures like Steve Blank and Eric Ries as pioneers in the customer-centric movement. He recommends resources like “The Lean Startup” and “44 Experiments” for further reading. The speaker concludes by emphasizing the importance of using a business canvas to frame the entrepreneurial process.

Further the importance of understanding customer profiles in the idea validation process is highlighted. Simon recommends using business model canvases, such as the lean canvas, to frame and validate ideas. The second stage of validation involves expanding on customer profiles by giving them names, understanding their touch points, and communicating effectively with them. The speakers caution against relying on surveys for validation, as they can be misleading, and instead suggest running validation experiments where people are unaware they are being tested.

Simon emphasizes the importance of entrepreneurs using free tools for landing pages and idea validation instead of paying someone else to do it. He mentions his personal favorite tool, MailChimp, which offers landing pages and collects email addresses while ensuring GDPR compliance. The primary goal is to attract visitors and get them to take action, such as providing an email address or clicking through to another page. The speaker encourages entrepreneurs to explore various free validation techniques, such as mock sales, fake doors, and broken promise tests, to gauge customer interest and validate their ideas. He also emphasizes that idea validation is not just about validating the idea but also validating the entrepreneur’s skills and abilities in the high-risk and uncertain environment of launching a business.

AI solutions also play an important role in validating business ideas. Simon mentions that there are various experiments to validate ideas, ranging from non-technical to more technical methods. He also emphasizes the significance of market research but warns that it should not be a substitute for customer validation. He suggests that running a pre-sale or using surveys are stronger ways to validate an idea than relying on landing pages. However, he clarifies that it’s his personal viewpoint, and there might be other effective methods for idea validation.

Simon further discuss the importance of not finalizing a brand name or web domain during the idea validation stage. He suggests using a neutral name and focusing on the idea itself, as the business and brand are likely to evolve. One of the participants adds that using one’s name as a brand or web domain may deter potential investors. Additionally, the speakers touch on the importance of validating the price point and method of selling the idea. The idea of giving away too much information during the validation stage is also addressed, with the consensus being that it depends on the nature of the idea.

Simon shares his perspective on the importance of showcasing business ideas to potential customers as early as possible to gauge their interest. He emphasizes that discussing the commercial aspects of an idea, rather than its technical workings, is a more effective way to engage customers and validate its market potential. Simon also suggests offering a money-back guarantee as part of the sales pitch during the idea stage to test customer interest and gather feedback. He recommends conducting A/B testing by presenting different versions of the offer to various customer groups to determine which one resonates better.

Simon concludes that establishing product-market fit is a crucial aspect of the business model validation process and should be addressed during the ideation stage. He emphasizes the importance of conducting thorough research and experiments to validate a business idea before committing significant time and resources. He stresses the need for conclusive data and suggests seeking independent feedback from assessors or mentors.

Within the Q&A session Simon shares the origin story of his business, 12 Ronnies, which began as a conversation in a pub between him and his co-founder, Jake Shaw. They discussed the challenge of getting investors to trust inventors to commercialize their intellectual property and came up with the idea of bringing inventors and commercial entrepreneurs together. The name 12 Ronnies was inspired by a comedy team from the UK and was initially just a placeholder, but it stuck and has since become a fitting representation of their team. Despite the misconception, none of them are named Ronnie, and there are not 12 of them.



Simon is passionate entrepreneur who has successfully set up and exited a number of businesses in the digital and innovation space over the past thirty years; most recently launching a suite of products for startups and early stage companies. He mentors at a number of universities, business schools and incubators where he specialises in helping founders validate their ideas.

LinkedIn: https://www.linkedin.com/in/simonkrystman

Web: https://community.12ronnies.com