Firstly, the purpose of this article is to illustrate my approach to evaluate startup ideas. More importantly to decide if I want to invest the next 3 to 7 years of my life developing the startup into a viable company. It helps me to think thru each idea and to map it with my personal aspiration, ambition and development. This analysis is helpful for the vetting of new ideas.
Good ideas are characterised by 7 key elements. These elements will evolve as the startup develop and are the key success factors for a startup. Some can be influenced directly by the startup and others not.
1. Customer – the owners of the problem whom startup want to serve
2. Product – the service or solution startup develop and sell
3. Business model – how startup make money
4. Sales and marketing channel – how startup sell it
5. Market – the group of people buying the product
6. Momentum – the timing, market forces and direction
7. Founder (s) – the founding and management team capability to execute
My approach is inspired by lean startup and business model canvas frameworks proposed by startups veterans such as Steve Blank, Paul Graham, Eric Ries, Alexander Osterwalder or Ash Maurya on how to validate and develop idea into a viable startup.
Secondly, the triggers to startup can come from different sources. This could be a founder whom have an initial idea that later mutated to a product that solved a real problem; founder whom created the solution to a problem they encountered themselves and realised that people are ready to buy it; founder whom saw new opportunities and create a product to address the need; founders whom enjoy working together and goes out to look for a market to sell to, etc. More about this here.
Knowingly or unknowingly these founders are creating a startup within a market. According to Steve Blank there are 4 type of startups, each with it’s own characteristics.
The 4 types are:
- Existing market
- Re-segmented market
- New market
- Clone market
**As an exercise to illustrate the approach I mapped out my QuickGetit project. QuickGetit is a mobile app that allow e-retailers to create marketing materials that smartphone user can buy directly. E-retailers subscribe to use our service and user download our app for free.
The 7 key elements of QuickGetit:
1. Customer – e-commerce or marketing managers of large online store.
2. Product – Mobile App that allow user to scan a QR code to buy.
3. Business model – subscription model.
4. Sales and marketing channel – B2B face to face sales and online acquisition (?).
5. Market – mobile (m) commerce within e-commerce (desktop commerce).
6. Momentum – m-commerce just started with potential to become a new market.
7. Founder – experienced in e-commerce, management and soft development.
QuickGetit is working in a re-segmented market, helping e-commerce (desktop commerce) sellers to sell on smartphone.
***The key questions concerning each elements that founder should ask themselves are:
- Are you energised by your customer?
- Do you want to spend all your time with them?
- Do you empathise with them?
- Do you want to help them grow?
- Is your product solving an important or urgent problem for a customer?
- Are you solving a meaningful problem?
- Are you offering a X5, X10 or X100 improvement? or completely new solution?
- Who are ready to pay you?
- Do you know the S-curve of your technology?
- What pricing strategy?
- Is is scalable?
- How would you deliver your service? (SaaS, App, etc)
- How can you sustain it thru the different phases (startup, seed, growth, mature/exit)?
- Understand which type of startup you are building.
- Are you building a B2B or B2C company?
- How would you prime your business (how to get the first 20 customers?)
- What is your go to market channel? (how do you sell your product?)
- What are the effort, challenges and implications (B2B vs. B2C)?
- How can you sustain this?
- What is your market position?
- What are your strategic assets? (Things that is unique to you)
- Do you know the ecosystem of your market?
- Do you understand the value chain of your overall market?
- Competitions, geographical, customer demographic, customer psychological, customer Maslow pyramid, Gartner curves, customer type and phases (innovator, early adopters, etc) …
- Do you understand the timing and market trends?
- Do you understand the Gartner technology curves for your market? products?
- Do you understand the technology diffusion curves for your products? type of users?
- Market s-curves, Gartner curves, …
- Do you have the experience?
- Do you have the drive and motivation to work (extra hard)?
- What are you passionate about?
- What motivate you to go the extra miles?
- What is meaningful work for you?
- Are you self-aware? how can you improve this?
- Do you know your own weakness and limitation? how can you surpass them?
- What do you expect to get out of this?
- How open minded are you?
- Can you evolve, adapt and overcome the challenges of growing your startup from ideation stage to a viable company?
- Startup is an ultra-marathon and not a sprint? can you maintain the cadence? and stay motivated?
- Are you physically fit? mentally hard? or do you know yourself well enough to know your own weakness and how to improve this?
- Do you know each other strengths, weakness, aspiration and ambition?
These are just some of the key questions to help you decide on what challenges do you want to take up as a startup.
The earlier you understand this, the better you can forge meaning and build identity and the higher chance your startup might be successful.
Update – more resources:
1). Ash Maurya had an interesting post on market timing of new ideas here.
2). The most common pivots are Customer Pivot, Problem Pivot and Solution Pivot. Lesson learnt from David J Bland
3). 3 Strategies To Help You Choose The Right Business Idea To Pursue from Dan Martell
4). Checklist for startup by David Lee here. Or good questions to ask from Peter Thiel’s contrarian approach.
5). Paul Graham’s Startup Advice for the Lazy by Stelios Constantinides here.
6). The single reason why startups succeed by Bill Goss TED talks here.
7). Scott Dismore’s TEDx talk on “What is the work you can NOT do? here and how to get there.