[Book review] Startup Science - Idea Verification

In this blog, I introduce the summary of the way of Idea Verification, which is the first stage of a startup. If you've not read "[Book review] Startup Science - What is Startup Science?", I recommend to read it first to know the overview of Startup Science.

The goal of this stage is to make a Plan A.

Idea Verification

After you find an idea based on the checklists, we need to verify if our idea is optimum for a startup or not. What we have to think of is below.

Timing

The most important factor for successful startups is "Timing". Why not 2 years before, why not 2 years later? Why do you need to do it now?

Market redefinition

Your idea can redefine the market?

If the evolution of a market of your idea stops for long, you can achieve a big thing with small resources.

PEST analysis

You can discover "a sign" to make the big stream of 2028 (I wrote this blog in 2018 so it means 10 years later)?

• Politics (Demand evoked by deregulation and regulations change)
• Economics (Economy, income, consumption movement)
• Society (Population [= supply and demand gap], culture, fashion)
• Technology (Rise of Gartner Hype Cycle curve should be the next technology innovation which will occur 3 - 5 years later)
• This is Gartner Hype Cycle curve of 2017

Pay attention to Tech Giants

• Product launch
• Roadmaps
• M&A

Types of business models and make a Plan A

Frameworks when thinking of ideas of startups

• Remove intermediate process (skip the players who only obtain intermediate margin)
• Optimize with unbundling (Unbundle service which has bundled any of features and become inefficient to provide values, and aim to provide 10 times value)
• Utilize dormant assets
• Aggregate disjointed information
• Strategic freedom
• Time machine
• Arbitrage (to fill the gap between supply and demand of resources)
• New combination
• Low-end destruction (inexpensive products that scraped off excess parts)
• As-a-service (service that did not become a service until now)

Specify the target

• The total addressable market is desirably 10 billion yen (100 million USD) or more
• First of all, aim for monopoly with a limited entry market (problem-recognized early adapter), and gradually expand the correspondence market
• We do not target markets that have already become big. It is ideal to target markets that have high growth potential and do not exist at the moment.

Make a Plan A using Lean Canvas

Here's the template of Lean Canvas (ref). 

• A problem, Customer Segments, and Unique Value Proposition are the most important at the moment.
• The others will be updated from now so you can write them simply.
• Early Adopters (Customer Segments that we should aim initially) decide the business plan so deeply consider where you aim.
• In the case of the Two-sided market, you can put stickers with the different colors on the same canvas.
• Review Plan A continuously finds a business model that works well with pivoting (change the strategy without changing the vision), and aim PMF.

We can advance these activities introduced in this blog can be done as a side project.

In this blog, I described the idea verification. In the next blog, I describe the next step, Customer-Problem-Fit. See you next!

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About Tomohide Kakeya

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