Moving from concept to business: The eight principles of Zero to One
I’ve met with hundreds of entrepreneurs all at varying stages in their ventures. The overwhelming percentage, however, seem to be stuck in ‘startup’ mode (and not the sexy startup your cousin John runs in San Francisco) where they really don’t have much more than an idea and perhaps a domain name. Too early on, aspiring entrepreneurs want to focus their attention on fundraising, recruitment, incorporation and all of the other things they think represent having a business. The idea of ‘playing business’ ends up being their biggest inhibitor of actually creating a business. When you’re at that idea inception stage, the most important thing to focus on is determining whether that idea has any potential merit. No one wants to spend thousands of dollars and months of time before they realize their concept doesn’t have potential. The quicker and cheaper you can make figuring that out, the better.
I like to think of this early vetting stage as the process of going from ‘Zero to One’ (not to be confused with Peter Thiel’s upcoming book). Zero to One is about getting the first lead, the first customer and the first dollar. It’s about taking that first step not in ‘building a business,’ but just proving your idea even has potential as a business. There are many fantastic resources, frameworks and systems out there (created by far smarter folks than myself) that emphasize very similar strategies of vetting an idea. The most popular is likely The Lean Startup by Eric Reis—highly recommended. In the Zero to One flavor of vetting an idea, we like to cut-through overly-branded jargon and focus on super basic principles. In this article, I’ll outline some of the key principles we use in taking a concept from Zero to One.
1.) Obsess Around the Problem and Audience, Not Your Ideal Solution
Many entrepreneurs start ‘businesses’ with a very specific product in mind. Perhaps it’s an invention, a cool design or a piece of code. These ‘early products’ are products that you created for yourself, based on some sort of personal inspiration. Although there is the possibility that they could turn out to be highly-desired products, they will most likely undergo significant change or evolution before they achieve any sort of success. Early in testing a business concept, it’s far more important to hone in on your target audience and the problem you’re solving than the specific product you have in mind. If you build a solid understanding of a particular target customer and have dissected the problems they’re experiencing, you’ll be able to shape your product/solution around their needs.
If, however, you try to shape your customer or their problems around a specific product you’ve created, you’ll likely hit a number of major hurdles. Obsess around the problem and audience so you can allow your solution to evolve naturally and in the direction of the market’s needs.
2.) Make Interacting With Customers Your Primary Focus
Since we’re obsessing around a specific customer and have the goal of intimately understanding their problems, it’s important that we get as much ‘face time’ with them as possible.
The more in-person or phone-based communication you can have with your target audience, the better. During these interactions, you’ll have the opportunity to ask questions and dig deep into what motivates/frustrates these potential customers. You can ask open-ended questions and let them describe the ideal solution to their problem directly to you.
At that point, your job is just to take notes, ensure they’re explaining themselves fully, and prompt them to suggest ways they’d like to see their problem solved. Lean on your customer to help map out the development of your product or service—they’re the ones that will be buying it, not you.
3.) Ask For the Money
During your early interactions with potential customers, there is no better litmus test of an idea’s potential as a business than to actually ask your customer for money. If you’ve identified a problem and they’ve articulated a cost associated with that problem, then it’s fair to say that your solution should have value, assuming it can work. We like to use two numbers as benchmarks to the ‘asking for money’ principle: 1,000 consumers or 100 businesses.
When exploring the potential of a B2C business, your goal is to drive 1,000 people to a landing page that targets their specific problem, describes your ideal solution, and asks them to make some sort of commitment. Regardless of whether you’re just giving away free content for now or actually trying to sell your product, you’ve got to ‘ask for the money’ and see what sort of conversion rate you can get. Of all those consumers who have expressed interest, you’ll want to get on the phone with each of them (remember the second principle) and find out what interests them in your solution.
For B2B business concepts, the idea is the same, except that your goal is to speak with 100 businesses directly. Don’t be afraid of hitting up your LinkedIn network, cold-calling, pitching at networking events, etc. The key is to get in front of 100 business that fit your target customer profile and try to sell them on your concept. Objections you get during the sales process should serve as fuel for how you position or pitch your solution going forward.
4.) Intentionally Use the Lowest Tech Possible
Early on, aspiring entrepreneurs love to get wrapped up in the technologies that might power their business. They want to design ‘innovative websites’ and build ‘world-class software’ to support their business. Remember, you still don’t have a business yet, so you don’t need an innovative website or world-class software. What you need is the easiest, cheapest and quickest means of getting in front of your customers. We recommend intentionally using the lowest tech possible while in Zero to One mode. Free DIY website builders like Weebly, Google Analytics, Gmail and Excel are probably the only tools you’ll need when vetting your idea.
Limiting the number of tools, the sophistication of tools and the capabilities of your tools will help eliminate all of the distractions that might otherwise prevent you from moving quickly through the Zero to One phase. For example, if you use too robust of a content management system to build out your initial landing page, it’s likely that you’ll spend more time learning the software and getting things ‘just right’ then you will speaking with your customers. Cut down on the tech and spend the time you would configuring software on speaking with your customers about their problems and how you solution could potentially help.
5.) Prioritize Your Assumptions
The real trick to testing out a potential concept is to look at it as a series of experiments. Each experiment is set up to test one specific assumption. For example, if you’re interested in building an on-demand rental service for bikes, don’t start out by trying to test the entire concept. First, start by testing whether you can get a specific demographic that might want to use a bike in general to visit a landing page you’ve created. Then test whether those people would be willing to rent versus purchase a bike. Then, test whether those people would be willing to rent on a daily-or an hourly-basis. And so on.
Try to prioritize all of the assumptions you’ve made in your business by starting with the big assumptions (i.e.: people are interested in using bikes) down to the small assumptions (i.e.: people are interested in renting a bike for one hour). This prioritization will help break your experiments into smaller, more digestible pieces.
6.) Set a Defined Period of Time to Run Your Experiments
Speed is crucial when testing out concepts—you need to fail fast so you can stop wasting time on things that don’t work. However, it’s easy to succumb to one’s natural desire for procrastination and extend the timeline of any project. By setting yourself deadlines, and specifically those that are aggressively short, you force yourself to take action and get the ball rolling. If you think it will take a month, give yourself a week. If you think it will take a week, give yourself a day. Put a definitive time cap on your early experiments and launch whatever you’re working on by that deadline, regardless of its polish.
7.) Focus Your Branding On Experience Rather than Visual Identity
It’s easy to get caught up trying to nail your ‘brand’ down right from the start. Thinking about business names, domains, logos, style guides, etc. can be pretty fun. Remember, however, you still don’t have a business yet—just a concept. Any ‘brand’ you create during the concept vetting phase can be completely thrown aside. You will (or should) be interacting with customers directly while in your ‘experiment’ mode and therefore people will associate the product/service with you, not with whatever name you refer to the business as. You can easily tell them that after a few weeks of the service, you’re rebranding yourself. They really won’t care so long as you keep doing the thing they want. This early in the process, your brand is more about the experience you provide your early customers and the reputation you gather, not your ‘visual identity.’
8.) Don’t Let Your Ego Get In the Way
The most important principle of all: Don’t let your ego get in the way! We’re all perfectionists to a certain degree and tend to get held up until things are ‘just right.’ Nothing will be right while you’re vetting an idea, so the sooner you can shed that thinking, the better. The reason most aspiring entrepreneurs spend too much time and money trying to get an idea off the ground is that they’re too personally wrapped up in getting it right.
We’re all afraid of failure and of looking like an ‘idiot’ when trying to sell something to the world. Realize, though, that if you stay focused on understanding your customer and genuinely want to help them solve their problem, nothing you create will make you look like an idiot. It’s totally alright to let people know that you’re early in the process of building out your product/service and that things won’t be perfect now, but that you’ll make up for it in the attention you pay to their needs. Don’t get caught up in making things perfect—just make them happen.
In the end, these principles are just things we’ve observed in ourselves, our friends, and other aspiring entrepreneurs. There is no denying that starting a company is an extremely difficult thing. Use these principles as tools to help you move quickly through the early (and often ugly) initial phases of vetting a potential idea. Remember, the quicker you can fail with one idea, the quicker you’ll get to an idea that will actually succeed.
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Ross Beyeler manages Growth Spark, a Cambridge, Massachusetts-based agency that helps ecommerce companies design interfaces that convert visitors into customers, implement technology to streamline operations, and use analytics to guide marketing decisions. Since its founding, Growth Spark has completed over 250 projects that led Beyeler to a nomination as one of BusinessWeek’s Top 25 Entrepreneurs Under 25 in 2010. A graduate of Babson College, Beyeler has been a serial entrepreneur in the technology space with experience ranging from digital marketing, to business development, to strategic management. In 2007, he co-founded For Art’s Sake Media, a technology company serving the art industry, and led it through Seed funding, team building, and product launch.