Will it workWalking through the process of evaluating an idea for feasibility

Hi, I’m Stewart Youngblood

• Program Director Tech Wildcatters

• B2B Forbes Top 10 seed accelerator

• Co-Founded Obvious Apps

• Specialties: Angel Investment, Venture Capital, Finance

Agenda

• Technical Feasibility• Evaluate Market

Opportunity• Competitive Analysis• Customer Validation• Develop Cost Model• Revenue Model• Scalability• Cash and Financing• Team and Capabilities• Pitches

Technical/Functional Feasibility

• The first step in any ideation process is evaluating whether something is technologically or functionally feasible (but actually, there’s a step 0!)

• Commit 1-2 hours to research online or through industry experts on whether your concept can actually be achieved

• Be wary of common mistakes (i.e. perpetual motion machine)

Exercise #1 - Idea Feasibility

• Discuss: Head’s Up display for driver of motor vehicle with GPS, phone/text, weather, and other information. Aftermarket product that uses modern LED/OLED tech to create banner across top of front windshield and car’s battery for operation

Evaluate Market Opportunity

• Define where your idea fits into a market category and research solutions that exist

• Decision criteria depends on players in the market, total size of market needed for you to feel comfortable

• Build a bottom’s up case (number of users/customers times price)

Competitive Analysis

• Evaluate size, scale, reach, key features, and pricing for top market owners and put into matrix

• Beware, sometimes no competition is NOT a good thing

• Find a market where competition lacks key features or customer pain

Exercise #2 - Competition

• Create a matrix of competitive solutions:

• GPS

• Smartphones

• Imbedded systems (i.e. Ford’s Sync)

Customer Validation

• Use competitive matrix to develop a set of key features and differentiators

• Contact as many potential customers you can via email or phone to generate feedback on key features and potential prices

Exercise #3: Customers

• Identify 3-4 key feature benefits and discuss among the group how you would acquire customer feedback

• Split into teams and interview other teams for feedback on your key benefits/value proposition

Develop Cost Model

• Research potential manufacturing or development cost of your idea and begin to build a cost model

• Don’t forget to add 10-20% to original estimates

• Include shipping, packaging, delivery, support, and other costs

Revenue/Business Model

• Determine how you will sell this product and make money in order to determine a price point (see cost model) and ensure profitability

• Evaluate 2-3 revenue models in order to test assumptions and generate highest rate of return

Exercise #4: Revenue Model

• Create a price point and process for generating revenue by evaluating and discussing 2-3 revenue models.

Scalability

• Look into how you will deliver your product/service for the first 10, 100, and 1,000 customers in order to understand whether the concept is scalable

• Research automation, outsourcing, and alternative manufacturing/development sources

Cash and Financing

• Use your assumptions on cost and pricing to build a basic one year cash flow projection to understand hard costs associated with launching

• Evaluate feasibility of net cash need versus potential upside of idea to consider whether you can fund this or if investors would fund this

Exercise #5: Financing

• Use initial costs/revenue assumptions to ascertain development costs, go to market and product launch costs, and implement these into a high level 12 month cash flow statement. Project early sales units based on conservative assumptions.

Team and Capabilities

• Evaluate and recognize your capabilities and strengths to determine whether you possess the necessary skills to execute

• Determine whether, based your evaluation, you can attract talent to supplement your own skills

Exercise #6: Team

• Split into teams and discuss experience, training, and skills to determine what role you would each take and what skills you would need to acquire. Develop a plan and timeline on how you would acquire skills (not everyone has to be full time)

Do It

• Understand that entrepreneurs are problem solvers and that risk is about calculation

• Jump in, with the knowledge that execution drives success, not the quality of the idea

The Pitch

•Leverage what you’ve learned to craft your 30-second elevator pitch

•Starting a pitch deck will help you continue to hone all items we’ve talked about

Q&A