Assess your startup's potential for success

Does your startup have what it takes to become a $100M+ business?
Take this quiz to find out!
After watching Kevin Hale's lecture on how investors evaluate startup ideas, we were inspired to create a quiz any startup could take to find out their growth potential based on Kevin's own investing criteria.
Based on your answers your startup will fall under one of the following 4 categories:

- Great potential! 🤩
- Moderate potential 😀
- Low potential 🤔
- Poopy potential 💩
Here is Kevin's lecture: Evaluate your startup idea - Kevin Hale (YC Partner/Wufoo)
I estimate it would take you between 31 - 32 steps (depending on your answers to my questions) in 2 minutes to Assess your startup's potential for success.
Is your goal to build a company that could potentially become a billon dollar company within the next 5 to 10 years?
  • Great! this is what all investors are looking for. Let's build that billion dollar rocket!
  • Nothing wrong with that. Most businesses stay relatively small and still afford the founders a great lifestyle. However, it may be quite difficult to raise money from investors unless you can proof you want and can build a very large company ($100M+) over the next 5-10 years.
  • No problem just be aware it will be difficult to raise money from investors unless you can proof you want and can build a very large company ($100M+) over the next 5-10 years.
Can you acquire most of your customers without spending money in sales/ads/marketing?
I.e: referrals, worth of mouth, network effects, free press, inbound marketing.
  • Fantastic! growing will be a lot easier if you don't have to spend exorbitant amounts of money trying to acquire customers.
  • This could slow down growth. You need to find ways to reduce the cost to acquire new customers. How could you increase referrals, worth of mouth, network effects, virality, free press?
    A robust content marketing strategy can be a good way to build a large audience that you could convert into customers affordably (i.e: 37Signals blog -> Basecamp, Paul Graham essays -> YCombinator)
Are you (or your team) 1 in 10 of people/team in the world that can uniquely solve this problem?
E.g.: Are you one of the top experts in the word on the problem? do you have a patent/s on your technology?
  • Great! this is one of the most powerful unfair advantages a company can have.
  • It helps to have a stellar team but it's not the end of the world. You can either acquire the skills to become a top expert or get coaching or hire someone that could make your team stellar.
How many people have the problem you're trying to solve?
  • The bigger the market the more room for growth. If you're going after a small market, you need to make sure that market is expected to grow at least 20% year over year to have a chance to build a large company.
  • The bigger the market the more room for growth. If you're going after a small market, you need to make sure that market is expected to grow at least 20% year over year to have a chance to build a large company.
  • The bigger the market the more room for growth. If you're going after a small market, you need to make sure that market is expected to grow at least 20% year over year to have a chance to build a large company.
  • This is a good market size! The bigger the market the more room for growth. However, make sure this market is consistently growing (20% year over year ideally)
  • The bigger the market the more room for growth. If you're going after a small market, you need to make sure that market is expected to grow at least 20% year over year to have a chance to build a large company.
Is your market predicted to continuously grow over the next 5 to 10 years?
i.e: an ideal market growth rate for investors is 20% or more per year.
  • This is ideal to build large companies. Just make sure you pay attention to market trends and your predictions are as accurate as possible.
  • You need to make sure that market is expected to grow at least 20% year over year to have a chance to build a large company.
  • Unless you want to build a small business, make sure your market is expected to grow at least 20% year over year. This will maximize your chances to build a large company.
Is solving this problem mandatory for your customers? Do they really need it solved?
e.g: Maybe the law has changed forcing people to change their behaviour or opening opportunities to do things that were previously illegal.
  • Great! your product can capitalize on this mandatory change by providing a solution that needs to be implemented in order for your customers to do what they want.
  • Without a problem that needs to be solved mandatorily, your customers may not be compelled enough to use your solution.
  • If you're still unsure, you may want to explore problems that customers are forced to solve in order to keep doing business (i.e: a change in law)
Will your problem be expensive to solve? and will your customers have the money to pay for your solution?
  • Great! it's obvious the more you can charge the better. Only as long as your target customer has the pocket to afford your solution!
  • You may be in trouble if you're charging too little or your target customer simply doesn't have the means to afford even the cheapest incarnation of your solution.
  • Try to find a problem that people are actually willing to pay money to solve and a target customer that actually has the means to afford it.
Is you product/solution 10X better than the competition's?
  • Great! having a 10X better product will give you the unfair advantaged needed to acquire many customers.
  • You need to improve your product to make sure is 10X better than anything else out there. Otherwise, customers may not have a compelling reason to switch their current solution.
    10x can be a factor of multiple metrics such as 2X faster times 5X cheaper.
Do your customers need to have this problem solved urgently?
  • Congrats! urgency is a key motivator for customers to take action fast.
  • Hmm... if your target customer doesn't have a pressing need to have that problem solved they may postpone indefinitely paying for your solution.
  • Find out how urgent your customers need to solve the problem your product is addressing. If you find out there is almost no urgency you may have to consider addressing a more pressing problem.
How often do your customers have a need to solve this problem?
  • This is the ideal scenario. The more frequent is the need to solve the problem, the easier will be to find customers willing to use your product.
  • Evaluate #11991 ::Once a day
  • Weekly
  • Monthly
  • Every few years
  • This could be bad! you want to solve problems people have very frequently, otherwise it will be difficult to find customers.
What have you done first?
1. We've built a solution and are trying to find customers for it

2. We've identified a problem and are building a solution for it
  • This approach is known as SISP (Solution In Search of a Problem) and it may make it difficult to find customers. It's very common for product focused founders to fall in love with creating a technology before finding if it solves a real problem. Don't fall for this!
  • Good! your chances to find customers and making money are much more likely if you identified a problem by talking to customers before building a full solution for it.
Will it be much harder to be defeated by competitors as your company grows?
E.g.: marketplaces, or companies that grow mostly due to network effects tend to become monopolies.
  • Great! you're probably building a marketplace or a solution that can grow mainly due to network effects (i.e: the more users you have the more value there is to join your product)
  • Not having the ability to become a monopoly may make it much harder to keep competitors at bay as your company grows.
  • If you're not sure, you may want to research how you could either become a marketplace or incorporate a way in which network effects could give you an unfair competitive advantage as your company grows.
Action Plan references 1 Expert Videos by 1 industry expert: Kevin Hale
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