Roundtable Recap: May 20 – Validation, Validation, Validation

This morning the roundtable ran very smoothly.  The five entrepreneurs who presented are all in various stages of validating who their best customers are.  The best conversations during these roundtables usually stem from the businesses that have already been validated to some degree, simply because I am often not the target customer for a product. All entrepreneurs need to speak directly to their real customers, the people who are willing to pay money for their product or service, in order find out if they are solving a real problem. It is your potential customers who will give you the most valuable feedback and these conversations should happen very early on, preferably before you have spent precious time and money building a product or service.

Ellen Badinelli started off by introducing her business, ScanAvert.  This is a mobile dietary application that scans products’ barcodes and alerts the consumer to dietary incompatibility based on their user created profile.  For example, if you are following a gluten-free diet or avoiding certain ingredients that may cause a bad reaction to a drug you take, you can scan the bar code and quickly find out if the ingredients you are avoiding are in a given product.  There have been 5,000 users so far, giving Ellen a good idea of who the best demographic is for this product right now.  She is looking to get financing to beef up PR efforts as recommended by some angel investors.  Unlike advertising, you don’t get more PR by spending more money.  I recommend she does some more guerilla PR herself.  Using the demographic information learned from the 5,000 customers who have already downloaded the app. She should target the top bloggers and media for each of the largest segments.  I would like to see Ellen ramp up a bit more and get more conversions. As long as she can continue to bootstrap, she will improve the valuation.

Next Bradley Owen presented TxtJet, which delivers email on cell phones for free, as text messages.  He plans to use an advertising revenue model which will begin in six months or so to run a short ad tied to key words in the message.  The ads are based on key word density and the geography of the user. I have my doubts on how well this will monetize because it would be tricky to target the ads based on the wording of email messages.  I suggested that building an ad server to do this might be a more interesting product although Google is already working on similar efforts.  We discussed using SEO optimization around the key words “free mobile email.” I suggested he may also want to explore doing a deal with the carriers by offering a product to help transition text messaging customers into email customers.  This, of course, would depend on how strong Bradley’s intellectual property is.  They won’t be interested in something they can easily create for themselves. He’s launching this product tomorrow, so he’ll soon be able to see exactly where his customer base is coming from.  Good luck!

Kendra McKeever was up next to present Sock Monkeys Clothing, which offers clothing appropriate for infants with eczema (3 months to 1 year old sizes).  Apparently 20% of babies have eczema in the U.S,. including her daughter, and she is targeting the parents and grandparents.  She says there are a handful of competitors, but all are located in Europe, making the products expensive.  She has all great endorsements from parents and pediatric dermatologists, but this has not converted into sales.  We discussed the importance of focusing on SEO marketing; she needs to be on the top of the page for those searching for infant eczema. I suggest she does a laser focused outreach to bloggers, especially mommy bloggers, who are already discussing this topic to see if they are willing to write about her product rather than going after the larger iVillage-type bloggers right now.  Also, trying to get into publications read by pediatric dermatologists is worth exploring.  Although doctors don’t sell clothing, this could also help get the word of mouth going.

Then we had Dhaval Sharma who has been working on a backend solution to make pooling (as in carpooling) easier to organize.  Dhaval spoke about all he has been doing and his ideas, but he has yet to speak to his potential customers to see if they are willing to pay for this. I’m not yet convinced by his value proposition because I think there are free solutions already available. Dhaval needs to focus on one segment, mass pooling is too large.  Once he has found his strongest segment to zero in on, he needs to stay with that one line of thought and go out and validate that there are people willing to pay for his solution. Don’t spray and pray! You should always try to validate your idea first, build your product later.

Up last was David Braxton presenting for HighPerformanceU, which will offer an audio program that shares a business coaching methodology he has helped to develop through his 1-on-1 coaching experience.  They would like to eventually offer this as a reasonably priced, customized solution for a company’s sales force for example.  A professor he has been working with has been able to sell a very similar program to two companies so far, which is a good data point for David.  But he really needs to validate his assumptions with his potential customers.  I recommend he speak to 100 sales managers to ask them for feedback, and maybe offer the service for free at first and develop some success metrics.  If they like the product, he’ll have his first customers.  This can be done by phone or through connections on LinkedIn, doesn’t need to be done with in-person meetings.  More validation needed.

I started doing my free Online Strategy Roundtables for entrepreneurs in the fall of 2008. Based on this work, I’ve been able to draw a few conclusions.

First, a good percentage of entrepreneurs don’t bother validating their ideas. Another percentage is immediately interested in raising money. Raising money without validating the business is pretty much impossible. If we can address some of these patterns we have a chance at significantly reducing infant entrepreneur mortality.

These roundtables are the cornerstone programming of a global initiative that I have started called One Million by One Million (1M/1M). Its mission is to help a million entrepreneurs globally to reach $1 million in revenue and beyond, build $1 trillion in sustainable global GDP, and create 10 million jobs.

In 1M/1M, I teach the EJ Methodology which is based on my Entrepreneur Journeys research, and emphasize bootstrapping, idea validation, and crisp positioning as some of the core principles of building strong fundamentals in early stage ventures.

You can find the recording of this roundtable session here. Recordings of previous roundtables are all available here. You can register for the next roundtable here.

This segment is a part in the series : Roundtable Recap
. March 25 – A Mixed Bag Of Advice . April 1 – Bootstrapping Tips . April 8 – A Focus On E-Commerce . April 15 – Small Is OK; The Goal Is Profitability . April 22 – The Original Runners . April 29 – Finding The Right Direction . May 6 – Defining Value Proposition . May 20 – Validation, Validation, Validation . May 27 – Is The Venture Worth Your Time? . June 3 – Defining Market Segments . June 10 – Efficient Targeting . June 17 – Online Education Startups . June 24 – Three Startups That Can Hit One Million Dollars . July 1 - Get Your Pricing Model Validated . July 8 - The EJ Methodology . July 15 - A Market Of Late Adopters . July 22 - Bootstrap Using Services . July 29 - Startups In Malaysia . August 5 - Paying Customers =>Validation =>Valuation . August 19 - Niche E-Commerce Is Great For Bootstrapping . August 26 - 85%-90% Of Search Traffic Comes From Organic Search . September 2 - Find High Velocity Channels . September 9 - Open Opportunities In Cloud Computing And Rural BPO . September 16 – 5 Cloud Computing Opportunities for Entrepreneurs . September 23 - Do Not Spray And Pray . September 30 - Investors Don't Fund Broad Ideas . October 7 - Try To Get At Least $2M Pre-Money In Seed Round Valuation . October 14 - Professional Investors Do Not Invest In $20 Million Markets . October 21 - Bootstrapping Comes In Many Flavors . October 28 – Convert Potential Competitors To Partners . November 4 - Premium Lounge Sneak Preview . November 11 - African Tech Entrepreneurs Emerging . November 18 - Not Coming To The Rescue Of Victory . December 2 - Niche Marketplace Businesses Can Be Interesting . December 9 - Where Should You Raise Money? . December 16 - Top 10 Tech Trends To Watch . January 6 - Top 10 Vertical and Social Web Trends For The Decade . January 13 - Top 10 Online Advertising Trends For The Decade . January 20 - Personalization Remains An Open Problem . January 27 - Non-Dilutive Financing Through Revenue Sharing . February 3 - Indian Entrepreneurs Are Maturing . February 10 - When Keywords Are Competitive . February 17 - Indian Company Plugs Gap In Google’s Enterprise Solution . February 24 - VCs, Angels, Incubators, Accelerators – What Are You Doing With Your Rejects? . March 3 - Spotlight On The Northwest . March 10 - Spotlight On India . March 17 - Spotlight On Latin And Central America . March 24 - 75th Session Spotlights The Midwest . March 31 - Microsoft’s $100,000 India Startup Challenge Grant . April 6 - 1M/1M Announces Important Partnership With MAD Incubator, Malaysia . April 9 - 1M/1M Announces Partnership With TiE Chennai . April 16 - 1M/1M Partners With Indian Angel Network Incubator . April 17 - High-Octane Energy In Pune . April 21- Incubators Are Reaching Out To 1M/1M . April 28 - Guerrilla P.R. & SEO Most Profitable Customer Acquisition Strategies . May 5 - Ownership Matters . May 12 - Two Really Cool Companies . May 19, Making Money From Blogs . May 26 - Twitter, LinkedIn - Why Not Affiliates? . June 2 - 1M/1M And Incubators - What We Have Learned . June 9 - Silicon Valley . June 16 - Exciting Companies Lined Up For Microsoft Startup Grant Finals . June 23 - New Assessment Tool For Entrepreneurs . June 30 - Continued International Participation . July 21 - Crowd Sourced Funding Exchanges - An Emerging Trend . July 28 - Investors And Incubators Need To Look At Pre-Incubation . August 4 - How Do You Bootstrap Freemium Ventures? . August 11 - Menlo Park And The Silicon Valley Renaissance . August 25 - How To Use Twitter For Lead Generation . September 1 - Fall Call To Action . September 8 - A View Into Israeli Start-ups . September 15 - Do Your Homework First . September 22 - How Do You Catalyze A Region’s Entrepreneurship? . September 29 - From Poland To Argentina . October 6 - Dedicated To Steve Jobs, Reinforcing Mission To Restructure Capitalism . October 13 - FREE Is Not A Business Model . October 20 - Non-profits And For-profits . October 27 - Check Out Stanzr . November 3 - VCs Are Not Always Right . November 17 - Business Schools And Early Stage Entrepreneurship . December 1 - 1M/1M Premium Company Freshdesk Wins Funding From Accel Partners . December 8 - Three Open Opportunities For 2012 . December 15 - Web 3.0 And Social Dancing; Romania Emerging . December 22 - Free Apps, Ad-Supported Business Models => Dangerous! . January 5 - ERP Galore . January 12-13 - Spotlight On IIT Kharagpur, India . January 19 - Are Media Sites Fundable? . January 26th - Spotlight On Jacksonville, Florida . February 2 - YCombinator vs. 1M/1M . February 9 - Are You Fundable? . February 16 - What’s Happening In Turkey? . February 23 - Microsoft Israel To Offer 1M/1M Scholarships . March 1 - Strategy Gaps Need To Be Plugged . March 12 - Winners Of Microsoft Israel Scholarships . March 15 - Spotlight On 3 Day Startup Tel-Aviv . April 3 - Rendezvous In Bangalore . April 12 - More From Indian Entrepreneurs . April 19 - Tyranny Of The TAM . April 26 - A Rare Women-Only Session . May 3 - Some Wonderful Opportunities With Corporate Partners . May 10 - BlueSnap-Elance Contest Applications Deadline This Weekend . May 22 - Winners Of TechHub-A&N Media Battle Of The Startups Contest In London Win 1M/1M Scholarships