[Lessons Learned] Key Start-up Questions

Random Observation/Comment #428: One of the most important skills to learn in analysis and evaluation is to put yourself in the other person’s position. Once you see what others see, you’ll be in a better state to make the decision.

see lemons excited

I’ve been working with the start-up industry and playfully keeping updated with the latest technologies for the past 7 years. It’s actually quite amazing how far we’ve come and how much farther we can go. I’ve heard hundreds of brilliant ideas and thought through all the different market niches that one could even consider.  Surprisingly, this is something else I do for free in my (free) time. I think I’m just a terrible business person when money is involved.

If you’re thinking about starting a company, consider what VCs ask when evaluating your company. Yes, many people that are building sites are doing it altruistically, but if you want to realistically have this company become successful, you have to think of the following:

  • What problem are you solving?
    • Does the problem actually exist? Is it a large problem?
    • Is it something that I can feel, understand, and relate to?
    • Is it something original or already being solved?
    • Is it something scalable?
    • Do you know people who want to see the problem solved?
    • How are you using technology to solve the problem?
    • Can you cheat the market place? Are you playing on an un-leveled playing field?
  • Who is on your team?
    • Can your team execute? Can they build it?
    • Is your team reliable and hardworking?
    • Can your team build it themselves? Do they need to hire programmers on the side? Is your team technical?
    • Is your team experienced?
    • What is your team’s network value? *This is specifically important for gaining momentum and movement
  • What is the competitive landscape for your idea?
    • It’s not if there is competition, it’s when there is competition. How do you react to it and defend against it?
    • How do you compare to your competitors? *Can your idea just be a feature for someone else’s existing site?
    • Do you need to educate the space? Is it a space that doesn’t exist or most competitors don’t understand yet?
    • Is your product better than your competition by value? You should not be playing the pricing game unless you’re big enough to take the loss.
  • How much is your company raising?
    • What is your plan for expanding the company?
    • Which seed stage are you in? Incubator, Accelerator, Series A, Series B, etc.
    • Where are you allocating the funds?
    • How much time do you need to get your product out there?
    • Who’s on your team of hires?
    • How much money do you need vs how much you’re raising?
    • What are your main milestones?
    • Is there room for error?
    • What is your strategy to get the next investor? Investors should jump to next investors to keep traction.
  • How will you make money?
    • Do you have a predictable revenue stream?
    • Are there similar services payments?
    • What’s your pricing model?
    • What’s the overhead and product expenses?

Most importantly, every person should think about risk. Some people can take the loss while others have more responsibility. There’s a fairly slim chance of your start-up being the next billion dollar idea, but it may be exactly what you want to do and support a growing idea.

Remember that all of your assumptions can change at any time and it may turn your playing field upside down, so be sure you think clearly about the market and the customers.

~See Lemons Started-up