Proving Your Concept or How Not to Get Broke With an Idea
by John A. Hoda CFE, CLI
So, I had this great idea. One that I didn’t see in the marketplace yet. Was that a red flag or was I truly onto something? I could charge a premium price, get a ton of fast-paying, high-paying clients and light my cigars with twenty-dollar bills. Well, maybe not go that far, but you know what I mean. Fat city, here I come. Luckily, I had gotten experience with a few proof of concepts before and learned not to put all of my eggs in those baskets.
During Covid some of us had time to think, lots of time to think. Do you have a unique skill and wonder if there is a market for your ideas? How do you start? Did something emerge in your eyes as a new trend in Private Investigations? Think back how GPS trackers revolutionized surveillance, inexpensive databases with basic locates, OSINT with background checks. This list goes on.
I had the distinct pleasure of working with a serial proof of concept idea guy who is a master at data mining. I happened to be a fellow that was not afraid to invest in a proof of concept with the investigative skills he needed. About a decade ago, I put together a team of grad students to work for the summer in my offices on his concept.
He and I had already made money on a different concepts at locating persons out of the country with money languishing in different state’s unclaimed property funds. We also burned up some money on locates in countries where the suspicion of our intentions were so culturally ingrained that we couldn’t overcome them.
For the summer project, we needed a cloud-based relational database to keep the information we were gathering. We used Tracers and IRB to locate people. We kept honing call scripts to get return calls and interview checklists when we talked to the folks. We tested constantly and measured. I promised him we would work on that all summer. If it worked, we would split millions in profits 50/50. His data mining worked and my locates and telephone calls worked, but when the people we found pulled back the curtain on the source of their funds, the amount of money that was unknown until that moment proved to be so little that it made the mining too costly. He had the map and I had the miners, but in the end, their weren’t enough nuggets to make it happen. I invested $46,000 in that concept. $46,000.
Fortunately, I kept my core business humming. I didn’t walk away from the farm to go prospecting. I budgeted money for the proof of concept and worked longer hours that summer. In the end, I licked my wounds and moved on. I knew my downside and wanted to gamble on the upside.
Proof of Concept
Let’s dive into what a proof of concept looks like. I lean heavily on The Startup Owner’s Manual by Steve Blank and Bob Dorf. I met Bob a few years back. They went on to describe a start-up as a faith-based entity built on its founder’s vision and a notable absence of facts.
- How do you know if your idea will fly?
- Who is the target market?
- How do you address their pain, fears and needs with your solution?
- Are you willing to iterate with their needs until you get it right?
- Are you willing to fail and fail again until you match their needs with your service?
- “No business plan survives first contact with customers.”
- Are bringing a new service to an existing market or a new service to a new market?
- Are you going to re-segment an existing market with a low-cost solution?
Let me give you an example. Parents of Boomers are getting older. They have some skills with computers, the internet and e-commerce. As they get older, their mental processes may fade and combined with spy-worthy scams, their credit cards can be vulnerable. If they have online banking, it could be worse. Family members are worried about Mom or Pop, but they don’t know what to do. How about setting the older person up with a fraud screening, detection and prevention package with your analysis and tools? Maybe offer to do this on a yearly basis. I am spit balling here. I haven’t looked to see if anybody is even doing this. Could you learn how to liaison with law enforcement if you need to report a scam. Same goes for learning how to identify the scammers and put a stop to it. How do you price it? How do you sell it? It’s like doing a bug sweep, but you are using different tools and skills for the laptop.
You are investigating whether or not someone is stealing the oldster’s money via their computer. Then you are recommending prevention steps and software to flag future intrusions. Winner! Winner! Chicken Dinner! or maybe not. Is this a new market? Is this something you market to Elder Law attorneys? Are you offering a service to an existing market with a low-cost solution? How many jobs do you need to perform to break even? Is this a good use of evenings and weekends while you ply your trade in the daytime? McAfee or Norton on steroids! Once you master this skill, can you train it? How do you market it? What channels do you use?
- Has the customer problem been validated?
- Have the service features been validated?
- Does the minimum feature set resonate with customers?
- Is the parent or the boomer the customer?
- What are upsells to follow your service with?
- How do you find the price point? Can you offer 2-fers or discounts?
Here is my real-life example. After learning how to find heirs to estates in foreign countries or living under bridge underpasses or after they married and divorced a couple times, I felt I had a specialty in locating people. After the US Marshals contacted me twice and asked why I was looking for people that went off the radar without a trace, I knew I had stumbled across heirs that were in the witness protection program. I figured that I had a five-prong locate solution. I called it Critical Locate Solutions and I targeted Fortune 500 General Counsels and the law firms that catered to top corporations. I hired a summer marketing intern and he made the phone calls and emails to see what steps prospects took when they absolutely, positively had to find a witness or a party to a case. No one was putting together the package of solutions that I was proposing. I was sure I had a winner. Over and over again, they talked about the need. They talked about how their present solution was not always effective. The intern and I went over the data and I was convinced that I could sell this service. Luckily the business cards were not expensive, neither was the website. The marketing intern and I tried setting up appointments to discuss our solutions with prospects. During this prospecting, I received a handful of assignments and got nice testimonials for the website and thought that if I scaled the marketing, I would be able to launch.
No dice. What I learned was that even though they felt the pain, it was not enough for them to stop using the solutions they had in place before I called. Getting them over the inertia to make a change was too great, even with a money-back guarantee! They could live with the poor results from their present vendor or in-house search solution. I scratched my head at that logic. I ended the concept but came away with a few takeaways.
Having those painful conversations helped me with learning how to better secure new clients in what was then my company, Elm City Detectives. I learned how to become a pinch-hitter to attorneys that already had a reliable PI. I learned to offer services that the other PIs didn’t. I relied heavily on flat-rate offerings, including a scaled down version of my Locate service. I emailed discounts and newsletters with success stories to those prospects and I stayed ‘top of mind’. Eventually I won over new clients when their present vendor, retired, died or fumbled the ball once too often.
That was the true value of my proof of concept. Instead of going “all-in”, I tested the waters and learned that although I had a great idea, it was not viable, because the customers were not unsatisfied enough to try something new. The fear of new was greater than the pain of old.
So, before you run off with a full head of steam on the ‘next great idea’ plan and execute a limited proof of concept. Blank and Dorf learned the hard way and wrote the book. It’s worth the read and is a lot cheaper than a domain name, hosting service and business cards that you will never use again. As this is the Surveillance Issue, let me suggest this marketing proof of concept. Let me know how it works for you.
Fidelity Surveillance Tip
Offer high-end hair, nail and beauty salon owners a 20% commission for referrals, likewise for gym owners and wellness centers. Give deep discounts to their employees if they suspect their significant other is stepping out on them.
Place a card holder with your cards and a stack of hand-outs or ‘leave behinds’ with the Five Signs That Your Partner is Cheating on the counter next to the protein shakes or other impulse buys.