There is a lot of great advice out there for founders evaluating startup ideas. However, there are four things that are often overlooked, but that I think are essential to consider. These are by no means the only criteria but they are good to keep in mind I like to think about in addition to the standard startup idea evaluation criteria you may already be using.
I wanted to share them in case it’s helpful for others
1. Unique insight: What do you see that others don't?
The best startup ideas are based on unique insights into the market or customer needs. For example, Warby Parker realized that people like to try on glasses at home before buying them, and they saw how much cheaper it would be to go direct to consumers and cut out the retail middlemen. Airbnb co-founders realized that people traveling for conferences needed affordable places to sleep, and they could fund their own conference attendance by leveraging their unused space.
You need to ask yourself what is really unique that you see or can do differently that will have a significant improvement for your customers. This is where the real innovation process occurs. It’s about looking at what exists today and imaging a way that it could be better.
2. Unfair competitive advantage: Why are you the best person or team to create this business?
If the idea you're exploring is good, then someone else has probably already thought of it. The iPhone wasn’t the first smart phone, Slack wasn’t the first chat software, Gmail wasn’t the first email client, Facebook not the first social media, etc.
So, you need to figure out what about your background, experience, contacts, skills, or resources makes you uniquely equipped to solve this problem.
I see founders far too often hoarding or protecting their idea and trying to hide it from the world operating in “stealth” mode. There are of course times where this makes sense and first mover advantage is a real thing.
However, I believe the majority of founders are far better off telling people about their idea early and often and getting feedback. If your idea is good then sooner or latter someone is going to try to copy you. You should expect and plan for this by finding an unfair competitive advantage. If you think they will copy you and do better than you, which is why you are keeping your idea a secret, then you should do something else.
3. Tailwinds: Why is your product or service going to be the default now and in the future?
Look for tailwinds, such as growing markets, technology trends, or cultural shifts, that can help you get into a market early and establish yourself. For example, Jeff Bezos realized how fast the Internet was growing and that books would be a great starting point for an eCommerce company. Reed Hastings realizing how much of a pain overdue fees from blockbuster were and how easy and cheap it is was to ship DVDs by the mail.
Tailwinds are great things to look for because they can help you get into a growing market and ride the wave higher. To spot these you have to look really broadly though. Tailwinds can apply across geographies, political, and social or popular opinions. But you should make sure that you are not just following a trend and that you are actually trying to build something that gets in front of upcoming needs and shifts in the market.
4. Contrarian idea: What is everyone else doing that's wrong? What is assumed to be true, but may not be?
The most innovative startup ideas challenge the status quo. For example, everyone knew you wouldn't get into a car with a stranger, until Uber came along. US consumers would not buy electric cars, until Tesla came along with their luxury electric vehicle.
Contrarian ideas are nice to have but not an absolute requirement. Many great businesses are founded in well established markets following the established path. But having an idea that is contrarian to popular beliefs can unlock a truly untapped market opportunity which will further help accelerate and scale your business.
As I said before this is by no means an exhaustive list. There are a ton of other criteria that you need to consider when evaluating your startup idea:
- Validate your idea: Talk to potential customers and get their feedback on your product or service. This will help you to understand the needs of the market and to see if there is a real demand for what you're offering.
- Do your research: Learn as much as you can about the market you're entering and the competition. This will help you to develop a sound business plan and to identify the best way to bring your product or service to market.
- Be realistic: Starting a business is really really hard work. It takes time, effort, and dedication. Be realistic about your chances of success and be prepared to work hard to make your dream a reality.
I hope this helps!