Evaluating your startup idea

Chris Guillebeau in his book $100 startup says that a good test of an idea is its measure on a scale of 5 on the following 4 parameters:

1. Impact

What is the impact of your idea on the overall scheme of things? Are you, to quote Steve Jobs, “Creating a dent in the universe,” or just moving the needle a little bit. If you were building a space travel company, you would give it 5. But, if you were building a T-shirt printing company, it could be argued to be a 3.

2. Effort

How much effort is required to bring this idea to fruition. Space travel company is an easy 5  and a T-shirt printing company, an easier 2 (minimal effort required).

3. Profitability

How much profitability can you expect from your idea? Space travel is going to get you lots of money if done right, so 5 for that. T-shirts can give you a lot of money if they become hugely popular, but a 3 would be fair for it.

4. Alignment with Vision

Does it align well with  your vision and mission? It can only be answered by an individual since it is the most subjective and personal of all parameters. It is up to you to decide which idea appeals to you more intensely.

If I were to rate Musicfellas on these parameters, it would be:

1. Impact – 3, since it impacted a big (almost 20%) and growing segment of the music industry.
2. Effort – 4, since the indie music market was scattered and unorganised.
3. Profitability – 2, because of the fact that digital music sales wasn’t exactly a great business to be in.
4. Alignment with vision – 5,  because simply put, I love music and want to see a world where more and more musicians can live a comfortable and fulfilling life just by making music.

If you have a few ideas in your head and are trying to figure out as to which one to pursue, put these numbers down on paper. See  how they fare on this scale. If one is a 10 and the other one an 18, the choice is simpler. But, if the numbers are closer together, then it is entirely your gut call. Or, you can always do some internal and external validation which brings me to my next two chapters in my book.

Mayank Jain ( http://mayankja.in/ ) was the Co-Founder and CEO of Musicfellas.com – an indie music store. Musicfellas was acquired by Times Internet Ltd in 2014. This is an excerpt from Mayank’s debut book Restart – Lessons from one startup for another. It is out now on Amazon (http://amzn.to/1DgpPSP ) and on Instamojo (http://bit.ly/restart_book ) as Pay What You Want.

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