Questions I Ask Myself When Starting a New Venture

A friend of mine has left his corporate job to seek his next adventure. He asked me for some advice on a few of the ideas and projects he was looking to join. I put together the following thougths about what I like to ask myself when starting or joining a venture. It's not a perfect list by anymeans but I think it's a good starting point to get you thinking.

For context: One of the companies he was looking had an early stage product and so much of my thougts are product and startup based.

Does this product have PMF (Product Market Fit)?

  • Key Components of PMF:
    • The Product: It should address and solve a genuine problem.
    • Go-to-Market Strategy: This strategy must effectively reach the people who need this solution.
  • Challenges in Identifying PMF:
    • Identifying PMF is challenging when attempting to determine the product's viability and the target market simultaneously. It's often difficult to discern whether challenges are due to the product itself or because it's not reaching the appropriate audience.
    • A strategic approach is first to address the product, then focus on the go-to-market strategy. The shortcut I like to take is starting with a problem that I’m intimately familiar with. When you lack familiarity with the problem, it often leads to stumbling blocks and difficulties.

What stage of the company are you joining?

  • Early Ideation Stage: At this stage, the focus is on validating the core idea and establishing PMF. Skills required here include creativity, problem-solving, and an ability to work with ambiguity and limited resources. The emphasis is on flexibility and rapid iteration.
  • Growth Stage: This stage involves scaling the business, requiring different skills such as operational management, process optimization, and perhaps even leadership for a growing team. Here, the challenges are about managing growth, maintaining quality, and scaling operations efficiently. I find people who are strong operators really excel in these types of orgs. The path is clear on the product and now it’s just a matter of optimization.
  • Understanding what stage this company is at helps in aligning your skills and experience with the company's needs. Whether it's contributing innovative ideas in the ideation stage or driving operational efficiency in the growth stage, knowing where you fit can make a significant impact. Also what do you like to do?

Is the product defensible?

  • Businesses with low entry barriers and high replicability often struggle to sustain profitability. For instance, the digital marketing landscape is competitive due to the ease with which individuals equipped with social media expertise can mimic successful models. Likewise, the rise of cloud computing, e-commerce platforms, and payment APIs has simplified launching an online store, reducing the need for substantial capital and technical know-how. This ease of starting a business ironically makes its long-term sustainability more challenging. Typically, the ease of initiating a business venture is inversely proportional to the difficulty of achieving notable success in it.
  • I recorded this list a number of years ago about how to make your business defensible and you might find it useful:
    • Accepting Limitations: Acknowledge that no business is entirely defensible, and be prepared to confidently address this reality with investors.
    • Time Advantage: A head start over competitors can enhance defensibility. Moving faster than rivals also offers a significant edge.
    • Strong Team: A capable team with relevant skills, qualifications, and experience in starting and scaling similar businesses adds to your startup's defensibility.
    • Economies of Scale: Growing allows for more operating leverage and reduced costs, contributing to defensibility.
    • Brand Strength: Developing a strong brand that connects emotionally with consumers can greatly defend against competition. Apple, for instance

Does it seem like a good idea?

  • I really like to thin slice ideas. If the idea feels bad in a matter of seconds you should usually just follow your gut.
  • Does my gut tell me if this is going to work. When I joined Urban Teachers I just knew the idea was good give my previous experience with teacher training programs. We were able to scale the company significantly over the 4 years I was there. With Eddee I personally have deep expertise in the area and the go to market is very clear. When this is the case my gut usually says to make the leap.
  • Understanding how you feel about things is very important.