Entrepreneurial Institute

I’ve Got an Idea for a Startup…Now What?!

Andy Moss is the Entrepreneur-in-Residence at the NYU Entrepreneurial Institute and the founder of Lean Launch Ventures. He currently also works as Mentor at the Refinery, and as Advisor at Topstone Angels.  Previously, Andy spent 17 years as an “intrepreneur” within Microsoft Corporation initiating multiple new businesses. 

 

It is often said that the difference between a successful venture and a great idea is the ability to translate that vision into reality. Many people have creative ideas, but only a few actually successfully put them into practice. The NYU Entrepreneurial Institute exists to help NYU students, faculty and researchers who want to take that critical next step to turn their ideas and inventions into a startup venture.

There are numerous resources and programs available for the NYU community to help would-be entrepreneurs learn the language, best practice methodologies, and strategies for building a startup.
To quote Steve Blank, “A startup is not a smaller version of a large company.” Existing companies—large or small—have historical data and information on which to base future products and plans. They know who their customers are, what problems they have, what features they value, how much they are willing to buy and pay, etc. How this all comes together is what we call a business model. Startups are by definition new, and thus need to search for a scalable and repeatable business model. Smart entrepreneurs do this by testing their assumptions with customers and partners before they build and ship their product!

Alex Osterwalder’s Business Model Canvas (BMC) is an extremely useful tool to capture the hypotheses underlying your business, and then to keep track of how they change as you “get out of the building” and test these with customers. It’s a simple one-page model replacing lengthy business plans based on not-yet-validated assumptions. On one page, you can capture and illustrate the various elements of your business including target customers, value propositions, revenue models, partners, distribution channels, etc.

The most critical activity in developing your business model is getting out of the building to test your hypothesis face-to-face (no surveys please!) with your target customers. If you’re not familiar with, or haven’t yet started working with BMC, I'd encourage you to come to events held at the Leslie eLab (check them out here). The aptly named startup bootcamp, I’ve Got an Idea, Now What? (next on November 20), is a great place to start.
If you can’t join us for that, then watch the 2-minute Business Model Canvas Explained video, download the BMC, and then watch lectures 0 through 3 of Steve Blank's free How to Build a Startup class on Udacity. Then, take an initial stab at completing your first draft of the BMC. Don’t worry about getting it right, let alone perfect; you will go through several iterations. The videos and working on the BMC will help orient you to the Customer Development methodology and how to think about the hypotheses you want to test as you seek problem-solution fit. Another terrific resource is the new book Talking to Humans (which is free in PDF or ePub). It is a concise guide on how to get out of the building to test your hypotheses with your target customers. Interviewing at least 5-10 customers to test your hypotheses in each element/box of the BMC would be a good initial target milestone.

The core of the customer development methodology and using the BMC, is to develop clear value propositions for each customer segment. For example, if you’re building a startup to serve the residential real estate market, you will likely have multiple customer segments that will require you to have a unique value proposition to appeal to each one (homeowners, realtors and prospective home buyers). Before expending your limited resources (time and/or money) building the product, you’ll want to validate the problems you believe you are solving for each of them. A couple of good resources for learning how to think about creating meaningful value propositions are 7 Proven Templates for Writing Value Propositions That Work and Alex Osterwalder’s Value Proposition Canvas.

Once you’ve moved your idea down the road towards problem-solution fit, meeting with an Entrepreneur-in-Residence (like me!) for a 1:1 coaching session becomes an option.

Building a startup is exciting, frustrating, challenging, infuriating, exasperating and rewarding. Learning the best practices to help your startup start up, can save you precious time and money, and is well worth the investment in time up front. Or, as my good friend Bob Dorf (co-author of the Startup Owner’s Manual) likes to say, “If a startup is going to take 20,000 hours out of your life, don’t you think its worth spending 100 hours up front to find out if someone gives a crap first?!”