Guide to Evaluating Startup Ideas

This article is pretty touchy feely to really make serious business decisions on. Here is my list (not just for tech startups): Is your business or product in a under-served niche (ie not a sexy industry that everyone is trying to get a piece of)? Do you have deep understanding of the industry or do you have a close relationship to someone that does? Is the idea easy to execute on (ie can you see clearly how to serve the market and all existing technology exists and is proven)? Is the market big enough so that you think you can easily sell 1000 units per month at $10 per unit, 10 units per month at $1000 or equivalent in billed hours of service? Can the business be revenue positive in 6-months? Can the business be automated or are profits recurring (ie could the business be successful with minimal human resourced or still be successful with minimal oversight by the founders)? Are there any barriers to entry for your market or possible intellectual property opportunities? Can you start the business without substantial upfront capital outlays (ie no inventory, etc)? Can the business stand on its own (ie doesn't need a huge existing customer base, mailing list, big advertising outlays, or additional features to make it an full product)? Do you have any other secret sauce not covered in the above?<p>No need to answer yes to all of them, but having 5 to 6 of these things in spades would be my criteria for doing more exploration.

Anyone interested in this topic shouldn't miss this either: <a href="http://evhead.com/2007/12/how-to-evaluate-new-product-idea.asp" rel="nofollow">http://evhead.com/2007/12/how-to-evaluate-new-product-idea.a...</a>.

I love #1. My personal goal is to I work on something I'm deeply attached to that's also insanely useful. I want to wake up to the sound of my phone exploding with customers pleading me to get my service back up not only because demand is toppling our servers but because my service is something those customers absolutely need every day. Don't get me wrong, I'm not asking for scaling issues or to be Techcrunched. I should be so lucky to have scaling problems working on something I love.<p>#4 is approaching the same thing from a different perspective. It's still a worthwhile question but I would put it under #1.

This isn't a very technical or sophisticated method but it works for my cohorts and I. When considering a new startup idea or really anything (domain name, features, marketing) we just put all our ideas up on the wall for about a week or two. By the end of the week, whichever idea has been built upon the most (variants or child ideas) is pursued and the others shamelessly forgotten. If no idea gets built upon it means our current work is more fertile than any of the new ones.<p>Also, #5 struck my attention and echoes the fact that most good "new" ideas are too contrarian for the general public to pick up on and are hardly profitable right off the bat. Some say primordial Google (search) was in this boat but Yahoo had existed since 1995 along with others, hints the next "______"s are easier for people to find because they are fed up with the old system and will type in "______" without spam/flashy ads or "_______" with such and such feature that works. People first need to know what "_______" is to search for it. A fact that spells disaster for truly revolutionary ideas.

Tony--<p>I like this...but I think #7 rises above the rest in terms of importance. Or, at least it does for me personally.<p>Invariably, startups get hard, so when the going gets tough it's hard to keep on chugging along if you don't care.<p>This is what happened to me...I wrote about a startup I was involved with once (<a href="http://www.scottporad.com/2009/07/13/the-key-lesson-from-a-semi-failed-startup/" rel="nofollow">http://www.scottporad.com/2009/07/13/the-key-lesson-from-a-s...</a>) where we had a good idea, but we didn't care. We ended up never even launching the product. :(

#1 has a severe flaw - how would you know <i>beforehand</i> how passionate users are going to get? It all depends on the implementation. Market size and fit are also important here, but I really don't think it's easy to figure this out beforehand.

<i>'...I strongly prefer an existing market to creating one from scratch'</i><p><i>'In short, the first mover advantage is a crock of shit'</i><p>So many people are scratching their heads trying to invent something new. Don't. Pick a market - the bigger the better and out-execute in some key area, be that design, usability, marketing etc.