How to Evaluate Startup Ideas

  • Startup idea = Problem, Solution, Insight
    • Insight is - why do you think your solution to the problem while make your business successful
  • Good problems
    • Popular: lots of people have these problems; Ideal: 1M+
    • Growing: more and more will have this problem in the future; Ideal: 20% yoy growth
    • Urgent: need to be solved very quickly; Ideal: right now
    • Expensive: expensive to solve; Ideal: millions of $
    • Mandatory: people have this problem and they have to solve it: Ideal: law changed
    • Frequent: people are going to encounter these problems over and over again: Ideal: hourly or multiple times a day
  • A good startup idea = atleast 1 if not a few characteristics of a good problem are met
  • Behaviour = Motivation + Ability + Trigger
  • Solution: don’t start here!
    • SISP: Solution In Search of a Problem = bad
  • Insight = unfair advantages / why will you win and others will lose
    • Founders: Are you special? Engineer at Google, PM at Google etc != special. Specific patent in a specific field of Biotech = special
    • Market: is your market growing explosively such that if you build a product in this market, you will automatically grow? This advantage alone, is usually a week in eyes of investors
    • Product: is your product 10x better than others example: faster, cheaper etc?
    • Acquisition: can you acquire users without paid marketing? Ideal: $0 to acquire new users
    • Monopoly: as your company grows does it become harder for competitors to defeat you? Example: companies with network effect or marketplaces tend to exhibit this characteristic