Have you ever woken up with the idea of a lifetime?
An app that revolutionizes payments, or education, or healthcare, or coffee…
You start Googling and you find NO ONE IN THE WORLD IS DOING IT!
That’s it, you’ve cracked it, you’re gonna be a billionaire!
Before you quit your job and plough your life savings into your dream, here are the steps to minimise the chances of failure:
Absence of evidence is not evidence of absence.
Just because you can’t find any product in the world like yours, doesn’t mean its an original idea. In the age of the Internet, you can safely assume there are no original ideas.
A lack of competitors usually means that everyone else that’s tried your idea has failed; crashing and burning and leaving no trace behind.
Your research exercise shouldn’t be to find competitors. It should be to find people/companies that failed whilst trying to do what you want to do.
Then you need to be sure that you have an edge that differentiates you.
Many a mobile payments app has launched and failed in SA. SnapScan succeeded. Why? Because they partnered with a big bank.
Doesn’t matter how snazzy the user experience. No big bank partner = failure.
Before you unleash your idea on the world make sure you understand why others have failed, and that you have an edge.
(Btw, investors like to hear that you’ve researched reasons for other’s failures and have a plan for avoid the same mistakes. Investors don’t like to hear, “I’ve looked online and no one has ever tried to do this before.”)
- Show and tell
The best pitch is a real live app demo. You need to create a basic app that shows off your concept.
Nothing complicated, just enough for the lights to go in in a customer or investor’s head.
Which means you need to spend money.
- Quick and dirty
Don’t spend lots of money.
Don’t over-spec your first version. Forget the fancy features. Leave the lipstick at home. Create a demo app that covers the core functionality only.
If you can’t code, you need to find a coder. The days of giving equity in exchange for dev-time are gone. If you ain’t paying, you ain’t getting.
Depending on the complexity of your app the demo can cost between R50,000 and R350,000.
Remember: it’s a demo app. You will never use it in real life. If you can’t raise additional funding your money is gone. You will have nothing to show for it except some lessons learnt.
- Market validation
Once you have a demo app you can start looking for the cash you need to go to the next level.
If you’re serious you’ll need about R5mil. R1,5mil for software development. R3,5mil for sales & marketing.
You can fund your dream with your own cash, with seed capital, or with revenues/funding from potential clients.
Don’t use your own money (unless you have too much money). There is capital out there that’s looking for ideas. Find it. Not only does it save you from risking your life savings, but pitching investors is a great way of validating your product.
Ideally you’d like a potential client to fund your app. This option only works for apps where one of the customers is a business.
Pure consumer apps like Facebook or WhatsApp can only be funded via traditional seed/venture capital.
If you can’t raise capital then you probably don’t have a decent product.
For a dummy’s guide on how to start a business click here.
If your dream doesn’t work out, don’t panic.
Many a dream has fizzled like a cheap Chinese firework. You are not alone. You may have failed, but at least you haven’t quit your job and spent your life savings.
You’ve survived to fight another day, to dream another dream.
Failure only happens when you let your ego overrule common-sense.
If you fail to get market validation, stop.
Move on. Keep dreaming, keep practicing, eventually you’ll get lucky.