A few people recently approached me with their vision for the next big idea.
They told me that their sites would generate millions of dollars.
I love meeting people and hearing about their ideas. At the very least, I feed off of their motivation and determinism.
Unfortunately, these people failed pretty badly answering some basic questions.
Here's a Start Up Quiz I developed that will help you decide whether a Start Up opportunity is for you or not.
Coming from the Lean Start Up Methodology, I give a quantifiable way of making a decision by using a scoring system.
If the question is answered well, then give them a point. If they get 4 points then awesome, if not then stay away.
1. So in a nut-shell what will the site do?
Good answers will be one or two sentences short.
Bad answers will be long winded and complicated.
2. What assumptions are you currently making?
A good answer would sound like this:
People will create profiles in a private social network for their college, and they will log into the site more than twice a week.
A bad answer is general
And can't be tested with a minimum viability product.
3. What have you done to de-risk your assumptions?
The perfect answer would be:
"I have a MVP and I made it specifically to de-risk the assumptions I talked to you about."
"So far I've de-risked my value assumptions, but I haven't de-risked my leap of faith assumption."
"That's where I need a technical partner to come in and help."
"I also talked to a ton of people in the industry as well as a lot of potential customers and users the site would have."
Usually, it's a hit or miss with this question. They've either done it or not.
4. How many potential leads do you have?
The perfect answer would be:
"I have 4000+ qualified leads."
"I have a niche blog that gets 10,000 unique hits a week and they're all potential users."
A bad answer would be:
"I haven't gotten any yet, but that's not my fault, the product needs to get done first."
It's my fault that you haven't talked to potential customers? Go to hell.
Another bad answer would be:
"Oh it'll be easy to get people to use this, that's why I haven't focused on it."
That basically means that this person is lazy and wants you to do all the work.
Avoid people with these types of answers like the plague.
5. How are you going to differentiate yourself from the competition?
Yipit.com's philosophy was to launch as quickly as possible by not spending time developing an algorithm.
They made it so the site looked like the algorithm was working
And they hired someone to manually make recommendations for people while it looked like the algorithm was doing it.
This way they were able to launch their site faster than their competitors.
Facebook's initial philosophy was a private network for college students.
InrTracker's philosphy is to have a web dashboard that helps blood thinner patients monitor their health and allow them and their doctor to make better decisions. The competitors were all focused on mobile, while the target audience aren't mobile savvy.
A bad answer is:
"No one's doing what we're doing."
While you're thinking, there are plenty of people doing what you're doing.
If there's doubt in your mind, then this person failed at answering this question.
6. What's your user acquisition strategy?
A good answer would be:
"I wrote an article and it's ranked #1 on Google and I've been capturing 10 leads a week so far."
"I'm writing more articles like that."
"I'm also sending out 20 linked in messages a day and making about 75 phone calls a day. I'm doing this to get the ball rolling, but I see us doing better if we can launch a big facebook competition on our fan page."
"I ran tests and was able to acquire 100 leads with a simple Facebook Contest. I think if we launched a bigger one we could do much better."
You want to hear numbers, and you want to hear things that they have actually done to back up those numbers.
An untested sales forecast isn't worth the space on the drive it's on.
And anything else that hasn't been tested is as good as pixy dust.