14 questions you need to ask before you start a venture

At Ballistiq, we get a lot of crazy product development requests. People come to us with grand visions for new ventures and products that they want to build. Our first reaction is to ask them if they have validated their product idea. I’ve even posted the entire methodology I use here.

What’s strange is that many people seem to be against validating — they’re afraid of asking people to shoot down their idea.

So here’s another way. These are 14 questions that you need to be able to answer about your idea before you start investing and building. These are from SyncDev, pioneers in product validation methodology.

  1. Is the target customer clear?
  2. Is the need compelling?
  3. Is the lifetime value of the product high?
  4. Is the market large enough?
  5. Is the competition tolerable?
  6. Does your product fit the market?
  7. Is your advantage sustainable?
  8. Is distribution available?
  9. Are sales costs reasonable?
  10. Is the product feasible?
  11. Are margins adequate?
  12. Are risks tolerable?
  13. Does the business fit your company?
  14. Do you have a mountain of evidence to prove all of the above?

If you can answer “yes” to all the above questions. You probably are onto something.

“Pulp Fiction” by Banksy, international man of mystery.

  • John Mackay

    Hi Leo, first of all I really like reading your articles, they are especially insightful, thoughtful and helpful. What I like most is that they make me think. Reading this I wondered about how Twitter would have gone pitching their service against all of the above criteria? I wonder how many of the above criteria would have received an answer of “We don’t know!” simply because they were the first to market? Can you imagine the elevator pitch when they were starting out: “Yeah it’s like SMS but instead of one person you can SMS the whole internet” followed by their prospective angel investor’s incredulous response of “What are you nuts?! Why would anyone want to do that?” Sometimes, ground-breaking products are about disrupting the marketplace, literally turning it on it’s head and that I think requires a rare combination of genius/insanity, fearlessness and drive. Qualities which all good entrepreneur web developers have in abundance–yes? Cheers…John.

    • leonardteo

      Great point John. Although one thing I would add…For each Twitter or
      Facebook there are thousands of carcasses of other social applications
      that have tried and failed. Also, Twitter is the kind of company that
      without massive amounts of VC money floating it for many years while
      trying to figure out a long term, repeatable, sustainable business
      model, would have folded long time ago. Even Twitter right now is trying
      to figure out where it stands in terms of revenue generation and is
      only now just starting to roll out advertising and sponsored tweets.
      Many startups today who are not in the Valley and do not have the
      opportunities that Twitter had at inception, will never make it to get
      the kind of investment dollars required to do what Twitter did. I get
      “disruption”, I’m just advocating that it is possible also to build
      great businesses without relying on external funding and can get to
      repeatable, sustainable revenue models. i.e. more of a bootstrapped
      model. I get that there are exceptions to everything, but we should
      regard them as that – exceptions. The chances of anyone starting up the
      next Twitter, Facebook, Uber is as tiny as winning the lottery, but
      there’s so much media buzz about it that people still go ahead and play
      the game. 🙂 Just my 2 cents…