Evaluating Startup Ideas
Updated: Nov 24, 2021
If you’re looking for a quick way to articulate your startup idea, I’ve developed this Evaluating Start-Up Ideas Notion template. The template includes several useful exercises (like the Amazon Working Backwards press release) that can easily be copied and completed with each new idea you consider. The template is mostly an amalgamation of ideas and frameworks from other smart people; my focus has been on pulling it all together in one place.
I don’t use this template to evaluate the merit of an idea; just my ability to articulate the idea. I like that the template focuses my attention on questions I’ve had to answer before that I know I’ll need to answer again. In my experience, if I can complete the majority of the template easily, then I know I’m ready to make the first customer or investor deck and test my idea further.
The template includes two sections: Guides and Processes, and Research. I walk you through each one, below.
Guides and Processes
Inspired by the Amazon Working Backwards Method, this exercise encourages you to think about how you’d announce your idea to the world through a draft press release. This one page document should include:
The product's name
A description of the customer and the customer's problem
The benefits of your solution
An enticing call to action
Most importantly, it should be written with your customer’s point of view in mind. If you can do that in one page, you might be onto something. Here’s an example of an early press release I drafted for an idea I called Silhouette.
I like to think of this Business Model Canvas as the business plan on a napkin. It organizes information about the business into four areas:
I find the process of drafting the press release actually helps me think through the offering and customers profile/pain points a little better than the Business Model Canvas. Where the Business Model Canvas is most useful is in capturing the key activities, resources, and partners, and how money will move through the channels, revenue streams, and cost structure.
Here’s an example of an early business model canvas for Silhouette.
Once you’ve worked through the press release and Business Model Canvas, the next step is to start outlining your deck. There are many good startup deck outlines on the web, like the Sequoia Capital Pitch Deck Template, and some very good example decks from successful companies too. I also really like this post that breaks down the Open Door Series A pitch deck. I find that no two decks are exactly the same, and each deck I make ends up being a unique expression that assimilates the narrative. Which is all to say: this is just guidance, not a rule book. The general deck outline I follow is broken into three parts. Part One focuses on the problem, proposed solution, and size of the market. Part Two explores whether or not the product is unique. Part Three considers if the solution can be built and if wealth can be generated.
Part One: Does This Even Matter?
PURPOSE: Start by exploring the business’ purpose: what’s the vision, mission, and values of the company? What does the future of the world look like if the most ambitious version of the company’s vision comes true? This slide should answer the question: "Why does this matter to the world?" Simon Sinek’s Golden Circle model is a helpful starting point for thinking this through. CUSTOMER’S PROBLEM: Next, what's the customer's problem, and, more importantly, how do they feel about this problem? Try choosing 3 - 4 emotions from Plutchik’s Wheel of Emotions that capture why the customer is willing to part with their money for a solution. What does it cost them today, in dollars or minutes? YOUR SOLUTION: On the next slide, describe the solution and the 3 - 4 emotions the customer will feel once they experience the solution. MARKET OPPORTUNITY: Finally, describe the market. Honestly, at first pass, I just write ONE BILLION DOLLARS in large font and move on. Eventually, I circle back and try to describe how much wealth can be generated for the company's shareholders if the business is massively successful.
These Part One slides cover the purpose of the business, the customer's problem, why they'll pay you for your solution, and how big the business could ultimately be. It's a great start.
Part Two: Why Me?
If your Part One is any good, chances are other people have already had the same idea and may be making progress with a great solution. These next three slides help to explain why you’ll be the one to change the industry, and world: why now, competition and product. WHY NOW: Timing is like the tide—either it raises you towards success, or rips you deep into the sea. Save piloting the moon, you're completely at its mercy. Use this section to explain why there will be the benefit of a rising tide and not wasted effort against a rip tide.
COMPETITION: When outlining your competitive landscape, I find it’s helpful to not only list your competitors but place them on a visual that illustrates a mental model for how to think about similarities and differences. For example, I often share a four quadrant diagram where the two axes clearly articulate customer needs and the competitors are arranged within the quadrants by how they meet those needs (see this example). Another way to visualize this is to compare competitors across a table, where your idea has all the checkboxes.
PRODUCT: Finally, use the product slide to describe how the customer solves the problem with your solution. There is a clear hierarchy for the quality of a product slide: list of features < wire frame < functioning demo < video of a paying customer solving their problem. That's all pretty self-explanatory. If you’re working in deep tech, then you might also want to discuss your technology in enough detail to identify why it is unique. If a technical advantage is a critical part of what you’re building then you should dedicate a slide to it.
There have been times after finishing these slides that I've found the solution to my problem in researching the competition, as was the case with Lavender (I see you, hicleo.com). Other times I’ve spent hours in Figma wireframing a solution only to realize I need to revisit Part One. Very rarely do I make it past this part of the deck quickly.
Part Three: What Will This Cost?
If you make it this far, you really might be onto something. Now we need to articulate how you think you will make money and a profit.
BUSINESS MODEL: First, describe the business model. It’s helpful if this is not unique in any way, but something very straightforward, like a SaaS monthly recurring subscription fee or charging per call for an API service. Adding the key business metrics (e.g. LTV or AOV) is also helpful since that's what you’ll need to optimize to drive revenue.
FINANCIALS: Second, what does the cash flow and P&L look like? Honestly, for the companies I build, this is usually something like "we will spend a lot of money on talented engineers and quality employment benefits.” Hopefully after 7-10 years the company is profitable with high operating leverage! This is also a great slide to introduce how much capital you think will be required to meet the next set of milestones.
TEAM: Most importantly, you want to introduce the team. I tend to work through this section last because I'm often working through the template on my own, but if the team is particularly strong consider making it one of the first slides.
If you've completed all three sections well done! Here’s an example Deck Outline I put together for Silhouette. I love beautiful.ai for quickly converting the outline into a good looking deck so that I can solicit feedback from customers and investors. Make sure to write down the questions they ask so you can build a FAQ and appendix slide at the end.
As I’m exploring my idea and thinking through the most impactful ways to articulate it, I keep meticulous notes of any useful Links I find and a collection of industry specific Glossary of Terms & Entities. The links are especially helpful for adding references to the deck (for example, on the Market Opportunity slide), and provides a place to keep notes that were motivated by something I've read. The Glossary of Terms & Entities is where I write down industry terms, participants, or people I should know, like any businesses that should be included on the competitor slide. I also keep a Scratch Pad for jotting down ideas that I’m not sure what to do with.
Talk to customers early and often. Take notes. Don't give up. When it comes to customer interviews, I like to keep two things organized:
Who I’ve spoken to: You’ll see the CRM template I use to track early customers interactions within the template.
Transcripts: Transcripts are important because in early interviews you might miss the value or importance of a subtle comment. If possible, ask to record the conversation. Either use a transcription service or transcribe the meeting yourself. I like to transcribe the conversations myself because it helps me process the conversation and remember key details. It doesn't sound fancy or require complicated explanations, but this is where the majority of the effort is.
If you’ve worked your way through the full template, great job. You’ve now got a solid messaging foundation, a comprehensive deck outline and a system for organizing your customer interviews, research and more. Best of luck moving forward.