1. On Initial Validation Points for a Startup Idea💡

In July we will test and validate our ideas. From an idea to a product to a company is an arduous journey, with multiple temporal validation points.

The first validation point is necessarily personal. Does it excite me? Will I use it (product / service) myself? Will I be delighted using? Will my friends use it? Will I refer it to a friend? Does it solve a real painful problem? How often (a day? a week?) will I use it? How integrated will it be in my life? Will I feel special discovering it before anyone else? Et cetera.

The second validation point is commercial, and you know the traditional stuff: Is it complex (in some shape or form so it cannot be easily replicated) but not complicated (for marketing)? Can we access the resources to make it happen over time? Does it have the right unit economics? Et cetera.

For me, the third validation point is philosophical: does it solve a public good problem? Are any UN SDGs affected at scale by it? Any approach that leaves out doing good is necessarily not doing well. I reject the false dichotomy ever present in public good social enterprise vs. rent extraction in for-profit. Why not be both at the beginning and at the end? For-non-profit-for-good? Et cetera.

To these I add orthogonality as my fourth and more original point. Somewhat tied to my complex/complicated dilemma, the word orthogonal comes from the Greek orthogōnios, meaning "right-angled." Lines that meet at a right angle. It also describes events that are statistically independent or do not affect one another in terms of outcome. If you are like me, you’d find it impossible to find statistical independence in human narrative. Amor fati, ipso facto.

The adoption of orthogonal thinking, encompassing the amalgamation of ideas from diverse domains, has the potential to foster innovation and engender unforeseen resolutions. This approach not only exemplifies a noteworthy accomplishment, but also underscores the significance of facilitating opportunities for individuals (our community) to encounter novel concepts, a practice which may prove instrumental in tackling other formidable predicaments. Craft a single shot from many different materials and kill many birds with it.

A judicious fusion of scientific, artistic, design-oriented, medical, architectural, and ostensibly unrelated disciplines offers a means to surmount intricate challenges, but more significantly, it imparts the capacity to generate entirely unprecedented entities, heretofore nonexistent.

We will collect 5 ideas to test. I already have 2ish. My shareholders will give us two or three more in the next couple of weeks. 

Here is one idea that I am mulling to serve as a short template for your ideas:

A Novel Bank for the Global Digital Nomad?

A bank is probably one of the most complex institutions due to national and international regulations, and because its essence is money; the root of all economics, capitalism and commercialism. Complex? You betcha.

I do not like the large US banks that I work with per se (Bank of America, Wells Fargo)-as they are bloated and cumbersome. It is extremely hard for a non-US person to open up an account. I don’t like small Bank-Fund-Staff Federal Credit Union (BFSFCU is World Bank’s Bank, if you will) as a shareholder due to mainly its sucky technology. Even though it is a US entity, BFSFCU makes it easier for a non-US person to open up an account, but you must have ties to the World Bank. No crypto at all and cross-border transactions are a big hassle. There are excellent banks with excellent tech stack in other parts of the world (like Turkey, and I was an advisor for BNP Paribas TEB) but the problem is that they are in a not-so-great jurisdiction.

Everyone’s got stories about sucky banks. Banks can do so much more as a trusted partner (if they were trusted), can they not? Most banks provide asset management outright or through subsidiaries for instance. Some utilize loyalty marketing side for shopping. Some definite orthogonal stuff there as we can hunt for paint points and delightful partnerships.

Take a look at BFSFCU’s 2022 Annual Report. 90,000 customers making $120m in interest income ($3bn loans), and $18m in non-interest income (13 million transactions). $1,500 income per customer. Not bad. Remember Apple makes $258 per customer.

My biggest takeaway from the crypto world wasn’t so much crypto-based decentralization, it was more ownership by all. I love these cooperatives, communities, and co-creation etc. A credit union is a member-owned cooperative. It is centralized but can it be decentralized in essence without crypto infrastructure? BFSFCU has 9 board members. Can we have all our members decide on all things? Can we not decentralize the heck out of corporate governance with software (not crypto per se)?

Can we utilize a US Federal Credit Union non-profit membership structure to grab an awesome banking license in an awesome jurisdiction, and make every customer a shareholder? Can we floor the fees on transactions because we have almost no overhead? (BFSFCU spends $93m a year on expenses, almost $50m on compensation and benefits). Can all this be achieved via awesome software utilizing crazy artificial intelligence?

Globally, some 1.4 billion adults remain unbanked. These people are hardest to reach – and more commonly women, poorer, less educated, and living in rural areas. Can we have 100,000 members who can give us $500 per year while we service another 100,000 unbanked faithfully by simply donating them a $100 internet phone and a $20/year internet package? Can some of those raise themselves up from poverty and contribute to our commercial success as shareholders? These are relatively small numbers to make buck and have real social impact. Imagine at 1m members levels globally. Bank of America has 68 million customers at a $232 billion valuation on a $26 billion net income. BFSFCU has $50m net income, and could probably be a unicorn if it hit those 90k users in a two years rather than seventy five.

Can a member-owned and operated cooperative do other communal stuff such as providing services and products to each other? Will you trust a member of the community who has been there for 2 years to also sell you her agricultural goods? Can digital nomadism or some other “lifestyle” choice create the glue for a community to start with a “bank” to let other orthogonality ensue?

Well, we will find out how some configurations of these ideas/questions and other value propositions in the vicinity resonate with our potential customers.

By July 1, we will have 5 two-pagers in Finance, Climate, Healthcare, Education, etc. So ping me with a two-pager if you like. Convince me after you convince yourself so that we can go out there and validate your idea. In the next newsletter, I will unveil our tech infrastructure for customer validation. We will talk about the art and science of pricing, and propensity to buy.

Folks, bring more people to our community; the more the merrier - it is all about the community and the relationships. In the Premium Membership Section, I delve into this concept with some personal stories and a gift. Remember, every subscriber by July 1, 2023 gets free Premium Membership. Just add your email and wait a bit - voila, we gift it to you. Forward this email to your friends - they will thank you for it.

Best to you and yours, Oltac

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