Launching a business impacts nearly every part of your life and could mean rising quickly to success, or failing horribly. So what if you could predict whether it was worth the effort before going down the road of entrepreneurship?
That's what GutCheck, a new website for online market research, is trying to do. The company made the news this week after raising $4 million in a Series B round of funding. That's in addition to an earlier funding round which also totaled $4 million. This means big growth potential for GutCheck. But the larger question is how reliable could the market research website be in determining the legitimacy and ultimately the success of an entrepreneur's idea?
Sure an idea or product might fail to illicit interest from potential customers, but does that stop a determined, optimistic and completely dedicated entrepreneur from finding success?
To find out, first here's how GutCheck works:
The site revolves around a do-it-yourself tool that allows businesses to get in touch with and ask questions to target customers. Potential customers are tracked down by a recruitment search engine which selects a target demographic for your product or idea.
This gives businesses the chance to receive direct feedback on pricing, advertising, messaging tools and packaging from potential customers. The interview process concludes with a report from GutCheck on the results of the idea's success. This comes in percentages that estimate "purchase intent" for each concept tested. So you might get a 40 percent purchase intent based on the way you proposed packaging of your product, or an 80 percent purchase intent based on your pricing.
The process sounds useful, but what happens when you have an idea that customers don't know they want yet? Or, an idea that hasn't been completely fleshed out?
Wayne Huizenga, the founder of Blockbuster, had an idea to rent videos through outlets, malls and separate stores. But before the company launched in the mid 1980s, video rental stores were still relatively unknown. Yet within a year, nearly 20,000 video retail specialty stores had sprang up--helped in part by the popularity of Blockbuster.
Though the company's stores have now all but disappeared, it rose to Fortune 500 status and became a staple in American culture for decades. But if given the GutCheck, it probably wouldn't have made the cut.
When an entrepreneur is given negative feedback, even from potential customers, it might not be a direct reflection on the success he or she might ultimately gain. Also, a tool that measures someone's purchase intent of a product that doesn't even exist yet, might not be a well rounded look at a startup's eventual success or failure. So, remember to use the tool with some skepticism.
If nothing else, the tool could help you gauge potential customer interest and learn valuable feedback. It might also help solidify a would-be business idea that an entrepreneur isn't completely sold on.
If, for example, you price a new body wash product at $18, and receive results from GutCheck that reveal a low purchase intent for price, you might look for cost savings with a different vendor. And if your packaging percentage score is low, a new design could spice up your look before going to market.
Quantified measurement and feedback might be useful to gauge initial interest in your idea, but it's important to stay grounded in what's most important: Staying flexible, listening to some feedback, and thinking long and hard about what you're willing to sacrifice. At the end of the day, the long hours, financial investment, and time away from family and friends are only worth it if you're all in. No website can do that for you.