“Authentic Demand” is the most important, most frequently discussed concept in the Atlanta Ventures Studio.
We bring it up with almost any founder at the idea stage.
We talk about it constantly when we are starting new companies.
“Where is the authentic demand??”
Today, I’m breaking down (overexplaining???) Authentic Demand.
What the heck is it? How do you find it? How do you know if you have it?
What is Authentic Demand?
All wildly successful startups have found Authentic Demand.
Authentic Demand is when the market pulls you.
It’s when you are building something people want, you’re solving a hair-on-fire problem, the boulder rolls down the hill.
With Authentic Demand, you don’t need to execute perfectly. The business grows anyway.
Authentic Demand is when there are multiple winners in your space because the market is on fire.
Why Does Authentic Demand Matter?
Great founders can grind it out. They can get customers through their sheer force of will, sales skills, and relationships. They might even be able to hustle to a decent outcome.
But they will not build a large, high growth business without Authentic Demand.
A billion dollar company requires something beyond a great founder.
It’s the right timing, market, and solution.
From the founders that have experienced the non-Authentic Demand grind and then find a business with the Authentic Demand fly wheel — they say things like:
“I’m having so much fun!”
“This is the growth I was hoping for.”
“It is hard but feels easy.”
“It felt fast from the beginning.”
“I knew we were onto something almost right away.”
“These are interesting problems to work on.”
P.S. These are the same founders. Yes, you need a great founder. But a great founder in the wrong market will never build something big!
How To Find Authentic Demand
It’s the million billion dollar question!
And we definitely don’t have all the answers.
But here are some things that guide us as we start new companies or help founders in the early stages:
Use The Mom Test for customer discovery. Don’t pitch your idea, but rather, look for the most painful, expensive problems that someone is experiencing. Ask lots of questions of lots of people.
Look for small but growing markets. What will be a big market in 3-5 years? Picking the right market is more than half the battle.
Explore multiple markets and ideas. Don’t pick the first idea that seems promising. Spend time in the idea phase to see what “pulls” the most.
Testing. Lots and lots of testing. See what people will spend time on, pay for, share with their friends. Trust what they do, not what they say. 😉
Stay open. The first iteration is rarely the “winning” idea. Get started, put something into the world, and continue to learn and listen to customers. (Like, really, actually listen. Don’t just hear what you want!)
Financial constraints are helpful. It forces better listening, more testing, and scrappy and creative solutions. Too much money can actually blunt Authentic Demand signals. Fancy marketing, well-trained sales people, and a robust product can result in some revenue. But is it really Authentic Demand? Hard to tell.
You cannot research your way into Authentic Demand. It’s important to understand the market, competitive landscape, and industry, but it’s the conversations, experiments, and action that really lead the way.
Examples & Resources:
7 Ways To Test Authentic Demand (With Real Examples)
4 Things We’ve Learned in the Atlanta Ventures Studio
4 Ways To Test Your Tech Idea (With Real Examples!)
5 Resources With Great Ideas On Getting Started
Build-A-Tech-Company Starter Pack
More on Authentic Demand!
Here’s more from Atlanta Ventures folks about Authentic Demand.
Like I said, we talk about it a lot! 😂
The Hunt for Authentic Demand (David Cummings)
Authentic Demand’s Role in Startup Success (David Cummings)
Finding Authentic Demand (Jon Birdsong)
Finding Authentic Demand (A.T. Gimbel)
0 to 10 Unaffiliated Customers as 1st Major Milestone (David Cummings)
What Is Product Market Fit? (A.T. Gimbel)
Why You Should Start With Things That Don’t Scale (A.T. Gimbel)
3 Big Ideas When Launching Your MVP (Hubert Liu)
Stay tuned for more on Authentic Demand with real life examples, things that seem positive but are not, and promising early signs of traction!
How did you know you had Authentic Demand? What’s your guiding principal for finding a great business idea??
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