#2: Evaluating Your Business Idea
Before you start your entrepreneurial journey and decide to build a product, you need to decide on a problem you want to solve. How do you evaluate that the problem that you have decided to solve is good enough?
In the IndieHackers podcast episode #243, Justin Jackson, co-founder of transistor.fm and Courtland Allen, the host of the show discuss the 7 questions that you should think about before deciding on a problem.
- Is the problem faced by lots of people?
- Obviously, lots of people facing the problems means lots of potential customers.
- Is the problem growing?
- If the problem itself is growing and more and more people are going to face this problem every year, you can expect your business to grow as well.
- If the problem is shrinking, the future might not be very bright for your business.
- Is the problem necessary for the customer to solve? Or can they go without it?
- Not all problems are important. If the customers can't make progress without solving the problem, it's a good problem to solve.
- Build products that are painkillers and not vitamins i.e. build products that are essential for the customer and not something just good to have.
- Is the problem urgent?
- It's a good problem if customers look for solutions as soon as they face the problems and not say, something like a month later.
- Is the problem valuable enough that people are willing to pay a large amount >100$?
- If the selling price of your product is low, you need to convince a lot more people to buy your product before you become profitable.
- Is the problem elastic?
- Do people repeatedly face the problem. Or is it one-and-done? Former is preferred.
- Is the market ceiling high enough?
- How much is the MRR for the biggest player who solves a similar problem?
- It's better to go in a market where the revenue for the biggest player is quite high.
- Sometimes the biggest player in market A has a lower MRR than one of the smallest players in market B. Go for market B.
Courtland has also compiled a more detailed version of business idea validation checklist. You can use it to think about market fit, product fit, pricing model, personal goals, and more for your business idea.
📚 Using Machine Learning in Customer Support
I have curated a collection of blogs and papers on how different companies are using machine learning in production for better customer support in the primaprashant/ai-customer-support GitHub repository. Some of the listed blog there should be quite a fun read if your are interested in the use of AI in the customer support domain.
🧑💻 Product Management for Engineers
Knowing basics of product management can not only help you in your work as an engineer but it's very effective tool for managing your personal projects as well. Check the blog A primer on product management for engineers by James Turnbull to understand the basics and the benefits of product management for engineers.
Three Phases of Product/Market Fit
Prashant Anand (@primaprashant)