Validating the business model
Proving the business model requires a different approach than proving the technical concept. For example, one CEO I know gave away his software product to the first ten customers. Customer technical personnel loved it, and it worked, so he was totally devastated when he couldn't sell one for a reasonable price in the first two months of hard selling.
So how do you go about proving the business model? It starts with a customer problem or need, and includes proving the technical concept, but starts earlier and goes much further, per the following key steps:
Quantify problem cost-of-pain first: Before you design your new solution idea, gather evidence and estimates of how much money a customer is willing to spend (if any) to solve the problem. Factor in your margin, and you will have an upper bound on your solution cost. You won't succeed with a product that is too expensive for the market.
Prove the technical concept: If the product doesn't satisfy the need, or...
