5 Ways to Know if Your Idea Could Become a Business
By Jenna Schnuer, entrepreneur.com
Brockway has launched major brands that address chronic problems in the travel sector. But it was the pain of moving house that led the co-founder of Hotwire and TripIt to tackle his latest venture. “We moved several times,” Brockway says. “Each time we moved, we would have furniture that just didn’t fit in our new house, and it was driving me crazy.My wife had spent a lot of time finding those [pieces], picking out the colors, the fabrics, and then we’d basically give it away or sell that thing on Craigslist or to a consignment shop.”
So Brockway launched Chairish, an online consigment shop for quality vintage furniture and home décor, along with his wife, Anna; former Hotwire partner Eric Grosse; and former TripIt partner Andy Denmark. “It was an idea that we had from personal experience [and] the pain around it,” Brockway says.
The idea paid off quickly. “On the very first day, we actually sold some of that stuff without any marketing … and the smallest amount of traffic you can imagine,” he says. “We were just, ‘Wow. We’re on to something.’”
The initial interest led the trio to believe that their curated marketplace could fly, even though they’d done little in the way of market research. “There are ways of looking at a business and seeing it’s working,” Brockway says. “Typically, it’s further along in a business. Most investors, they want to come onboard when you can show them that you make more money from your customers than it costs you to find them. When your business gets to that point, it is super easy. You’re off to the races. The hard part is, how do you tell if you’re on to something before the numbers start rolling in?”
We asked some experienced entrepreneurs to give us their criteria for moving ahead with a new business. Does your idea fit the bill?
1. Your idea solves a problem.
Truly disruptive ideas provide a balm for some kind of pain, solving a problem or making life more convenient, efficient or affordable. “At the very earliest stage, maybe you, the founder, are your only user,” says Jessica Livingston, partner in Mountain View, Calif.-based early-stage accelerator Y Combinator, which has funded more than 700 startups. “Maybe you’re building something to solve your own problem.”
But chances are that if you’ve noticed a particular problem that needs solving, others have, too. In 2013, Y Combinator funded a single-founder company called Medisas. Gautam Sivakumar, a physician, wanted to address a significant problem plaguing hospitals: the handoff of patients and their critical medical information to new doctors during shift changes, which can create confusion that leads to about 60,000 deaths annually.
“He started a startup to basically create software to facilitate this process so that there weren’t any mistakes in handwriting, and nothing got lost on a sticky note,” Livingston says.
Sometimes it takes tweaking to determine the real problem. When Lisa Falzone and her business partner launched San Francisco-based Revel Systems, the original plan was to sell an ordering app for restaurants. “We were in a meeting with our first client trying to sell him the ordering app,” Falzone says. “He was like, ‘That’s a great idea … but what I really need is a [point-of-sale] system.’ And he went on and on about how much he hated dealing with POS companies, and no one would call him back even for a sales call. I actually told him in the meeting that we would build it for him. That’s how we started it. We realized that the point of sale was a huge pain point. Therefore, we saw a great opportunity to resolve it and make people’s lives better.”
Revel Systems now sells iPad POS systems for movie theaters, stadiums, retailers, groceries and restaurants, including Baja Fresh Mexican Grill and Popeyes Louisiana Kitchen.
2. You’re in it for the long haul.
If you don’t think you can put in the time and energy to bring your idea to fruition, don’t bother. Livingston sees this situation often at Y Combinator. When a business isn’t growing fast enough for the founder’s liking, she says, “they come to us and they say, ‘I’m just not passionate about the idea of working in local coupons. It’s just not that interesting to me.’ I put my head in my hands and think, Then why did you start this? >>>