The concept of validation is fundamental to the startup and it makes all the difference in how you track progress and how you create value early.
The strategic planner says to form the strategy, generate milestones and then relentlessly pursue the milestones. This is true but it’s not enough. Milestones are a measure of what you accomplish but not everything you accomplish adds value to your startup. A great example is the formation of your company. You have to do it but nothing about having an LLC or a C-Corp in itself will cause a customer to buy your product or an investor to invest.
It may be months before you generate any tangible evidence of value – that is, generate cash! So how do you create value in lieu of cash? By getting others to respond to your efforts – a third party endorsement. This is the definition of a validation. Examples of validations include:
- Paying customers!!!!!! – early traction is fine but it’s better if you get paid
- A stellar team – good people have plenty of opportunity. All the better if they close to join you
- First class advisors and mentors – these people bring their contact list and their influence
- Key partnerships – companies that add value for upside in your success
- Investment capital!!!!
All of these are evidence that others are willing to bet on your vision and have put their skin in the game.
Checking off milestones is fine but they don’t mean anything unless they lead to validations. Measure these and highlight them in your company pitch.
Blogging Gazelle is published daily by Shawn Carson