In 2013, I spent countless hours in an obstetrician’s waiting room, accompanying my wife to appointments as we awaited the birth of our daughter. Perhaps it’s not a typical place for a business idea to be born, but that waiting room gave me plenty of time to contemplate the frustrations we were encountering. There was no opportunity to review costs online, no online bill pay and no online scheduling. At the time, I was running an e-commerce business, and I was shocked to realize the retail industry was light-years ahead of healthcare in technology adoption.
Then my wife’s OB-GYN missed a critical test result. It could have been a disaster if her primary care physician hadn’t caught it. I wanted to prevent this from happening to others — and, knowing technology could help, I brought an idea to my partner, Travis Schneider, to create a care coordination solution for OB-GYNs and expectant mothers.
It sounds like the first step in solving a problem with a business solution, right? It wasn’t.
When we interviewed potential customers in our target market — a critical exercise to determine any idea’s business viability — we learned health care providers didn’t see a problem, and they certainly were not willing to pay for our solution.
But something remarkable occurred during those interviews: Nearly every doctor voiced concern over whether they’d be able to survive as an independent health care provider. Each one realized that business survival meant having an online presence — and they were in a panic about how to do that. Travis and I had been successful running companies that thrived online. It was part of our business DNA, and we did it well. What if we did that for doctors?
Back to the validation proving ground. Did we have a business? Here’s the process we used to answer that question, and the criteria involved.
1. Focus on the solution, not the problem. Start by confirming the following:
• The problem is a “must solve” not a “nice to solve.”
• The industry is large and fragmented.
• Target customers can afford the solution.
• The solution model is simple enough to scale.
2. Validate demand. Too often, entrepreneurs focus on customers whose needs they don’t really understand. It’s incredibly important to test assumptions about your customer base before making further investments in the wrong direction — or the wrong endeavor.
Determine if the problem you’ve identified is real and whether there’s market demand to fix it. We set this up as quickly as possible by creating a simple website, a one-pager and business cards, then we sold our idea as if it already existed. This allowed us to validate high demand for a software solution without having to build it first.
It’s never a good idea to ask friends and family to validate your business. They’ll always respond positively. The only true test of your idea is with real target customers.
3. Validate the solution. Technology companies are at a tremendous advantage here. Unlike a brick-and-mortar business, such as a restaurant, a tech solution can be tested and evolved with relative speed.
In our case, with just one developer and third-party products, we cobbled together a prototype to confirm that customers would see value in the actual product and that they would pay for it. We were able to validate market-fit for the solution in weeks, not months or years.
4. Validate the sales model. To make sure you have a repeatable, scalable model, hire sales reps and start selling. You’ll get a more accurate assessment with hired reps than founders, simply because the latter carry a title and enthusiasm a sales team won’t. We learned that it’s best to hire two salespeople. One rep performed poorly; the other went on to become the company’s most successful salesperson. If we hired only that first salesperson to hit the streets, we might have reached the wrong conclusion about the viability of the business.
Every entrepreneur has to put their great idea through the rigor of careful validation to understand whether they have a winning business in front of them. Over the course of multiple startups, I’ve learned that process is more important than the idea itself. It can halt a potential failure and, sometimes, yield an even better idea.