How Do You Validate a Startup Idea Before Spending Heavily?

[0:00] hi there and welcome to episode one of

[0:03] startup Chuck which is really all about

[0:06] uh idea Creation in starting a company

[0:09] so if you want to start a company there

[0:11] needs to be a market need which means

[0:13] there needs to be uh some unmet need

[0:18] that people want to spend money on right

[0:22] um so that's the first thing how do you

[0:25] determine a market need um it could be

[0:28] something that you need for example

[0:30] personally so if we go back into my

[0:33] project archives here project archives

[0:36] then we can see one of the the first

[0:39] company that I ever

[0:41] created uh Uncle Charlie's shoe

[0:44] deodorizer balls so I was a rock

[0:47] climber and uh the climbing shoes I had

[0:49] didn't smell real great so um at the

[0:52] time this was

[0:56] 2004 um I was really trying to think

[1:00] about what what can I do in order to um

[1:05] you know dry my shoes out and powder is

[1:08] kind of stuck and it was never really

[1:10] good so um started thinking about it and

[1:13] was like okay so there's nothing out

[1:16] there boom right there Market need I

[1:18] need something the other people The

[1:20] Climbing Gym needs something so that's

[1:23] kind of idea creation if you don't have

[1:25] an idea you can start asking people you

[1:30] can find a demographic of people and you

[1:32] can go and um find a group that all have

[1:37] something in common uh and then so let's

[1:40] say it was uh golfers right you go to 50

[1:43] golfers and you say what do you wish you

[1:47] had um that you don't have right now

[1:50] most of them would probably say oh I

[1:53] want to take one stroke off my game

[1:55] right but it could be something as

[1:56] simple as oh I wish I had a glove that

[1:59] didn't itch my pinky right and so you

[2:03] might get 50 different answers but if

[2:05] you get uh maybe 10 of the same answers

[2:10] then now you've got an idea that might

[2:13] be worth going to market for right

[2:16] so from there you have a whole lot more

[2:20] steps but since we're going to stick

[2:22] with the easiest way to make money on

[2:25] anything you need to think about okay

[2:29] lemonade stand what is the easiest way

[2:32] to make money when you were a kid it was

[2:34] a lemonade stand right it had very

[2:36] little overhead you didn't get a

[2:39] business license you went directly to

[2:42] the customer and sold it straight to

[2:44] their face they gave you cash and then

[2:48] basically your costs coming in were more

[2:51] than your costs going out and on a basic

[2:54] level if you want to earn money in

[2:56] business just go do that start with the

[3:00] simplest possible way ground roots to

[3:03] make money and just sell something sell

[3:05] sell sell and it doesn't have to be

[3:07] anything special this was one of my best

[3:10] successes mainly due to the fact that it

[3:13] cost almost nothing to make I went

[3:16] straight into the shop and to the

[3:18] climbing shop and said hey I have these

[3:21] Sho odorizers uh this is a problem that

[3:24] people are having would you like to buy

[3:27] these um we negotiated a price they

[3:31] negotiated how many they wanted let's

[3:33] say I think I gave them like the first

[3:34] batch was maybe 20 um and then literally

[3:39] just super simple packaging you

[3:43] know paper printed out folded over hand

[3:47] punched Staples and then I think I had

[3:51] coffee beans and um what was it

[3:55] activated charcoal which is like really

[3:57] I think that's made from uh the husks of

[4:00] coconut that they you know Char up um in

[4:04] muslin little balls that I had and so I

[4:07] just made a little assembly line in my

[4:09] kitchen which again if you want to be

[4:13] profitable again uh with the small

[4:15] little thing if you can make it in your

[4:17] kitchen that's the way to do it yes

[4:19] we'll talk more later on about scaling

[4:22] and you know making things uh at

[4:25] factories and whatnot but start small

[4:28] start cheap if you can do something in

[4:30] your kitchen whether it's legal or not

[4:32] you know it depends if it's food or

[4:34] whatever it is

[4:36] um that's the cheapest you're ever going

[4:38] to get right and then so you know I took

[4:41] it to them I gave them an invoice they

[4:44] gave me a check and within the second

[4:47] order I had paid off all of the

[4:50] investment that I had in buying these

[4:52] bags in bulk paper ink I had to buy a

[4:56] little heat sealer for this baggie

[4:59] although

[5:00] um actually didn't even need it probably

[5:03] I probably could have got these little

[5:05] baggies that already came you know pre

[5:07] zip locked this is all like early Amazon

[5:09] also so it's much easier to buy supplies

[5:11] nowadays than it used to be um and then

[5:14] again you want to start small right you

[5:18] don't want to get in over your head and

[5:21] make 10,000 of these and then you're

[5:23] stuck with them when you can't sell all

[5:25] your inventory you want to test your

[5:28] Market early with a small amount of

[5:30] these and or whatever you're making and

[5:34] basically scale from there which again

[5:37] we'll talked about scaling and all these

[5:39] things later on but this is just an

[5:41] example of if you want to make money and

[5:45] you want to start learning immediately

[5:46] about business and seeing if you have

[5:48] what it takes to succeed which really

[5:51] it's all about sales if you can sell a

[5:53] product to somebody it validates the

[5:56] market need and then you can expand on

[5:59] that if you can't sell any of these to a

[6:01] shop right if I couldn't sell any of

[6:03] these to a shop if I couldn't sell those

[6:07] special you know anti-itch pinky gloves

[6:10] to those 10

[6:12] golfers then it's not probably going to

[6:16] be a great product right it might be how

[6:19] expensive it took for me to make it

[6:20] isn't going to work for the customer

[6:23] right I think I settled on like $6 or

[6:25] something for these um and we'll get

[6:27] into how much something should cost

[6:29] right rough ballpark usually MSRP is 4X

[6:33] whatever your manufacturing cost is um

[6:36] but in general if you can't get the

[6:39] customers that you asked and they said

[6:42] that they wanted that product if you

[6:43] can't get them to buy it if you can't

[6:45] get any of them to buy it then either

[6:49] the pricing is wrong or there isn't

[6:51] actually a market demand a lot of times

[6:53] people say they want something and in

[6:55] fact they reality they don't um so but

[6:59] by testing that market need early with a

[7:01] simple product one that is doesn't take

[7:04] years of

[7:05] development um then you know you can get

[7:09] a much better idea of whether or not the

[7:11] product is good and it can scale and

[7:13] we'll talk more another time about

[7:17] theoretical products right so something

[7:19] that could have a lot more financial

[7:21] investment in it in order to produce

[7:22] that item but this is the first episode

[7:25] we're talking about the simple possible

[7:28] way to make money on a product um

[7:33] literally from you know idea to being

[7:37] profitable within a couple of weeks if

[7:40] you do that you know really you're going

[7:42] to be successful in almost any product

[7:45] that you come up with as long as you do

[7:47] those basic

[7:50] steps