“What makes you different from your competition?”
In the widely popular show “Shark Tank,” aspiring entrepreneurs stand in front of a panel of investors, pitching their business models with the hope of landing funding for their ideas. The above question is almost always asked of them.
Why you? What will ensure your business will be a success?
It’s an entertaining show even if a bit nerve-wracking to watch.
As a bootstrapper myself, I’ve never taken a dime in outside funding or have had to try and sell my ideas (much less in front of a harsh panel). That, however, doesn’t mean I haven’t had to do my due diligence when it comes to seeing whether my business ideas will work out.
“Oftentimes, would-be entrepreneurs get so excited about their ‘epiphanie’ — the moments when they imagine the possibilities of a given idea-that they forget to find out whether that idea is viable,” writes Entrepreneur contributor, Karen E. Spaeder.
Most founders believe this kind of decision-making should be an arduous one, but I’m a strong believer in simplifying the process. Here’s how to find out whether your business idea is worth pursuing.
Are you solving an actual problem?
Elon Musk has his own three-part equation for gauging whether an idea is brilliant or not. In an interview with Lex Fridman, an A.I. researcher at MIT, according to Musk “What matters is the pace of innovation, access to resources, and raw materials.”
Below are the three main questions he asks us to consider:
1. How long will it take for us to build?
2. Do we have access to the right resources?
3. Can we acquire the necessary raw materials?
I can see a lot of merit in his equation (he’s considered one of the most renowned innovators of our time for a reason, after all).
But I’d also like to offer some of my own experience and perspective. When I first started my own company, Jotform, 16 years ago, I was a programmer working for a large Internet media company in New York City. And one of my tasks was to develop tools for editors to build forms, polls, and surveys. But I began to notice that the products in the form-building space were of low quality.
Forms weren’t just hard, they were tedious and required too much work on the front-end design as well as the back end. And so I visualized a better solution — an online form builder that allowed people without any kind of coding skills the ability to create a simple form without all the hassle.
My first advice to budding entrepreneurs when evaluating whether an idea is viable is this: always be observing. If you see a problem that people need solving, get curious. Pay attention and look closer.
Since the time we started out, we’ve now grown to 15 million users — all because I saw a way of simplifying something that was difficult. In my opinion, building a great business means you’re working towards making people’s lives easier in some way or another.
Have you done your homework?
Of course, I didn’t immediately dive in as soon as I conceptualized an online form builder, I had to put the work in. As Spaeder writes “Your research plan should spell out the objectives of the research and give you the information you need to either go ahead with your idea, fine-tune it or take it back to the drawing board.”
She adds: “You can use your research to determine a potential market, to size up the competition, or to test the usefulness and positioning of your product or service.”
Before going all in, creating a prototype can help provide more insight into whether your idea will be viable in the long-term. In the case of Jotform, we started out offering a free version to our users and later launched a paid premium one. But it was during those initial days that we gleaned more insight about market needs and were able to fine-tune our product.
Are you in good company?
You should be able to count on a core group of trusted people who you can run your ideas past or who can offer guidance. Remember: when starting out, you’ll be spending a lot of time together.
Since my company’s inception, I’ve maintained a hire-slow/grow-slow philosophy. The reason for this is because aside from building the best product possible, I believe a positive culture is fundamental for achieving success and growth. During the hiring process I’ll ask myself this fundamental question: Do I want to work with this person for the next two years?
I come from an engineering background and love technical details, so I know that I have to find colleagues who will not only complement my skill set, but will also be easy to collaborate with. As Elon Musk pointed out, we have to have access to the right resources, and part of this, for me, involves surrounding ourselves with the right team.
The bottom line
A business idea can be brilliant in your mind, but you should also be your sharpest analyst. Like the panelists on Shark Tank, you should ask yourself the following fundamental questions: What problem are you helping solve? Have you done your research and looked into the competition? Do you have the right human and material resources?
I am of an experimental mindset. But I also believe in honing in on one specific idea and doing it exceptionally well. As a tech CEO, I could have gone in many different directions in my younger years, but I chose to work on creating the best online form builder I could.
I didn’t want to spend my time on numerous mediocre projects. I wanted something that didn’t just prove to be viable, but something that would also give me a sense of fulfillment — something that made the world just a little bit better.