If YOU are building a product or have an idea for one, finding out if people will pay you money for it in the first place seems to be the logical first step.
Makes sense doesn't it? Why waste time and money creating something that no one actually wants? But as it turns out, the lack of knowledge about the basics of building a business is a widespread issue.
I was reminded about the bubble many entrepreneurs put themselves in after reading about CodeArmy's journey a few weeks back.
CodeArmy made a rather splashy debut in 2012 with the idea that it could use gamification principles to help solve the global talent crunch in programmers.
But, due to struggles in getting things off the ground, it recently pivoted, changing its business, scaling down and narrowing ambitions to focus on helping startups engage chief technology officers for remote consultation on a short-term basis.
CodeArmy did not validate its idea in the market for almost nine months, seeking validation only after the platform was officially launched in March 2013, burning through the just under RM2mil (S$780,000) in funding it had raised from an angel investor and the founders' own coffers. The expensive downward spiral was stopped after its founders discovered the lean-startup methodology that strongly advocates validation at the earliest possible juncture of a venture.
It should also be noted that getting funding doesn't equate to validation. Rather, it is only proof that people believe in you and the idea.
Thuan Lip Ong, chief operating officer at RES Malaysia, a provider of supply chain technology who also spends his time mentoring startups says, "There is always a disconnect between what the entrepreneur thinks the market wants versus what the market actually wants.
"In my experience, 'market validation' to many early-stage entrepreneurs means talking with a few friends and getting their opinions.