Ideas come from a lot of places. Some sound grand and inspiring, and others not that interesting. How do you know which is which? What is the quickest way to see if something is worth working on or if you should forgot about it and move on?

I come up with a lot of ideas for products. As you can imagine, most are dead in the water and some outright terrible. Out of the ones which aren't, they need to be ordered and ranked. You only have so much time in the day, so where do you place your bets?

I'll be using a real idea I've had recently, and I'm currently not sure if this is something worth pursuing or if I should move on. The qualification process should include:

  • Requirements to get it off the ground
  • Work involved in the creation of supporting systems
  • Understanding the difficulty of making this product turn-key
  • Costs associated with the running of this product
  • The market size and potential reward
  • If this potential reward is more than your number

The idea

I have a love for fintech as well as an understanding of what goes into building different types of products. One issue that plagues consumers is when a card is stolen or compromised, all places you've used that card (notably for subscription services) now needs to be updated.

What about this instead: an application that allows you to generate a "card" for every service you want, allowing you to also control the spend on that service, frequency of spend, maximum purchase amount, total purchase amount and many more controls. This can all be easily managed from a mobile application, and all links back to the card you already use. One card becomes as many cards as you need.

This is a problem I have and I'm sure others have too. There are some similar products on the market, but not many and nothing exactly the same. Sounds like a good idea to pursue.

The process

Now we start to break this down.

Requirements. This functionality exists directly with the networks and probably through a third-party, we'd need to do some API integration, might need to get a certification or similar, will need a mobile application and a basic website, will need a backend to manage all of the transaction controls. Biggest unknowns here would be the legal requirements around certifications or registrations.

Supporting systems. How would we get customers? Fintech is super competitive. Once we have customers how do they keep using the app? What does the marketing look like? What about support requests? This type of B2C app will require a fair amount of support, this is people's money even if we're just a router. What internal functions will the business need?

Turn-key. Will the systems above cover most of the requirements for a turn-key company? How will we make money? How much could we charge? What does the funnel look like?

Running costs. What is involved in the running of this product? Are there infrastructure costs? Human costs like support, administrative staff? Licensing costs? Legal or other costs? In the initial stages, this product would be pretty cheap: a small website, a single service hosted somewhere, probably free connection to Visa/Mastercard/etc for the initial sandbox period.

Market size. How big is the potential market? We would go and get some research done here. Nothing fancy, but paying a graduate student to find out some key figures: how often do cards get cancelled and re-ordered due to fraud, what the costs of re-ordering the cards are (for the bank and the customer), how much time this takes, if this affects a particular segment more than others (e.g. business travellers). This should give an indication of the size of the market which we can use as our base. Normally, I would also break this down into the various customer adoption stages:

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You can read more about this in this article.

More than your number. The last point is if this idea is worth it to us, with all of the above taken into consideration. To put some made-up numbers to our product:

  • There is a market of 2,500 innovators who would use this product
  • Each innovator would do on average 100 transactions through this platform every month
  • We could charge £0.005 per transaction, giving us a monthly revenue of £1,250
  • We should reach this innovators group within 6 months, and early adopters group within 12 to 18 months (early adopters revenue is £8,000)
  • This product would cost £3,000 to build and require 60 hours of dedicated time over 3 months to get set up (mainly building systems, turning it into a turn-key solution)
  • Ongoing costs of £300 and 15 hours per month

After we've put an hourly rate for ourselves down, we need to decide if this is worth it. For example, would £800 profit per month within 6 months be enough? And £6,500 within 12 to 18? Bearing in mind this is estimated and could be lower or higher depending on how well the marketing lands, how well the product functions, and well how the systems work.

We might also want to look out and see that after 3 years we should've reached the early majority, we've tweaked our pricing model and are getting increased usage and now are making £35,000 a month. Is this more than our number?

Wrapping it up

After I started doing this the quality of the ideas and products went through the roof and I had a lot more confidence for my own time and money commitment, as well as getting friends, family and investors involved.

Every time you have an idea for something, you should be able to run it through your machine and be able to get some quantified data out the other side which tells you if this is worth pursuing based on your criteria of revenue and time. Once you have this in place, the hit rate for the ideas you decide to test out should be a lot higher.