Q: I see a lot of opportunities for a startup, but I am not sure how to evaluate them?
A: Here is a short checklist we use to help entrepreneurs sort through where they are, this is typically most useful in the “idea / team formation” phase or in preparation for “open for business” and complements the “First Seven Questions” that focus more on the product than the team’s core competencies, the unknowns, or the plan.
- What is the Opportunity? Who is the customer and what is their need or problem. You can read a blog post or trends article to find many of these but you cannot stop there.
- Why You? You are not a blank slate, you have skills, experience, and interests that can form a basis for a differentiated offering.
- Why Now? What’s changed either in the industry or in adjacent or supporting industries, that will enable new opportunities for an entrant to gain advantage over incumbents and other larger firms?
- Issues: what challenges do you face in going after this opportunity. The most two most common early issues:
- Domain Knowledge: Either problem or customer intimacy or both.
- Team: If you can’t make progress on your own pick a different idea, but you should use your progress to recruit other team members if you are working solo to increase your chances for success. The idea is only the first 1%, you might consider joining another team and working to help them refine and improve their idea. Finding a core team you can work with is as important as the idea.
- Key Assumptions: What information or missing pieces of the final solution do you still need to discover. Can you construct a simple model for your business as a sketch or a spreadsheet that models just the key variables and their relationships? What do you know that you need to find out?
- Next Steps: what can you do with the knowledge you have, the people who are willing to help, and the time and resources you have to move your idea forward? You will be working on your startup for at least a year or two, I would pick a problem that you find energizing and that at least one other person is interested on working on with you.
This can also be a useful list of questions to revisit even as you are doing customer interviews and have early customers, especially if you learn something that challenges a key assumption about the business.