A really cool idea of mine that I proved out. Case Study #1.

Today:

📊 A really cool idea that we proved out. Here’s how. Case Study #1.

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📈 Would you have done anything differently? Vote and let us know!

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👍️ We highlight a ValidatorAI user and his startup. Check it out! 🙂 

Ok, let’s talk about a huge idea that I proved out recently.

👍️ Ok, you’re up to speed.

1️⃣ 
Step one: I wanted to find out if it was even possible to make a real-time index.

An index is simply a basket of items — the Dow Jones and NASDAQ are two big indices that you’ve heard of. They are baskets of individual stocks.

So, I hired a data scientist friend of mine.

Starting with sports cards, we started scraped and pulled tens of thousands of sales records for these cards from every public sales platform imaginable.
We compiled all of the sales into massive files. Here’s one with 100,000 cards in it:

We started running different regression algorithms against these data sets to see if we could create any interesting predictive models.

We created an index that tracks the sports card market in real time based on our market data:

We made it live and even made an individual index for major athletes, both active and retired:

and we got really good at creating models that predicted price movements and the next sales price of each individual item. Here is our best model. This shows we were great at predicting the next sales price of items priced at $10,000 and below. You can see we had some work to do on the higher end of the market ($30,000 and up items):

Step one completed. Can we create this? Yes.
On to step 2.

2️⃣ 
What are the legal implications of this?
Simply, we consulted a top commodities lawyer who told us YES, what you are doing is legal, but if you want to allow people to trade your index, that would be regulated by the CFTC. One assumption was confirmed there. More importantly, he told us that is it EXTREMELY DIFFICULT to create a new index, convince an exchange to list it and then get the public to trade it.

👉️ Ok, that’s new info. I need to chase this down before I move forward.
I tracked down the CEO of one of the largest commodities exchanges in the world, the Nodal Exchange. www.nodalexchange.com 

We had an hour long talk on the phone about what would be required of us to list our index on their exchange, and I learned how other companies created their indices and got them listed.

I learned (again) that it is VERY difficult to get traction for an index. I learned that you have to create other services first and generate a massive following and THEN launch your index. It’s a long process. VERY long. It’s nearly impossible to get it correct.

It was a very beneficial call, and I was sure to follow up with a thank you message:

👍️ Side note of praise for Mr. Cusenza for taking the time out of his day to explain everything to me.

🚚 I wanted to continue going, even though the probability of success seemed highly unlikely.

3️⃣ 
What do potential customers think of a tradable index for the sports card market?

I identified three groups of customers I thought might be a good fit to speculate on the collectibles market with a digital index:

• Existing sports card investors

• Cryptocurrency traders

• People that trade stocks on Robinhood

🏃 So, I went to Reddit and joined 3 groups that held my intended audiences.
I started topics describing what we were working on. I showed them our progress and simply asked if this is something they would be interested in trading. This got the conversation started.

NOTE: Just asking isn’t enough validation - you need to prove people will open their wallets. But this was a good first step.

I asked everyone: If we put our index on a public exchange, and it tracked key sports players like the list below, would you be interested in speculating on this market?

We tallied the results, and they were promising.

🧠 In the back of my mind, I was thinking of all the potential revenue sources this business could produce. Not only could we make money when people traded our index, I figured we could sell deep data analysis packages to these target groups to help them make informed decisions.

Maybe if we showed them how collectibles track with the stock market, insights like this would be valuable:

I followed up and asked if they would consider a monthly subscription to an analysis package as well:

❓️ All of this seemed promising. Right?

🛑 So why didn’t I pursue this any further?

I was super excited about this.

I had a huge addressable market and a list of potential customers.
I also had someone that wanted to lead an investment round for the startup.


Why bail? 

➡️ I talked to a founder who does this same data analysis in another industry. He’s been at it for a decade and he has an index that tracks his industry (shipping and freight). He told me he is YEARS away from having his index on an exchange. And, he said it might never happen. And he has tens of thousands of customers and major media outlets rely on his data and indices to keep up with the current status of the shipping industry. He is the standard in his business.

When I heard that… it was time to look inside myself and ask these questions:

• Do I have it in me to do data analysis for a decade?

• Am I so obsessed with this industry (collectibles) and data that I am excited to keep plowing forward — knowing that a tradable index might never happen?

🚫 For me. No. I loved the idea of an index people could trade. I was not interested in doing the other things for 10 years — knowing my tradable index may never happen.


So, that was it. 🤔 

If I were to pursue my idea, but use the validation methods we’ve been discussing for the past few months — should I have done things differently?

👉️ Answer below and let me know what you would have done differently.

Keep in mind, I felt I couldn’t talk to the major exchanges without a working index - and I wanted to have that working index to show potential customers.

Or, if these choices don’t fit what you are thinking, leave a comment or reply to this email and I’ll see it.

🔦 Finally, I want to highlight a Validator AI user’s startup!

🥼 Andrew is an incoming medical student on a mission.

Problem:
There is no visual representation of what is going on inside a patient’s body to show them their health status during a checkup. It’s all charts and docs and it’s not ideal. It’s more impactful if patients see what is going on in their body.

Solution:
Andrew and his team created a simulation that shows the current status of a patient’s vital organs.

Demo:
See it in action here: Demo — VAROS Technologies
A patient, or doctor, enters the patient’s stats and the simulator shows a visualization of what’s going on inside their body.

Traction:
Their visualization software is being tested in approximately 20 clinics across the USA! They are gathering great data and feedback from patients and doctors.

How They Have Used Validator AI:
They have run several questions through the AI and Andrew says:

🙌 Thanks Andrew and best of luck moving forward!

💻️ Reply to this email and let me know what you’re working on and how Validator AI has helped with your path forward.

Take care 🙂 
Aron

⏩️ Please send this email to friends that want to create startups!

Input your idea today at ValidatorAI.com and get started.