Michael Karnjanaprakorn

90% of startups fail.

It’s kind of crazy that entrepreneurs think that their vision and their idea is the “right” one.  What qualifies them to know what will work?  Why don’t digital and tech entrepreneurs test their ideas before they waste money and countless hours building a product that’s not needed?  I call this the “me too” syndrome that is so prevalent on the west coast <cough> Silicon Valley…

This article from the Financial Times talks about a new business model for development.  “With such tales in mind, some entrepreneurs factor the unexpected into their business models, eschewing business plans that rely on a single big idea. Instead, they set up companies in which small teams of engineers work on several ideas simultaneously. The hope is that one or two will take off – a “shotgun” rather than a “sniper” strategy.”

Wouldn’t it make sense to develop 5 or 10 alpha sites and test them to gauge interest?  This blog post from Eric Ries talks about using Google Adwords to find out whether customers are “interested in your product by offering to give (or even sell) it to them, and then failing to deliver on that promise.”  Genius!  He even gives a step-by-step process on how to do it.

Taking what Eric talks about in his post, I thought I would add some of my own insights to create a framework for testing digital ideas.

1. Develop 5-10 digital ideas and launch alpha sites.  This would consist of basic brand identity – logo, blurb about site, and email subscription.  For the alpha sites, I suggest putting the email subscription on the front page.  There’s no point in sending the potential customer to another page to sign-up.
2. Drive traffic to the site.  Use Google Adwords, PR, etc.  Test it within a 1-2 month period.  If your site gets between 500-1000 email registrations during that time period, you have a viable business idea.  For simplicity, let’s say each email registration is worth 2 points.  Let’s say each unique visitor to the website is worth 1 point.
3. Add other elements for scoring.  Add a fake “we’re hiring” page.  If people actually apply to work at the fake company, that should be worth 10 points.  Also, if a blog writes about your fake site, that would be worth 5 points.
4. Tally up the score.  (This is really rough)

• 0 – 100 points (your idea sucks, not worth pursuing)
• 100 – 500 points (might have an idea, flush it out more)
• 500 – 1000 points (idea is worth pursuing)
• 1000+ points (quit your job and put resources behind the site to launch it)

This a very, very, very simple model that I put together in 15 minutes.  This framework is to only test your digital ideas to see which one you should spend time to focus on and developing.  There’s no reason to develop a site that no one will find value in.  Obviously, there are other reasons to test your sites – financial projections for a business plan, proof of concept for investors, confidence in your idea, testing different price structures, etc. Seems like a win-win situation to me.

Would love to hear everyone’s thoughts on this framework?  And if you have any input on the “points”, feel free to add that in the comments section as well.  Thanks!