How To Validate A Tech Startup Idea without Coding, Part 1

Last updated on February 11, 2021 by Hong Zhuang

Reading Time:10 min

Are you a new entrepreneurs whose goal is to launch a tech startup from scratch and get it funded by pre-seed or seed investors?

If yes, this blog, the first part of a validation series, will help you do a preliminary validation without diving deep into validating it. You will find out if your idea

support your goal of building a successful, funded startup.
help you avoid the most common deadly mistakes which haunt many first-time entrepreneurs.
be attractive to pre-seed investors.

Then you can decide whether you should abandoned your idea or do more validation.

What are the necessary ingredients of a good idea? It should contain the following 3 elements:

Passion
Worthiness
Competency

If your idea lacks any one of the elements, it will ruin your chances of success. Why? Let’s review how you can assess the above elements using a three-step startup idea validation process.

How to Decide If Your Tech Startup Idea Is Good To Get In?

Do I have a passion for my startup idea?
Does my idea solve a big business problem from my personal experience?
Can I execute the idea and deliver the desired results successfully?

Table of Contents

Step 1:Do I have a passion for my startup idea?

Why is passion necessary?

you have probably heard thousands of times “do what you love and success and money will follow.” According to one study, 17% of startups fail because the founder lacked passion.
life as an entrepreneur is extremely difficult, especially in the beginning. You know Airbnb, right? For the first 2 years, with no investors and a few customers, the founders lived on credit cards and sold cereals to keep the company afloat. When you suffer constant awkward, negative energy will consume you. And you, like every entrepreneur, will attempt to give up your startup. Passion, like a lifeboat, will be your positive energy to inspire you, give you courage, and drive you forward to your goal.
since pre-seed investors care about founders more than ideas, passion is one of the criteria they pay attention to.

Do you know your passion?

If so, you can check if you have a passion for the idea and skip the rest of this section.

Otherwise, you probably are still searching. Where have you been searching?

Have you looked at your book collection, magazines and website bookmarks? What subjects have you been spending your time and money on? Make a list and see if your idea is among the subjects.

Passion lives deep in your heart. This is why you can’t find it using your head.

How do you connect your passion to you heart?

Use this self-assessment technique below. In order to achieve the desired results, follow the process precisely.

Find a quiet room for yourself
Close your eyes, and ask yourself “What would I do if I had all the money, resources, skills, time and energy, and could never fail?”
Let your mind wonder and get lost in your thoughts.
Open your mind and write down on paper napkin the first 10 things that appear in your mind.
Check if your idea is on the list.
If yes, it means that you have a passion for the idea.

Why does this exercise reveal your passion?

Many psychology studies show that as we grow older, we stop following our heart our heart because of fears, self-defeating beliefs and assumptions such as “I must not make a mistake because people will think I am stupid.” We only think about our dream life when we buy a lottery ticket. Like lottery tickets, this exercise sets you free from the real world and connects you to your heart. As a result, you came up with a bucket list. How many times have you made a choice that went against your heart, and then later regretted it? I can’t tell you how many people reconsidered their career paths after completing this exercise.

Step 2: Does the idea resolve a big business problem from my personal experience?

Why is the answer for this question is necessary?

if your idea doesn’t resolve any problem, it will not be worth pursuing because people will buy your product or service only if they can solve their problems. Do you remember the Google Glass? It never clearly defined what problems it would solve for its customers. The creator just assumed that people would like to have glasses combining a fashionable style with functions that Google offered. The result: no one wanted them.
When you have a personal connection to the problem, you will avoid the number one entrepreneurs’ mistake, which causes 42 % startup failing. It is that they built a product/service that did not solve their customers problems. You greatly increase your odds of success.
the first thing pre-seed investors look at is the level of founders’ unique insights to their problems. When you have a unique insight to the problem, you will likely develop a unique solution, outrunning your competition and avoiding the number three entrepreneurs’ mistake—getting outcompeted. Taking Uber as an example, the unique insight was the inconvenience of the taxi services including taxi availability, cash payments, and unfamiliar routes of drivers. Its solution is an app that connects customers with drivers easily, uses GPS to guide drivers, and processes the credit card payment.
to attract pre-seed and seed investors, your startup idea must exist in a market size of at least $200 million(some may tell you $100 million).

A common mistake made by new entrepreneurs is to define your problem loosely.

What do I mean by loosely?

A startup founder once told me that his startup was to solve food insecurity issues. But, food insecurity can mean many things, from food availability to food affordability to food safety. So, you have to be more specific to details. Remember: the devil is in the details.

If you define the problem correctly, you almost have the solution.”
— Steve Jobs

Then, how to find if your problem is big?

1) answer 4 questions on paper napkin

Let’s get your paper napkin and pen, and write answers for the following 4 questions because writing will help you understand your problem more deeply.

Does your startup idea solve any real problem? People will buy your product or service only if it can solve their problems. For example, you go to McDonald’s when you are either hungry or thirsty.

Is this problem from your personal experience? If not, I would suggest that you take a step back and make sure you understand the problem in depth. Why? “If you define the problem correctly, you almost have the solution,” as Steve Job said.

If yes, how urgent is the problem? If your potential customers can live with a nonurgent problem (e.g., a mosquito bite), they would not be willing to pay your product or service, and you would not have a viable business.

Otherwise, an urgent problem, what are switching costs? Even though your problem is urgent, it will not guarantee success if the switching costs are high.

Do you still think your idea is good? Yes? Let’s move on.

2) find out your startup idea’s market size

At this stage, you only need to do a rough calculation of the market size.

If your idea targets a B2C market, you can find how many potential customers exist by sex and age are in the market ( forget about your competitor for now), and then multiply by the estimated service charge. To help you do the calculation, the table below lists the US population by age and sex coming from the US government census data.

Age	Male	Female
Total	161,657,324	166,582,199
.Under 5 years	10,009,207	9,567,476
.5 to 9 years	10,322,762	9,873,133
.10 to 14 years	10,618,261	10,180,007
.15 to 19 years	10,745,607	10,308,963
.20 to 24 years	11,064,752	10,568,188
.25 to 29 years	12,004,570	11,504,446
.30 to 34 years	11,354,610	11,076,695
.35 to 39 years	10,884,941	10,852,580
.40 to 44 years	9,907,139	10,014,484
.45 to 49 years	10,085,355	10,312,396
.50 to 54 years	10,086,611	10,390,540
.55 to 59 years	10,642,489	11,234,902
.60 to 64 years	9,856,730	10,714,416
.65 to 69 years	8,199,773	9,255,228
.70 to 74 years	6,499,806	7,528,626
.75 to 79 years	4,318,499	5,334,166
.80 to 84 years	2,679,724	3,637,483
.85 years and over	2,376,488	4,228,470

For example, you have a product or service that can be used for women between 65 and 69. Assume that only half of the population will use your service and your service charge is $5 per time,

Annual service usage frequency	Population	Total potential market size	Fundable idea?
1	4,627,614	23 million	No
10	4,627,614	230 million	Yes

But, if your idea targets a B2B market, you can do a quick Google search using a search phrase like “how many”+ your b2b companies+“ in the US”. For example, if your idea is about serving law firm, your search phrase should be “how many law firms in the us?” Your search result will return 1,352,027 as 2019. Thus your annual service fee must be at $200 in order to be fundable.

Step 3: Can I execute the idea and deliver the desired results successfully?

You probably know Warren Buffet, the legendary stock investor in the US. He has beaten the S&P 500 index for decades. What is his secret sauce to succeeding? Circle of competency. Here’s Warren Buffett in his own words:

What an investor needs is the ability to correctly evaluate selected businesses. Note that word “selected”: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.“
Warren Buffett

In other word, it is an area where your skills, expertise and experience are strong. It is your edge. For every investment, Warren Buffet ensures that he is familiar with the businesses and whose owners focus on their circle of competency to lead the company to success.

Why is the circle of competency necessary?

It protects you from making major mistakes that will destroy your chance for success.

starting a business is like entering a war zone. Knowing your circle of competency is a must. As the greatest Chinese army strategist, the author of the Art of War said “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
as Sue Grafton said” Ideas are easy. It’s the execution of ideas that really separates the sheep from the goats.” You must know what makes you to execute your idea successfully in a timely manner?
pre-seed investors only invest in startup whose founders focus on the circle of competency to lead the startups success.

Need Help with Your Idea?

Then, what is in your circle of competency that matters to your startup success?

imagine that you have an idea of a beautiful house. Now, you need an architect to convert your idea into a blueprint and a general contactor and many subcontractors and workers to build your house based on the blueprint. In order to turn your idea into a product/service, do you have expertise, experience and tech know how to design your system blueprint and convert your design blueprint into a product/service that your customer will love and stands out from your competitors?
there is more than simply building a house. You need to buy a lot, get building permits from local government, buy insurance, obtain a construction loan, and so on. Do you have industry experience and expertise to make your product/services fits and works in its ecosystem effectively? For example, if most of your customers were using mySQL database, they would not buy your app using Oracle database.
if your idea is within your circle of competency, you will save yourself valuable time and money to avoid reinvent the wheel, and find product market fit faster.

What if you lack some of skills, experience or expertise?

One effective way is to find a co-founder or recruit subject matter expert as your advisor.

Conclusion

Now, you know the secret to deciding if your idea is good to get in by assessing passion, idea worthiness and circle of competency. You might wonder if it works. Yes, in fact, you can find many living proofs:

Amazon founder Jeff Bezos, for example, had many ideas when he started Amazon, and decided to sell books online because he is a book lover. Its market size is huge, and he knew how to build the Amazon platform, and he was nearby the biggest book publisher.
Another entrepreneur, Aaron Patzer, turned his idea into a funded startup within 1 year without a product and sold his company Mint to Intuit 2 years later for $170 million. He showed how fast a good idea can help to reach your goal. Why did the VC invest in him? His unique insight to the problem of difficulty for people to save, his tech know how in building the product, and his passion for being a successful entrepreneur(He got the VC founding after he had been rejected by many Silicon Valley VC firms).