What makes a great startup idea and how to get started
How do you get from knowing there’s a better way to becoming a rapidly scaling business? We spoke to a few of our advisors and alumni to find out what makes a great startup idea and how to get started.
What makes a great startup idea?
There’s a shared moment in almost every conversation we have with founders. It’s that moment when they recognized a problem in need of a solution and knew that they had an idea for a way to solve it.
Not just solve it for themselves, but solve it at scale and build a business around it. If it were one of those 80’s television infomercials, it’d be the part where a dejected homeowner cries out – “There’s got to be a better way!”
But how do you get from knowing there’s a better way to becoming a rapidly scaling business? We spoke to a few of our advisors and alumni to find out what makes a great startup idea and how to get started.
Start with a big problem, not a solution.
Every great, world-changing invention started with a problem. Getting messages across vast distances took too long with horses and trains. Samuel Morse creates the telegraph. Early computers were difficult to program. Grace Hopper makes COBOL, the first user-friendly programming language. Counting the number of cars that go through an intersection took a lot of time and was boring. Kurtis McBride comes up with the idea for Miovision - one of the first graduates of AC:Incubate.
Miovision helps cities achieve their smart city visions through a variety of data and hardware solutions. Today, Miovision has offices in Canada and Germany and customers worldwide, but the company got its start on a Toronto street corner.
McBride, one of Miovision’s co-founders, was on a co-op placement at a traffic engineering firm in Toronto as a software developer. On the weekends, they had the opportunity to earn extra money by doing traffic counts.
“You’d sit alongside the road for eight hours with a clipboard and count how many cars made a left turn for the day,” said McBride. “So as you can imagine, sitting there for eight hours doing that, you’re like there’s got to be a better way to do this like this.”
Realizing that useful data would produce better results, McBride looked into possible solutions. The result was using video and computer vision to complete accurate traffic counts.
“It just kind of flowed from there. And then we proceeded to hire people a lot smarter than me and went about making that happen.”
Identifying a problem is the first step. Next, successful founders spend time understanding the problem, their customers, the market, and the competition.
“When you ask bigger questions, you get bigger answers,” said Mary Pat Hinton, the co-founder and CEO of Emmetros. Hinton based the business’s name on the Greek word for an accurate assessment – metros. It’s a fitting name considering the work put into truly understanding their customers and industry. “I spent probably a good two years doing the research on what was needed in order to solve the problem,” said Hinton.
Proper research can help early-stage startups avoid costly mistakes. Research is more than identifying your market and customers. It helps identify potential competitors who are already solving the problem. If there are existing solutions, speaking with customers can reveal product differentiators for you and create relationships with future beta customers for your startup.
Hinton’s research involved speaking with people living with dementia – both those afflicted with it and their family members. She also spent time talking with personal support workers and healthcare leaders to understand where the gaps in the system existed for them. Today, with the product in the market, Hinton and the team at Emmetros continue to use research to grow the understanding of their market, customers, and partners.
“What is the World Health Organization saying is needed? What are advocacy groups saying is needed,” added Hinton. “We always have our finger on the pulse of those things and are involved ourselves.”
Understanding your market
One of the more common pitfalls is solving a problem that only a few people have or who find it worth paying to solve.
“Sometimes founders are so focused on the problem, but they’re not thinking about the go-to-market,” said Leanne Henderson, Director, Programs and Client Experience at the Accelerator Centre. “They’re going to have the best solution to a real problem that no one ever buys.”
Going into your market and speaking with potential customers is the number one way to understand your market truly:
Is this a problem that customers will pay for?
Is the addressable market large enough for you to scale your business?
Are there competitors in the market?
Is your product the right solution?
Who is your customer?
Accelerator Centre sales mentor Kevin Hood said that knowing the problem, how big it is, and how many people will pay to solve it are key data points founders need to understand.
“Would people be willing to do something about it? That’s huge. We’re telling founders to do market research before they get too deep into product development.”
Listening to customers in the market leads to your initial product concept. These concepts can be anything from a presentation to wireframes or interactive mockups to 3D-printed hardware product models.
Building a product concept should reinforce the ‘perfect is the enemy of good’. Getting your product concept in front of customers will ensure you’re getting actionable feedback before you begin to spend development dollars. Accelerator Centre advisor Kevin Hood said that he often hears from founders who say they’re not ready to talk to customers yet.
“You’re trying to create a product for them? And you’re going to do it in isolation from them? And then you’re going to take it back to them to see if that’s what they want to see? We’ve mentored hundreds of companies and I can’t recall that ever working.”
Whether it’s 50 or 500 customer interviews, you’ll find your product concept moving to one of four (or a combination of any of these) outcomes that we’ve coined as VMAP:
Validate - you’ve validated that there is a problem and enough people are willing to pay to do something about it,
Modify - what you thought about building needs to be different. Modifying your plan makes your product much more aligned with the marketplace,
Adapt - your initial customers aren’t the right group, but you’ve found a different customer base that wants to pay for your product,
Pivot - you find that your idea doesn’t have traction, but you potentially see another problem to solve.
Understanding your customers, first sales, and feedback
All the research you did for market validation and customer interviews opens up doors for your first beta and sales calls. Validating your ideas with customers also allows you to discover your first beta customers. You’ll write your initial case studies about these customers. They’re the interactions that drive your product revisions and go-to-market plans. You’ll have a market entry strategy driven by research.
“Research is marketing,” said Hood. “It engages you with the various customers that you want.”
Talking to customers early on also helps you learn how to speak to your market effectively. Miovision’s McBride found one of his first sales calls to be both awkward and a great learning experience. McBride telephoned the most prominent data collector in their market to make a pitch.
“I’m like blah, blah, blah, ASP. NET web 2.0, SQL databases like. The product is great, it’s got all this tech in it, and it’s gonna help you modernize your business. But it came across as just like tech jargon.” The prospective customer let McBride speak for a minute before stopping him. “He said to me, listen, I don’t understand anything you just said. Why don’t you go and figure out how to tell me about your product in a way that relates to my business and then you can call me back and we’ll talk.”
McBride said that interaction taught him more about how to approach customers than any other conversation.
“That’s the kind of stuff where the entrepreneurs that do well are the ones that can take that and not internalize it as a criticism, but treat it as a learning opportunity.
Learning how to talk to your customers in their language can lead to your first beta customers and, more importantly, first sales. Getting those first sales are critical to long-term success for your startup. According to the Academy of Management Discoveries, companies that start earning revenue in their first three years are 90% more likely to succeed.
Over our history of working with founders, one common trait sticks out - ambition. Our successful graduates looked beyond the problem to the idea of creating a business set up for long-term success.
Phase 1 of AC:Incubate is dedicated to helping you do the research and market validation necessary to ensure you’ve got the right solution and you’re ready to build it and sell to the ideal customer.
Helping companies go from knowing there’s a better way to becoming industry leaders is what we do at the Accelerator Centre. The proof is in our network. Accelerator Centre clients and alumni represent some of Canada and the world’s biggest startup brands – we’re ready to help you. Apply today!