Contact people in their network that are knowledgeable about the potential market, or that are potential customers. Get their advice, network contacts or any other insight that can help to understand or test the real world market potential.

Get a deep dive in reports from McKinsey, Statista and other consulting or market research firms and try to understand market predictions and competitor analysis. Draft up a business plan. In order to avoid that the idea gets stolen, they keep the idea to themselves and do not discuss it with anyone. Contact venture capitalists that you share your business plan with, after they have signed a “non-disclosure agreement” that they will not be sharing your idea with other people.

Rather than analyzing the market opportunity, trying to develop a quick prototype that you can use to test the market potential with potential customers. In an idea world, you would be able to even finance the product development process with a consulting contract from a potential customer.

Spending 2 days interviewing and consulting potential customers and partners on their perspectives on an idea and seeing under which conditions these stakeholders would be willing or interested in sponsoring the project or committing to buying it.

 “I think failure is just a way of thinking. If you want to have an omelet, you have to break eggs. No pain, no gain. The key is perseverance. Whatever happens, you just have to continue working on your idea until you succeed. Listen to any entrepreneur on Youtube and you will hear that it is only by persevering that they succeeded. Accepting failure is the philosophy of the loser.”

 “When I start a new venture, I always make sure that I know how much money and time I am willing to lose. Since any new venture can potentially fail, you have to know when you have reached your limits and when that happens, you have to be able to stop. As an entrepreneur, I know I will do everything that I can to make the idea succeed, but you have to be smart about managing your risks too. I have seen a good friend continue to invest money in his venture, when the market was clearly not responding favorable to his idea. He ignored everyone’s advice to stop and just kept going. Now he is financially ruined, divorced from his wife and no longer on speaking terms with his family.”

“Before I begin any venture, I first come up with a number of ideas. I then estimate both costs and revenues for each venture idea, and I then select the idea that has the highest profitability using the “Net Present Value” methodology. Managing the risk of failure is about doing a proper preparation and analysis.”

“I think entrepreneurship is a matter of instinct. There is no way to explain it, but you just know when an idea is going to work. In order to manage the risk of failure, you have to learn how to trust your instinct. Almost any successful entrepreneur I know shares this ability to sort of predict the future and somehow avoid failure along the way.” 

The fridge is an analogy for an entrepreneur’s resources, aspirations AND contacts. This means that an entrepreneur’s fridge is not just filled with her own resources, but also with those that she can access through her network. It also means that “opportunities” tend to be those ideas that the entrepreneur can connect with what is in her fridge.

The fridge principle is opposed to causal management approaches which resemble “cooking by cookbook”. In known and certain situations, one can first analyze the desired result (the dish), make a planning of the necessary resources (the ingredients), go raise the money (buy the ingredients) and then execute the plan (cook the dish). In unknown situations, experienced entrepreneurs have learned that such an approach is too risky, and they learn that achieving results with less risk is much easier when starting with one’s resources first.

When experienced entrepreneurs are facing a situation of uncertainty, the first thing they focus is on is to “open their fridge, and see what they can cook”. Since the situation is new, the entrepreneur starts from the resources that she already has at hand and imagines what can be done.

The fridge principle suggests that entrepreneurship takes time. When an idea doesn’t work at first, you have to “put it in the fridge” and wait until the right time comes along. What experienced entrepreneurs have learned better than novice entrepreneurs, is to use careful market studies to predict when “windows of opportunity” will open and so when it is the best time to launch a venture.

If search requires trial-and-error, then every error is in fact a decrease in efficiency of using resources to achieve a particular result. Error, however, is then a necessary investment to become effective.

If you would be able to have 100% resource efficiency in search processes (you engage in a particular action and you get the desired outcome), then you are either just lucky, or there was no reason to search or explore in the first place. If you know how to do something with 100% efficiency, you must have known how effort leads to results, and so you were in execution mode, not search mode.

The Lean Startup is not efficient, because it is not professional. If you don’t make perfect products, how could you ever have any outcome that can lead to success?

It is precisely because of this inability to predict results of search processes in a particular time frame, or with set resources, that intrapreneurs and innovators struggle discussing with CEOs and CFOs of companies that are in exploitation mode. When engaging in search processes, one must be aware that the efficiency of this search process is not the right metric to measure success.

The Lean Startup is a way for Eric Ries to ensure more book sales. In airport book shops, Lean Manufacturing books are known as best sellers, and so he tried to trick customers in buying his book by adding the word “lean” in the title.

Toyota is known for reliable, and perfect products, with a five year guarantee on its cars. Eric Ries thought that, in order to get customers to buy your products as a startup, you also have to develop perfect products and promise excellent after sales service afterwards.

Eric Ries had several experiences where he had wasted a lot of time to develop functionally perfect software products, but for which there was no market. He figured that it was much more efficient to make imperfect products and then quickly test customer reaction so as to avoid wasted time and resources, and then to engage in continuous improvement to make the products better and better. This process of “avoiding waste”, and “continuous improvement” was exactly like lean manufacturing, and so he translated the analogy into “Lean Startup”.