Comment by takrupp | Hacker News Reader

Comment by takrupp | Hacker News Reader

This article is pretty touchy feely to really make serious business decisions on. Here is my list (not just for tech startups): Is your business or product in a under-served niche (ie not a sexy industry that everyone is trying to get a piece of)? Do you have deep understanding of the industry or do you have a close relationship to someone that does? Is the idea easy to execute on (ie can you see clearly how to serve the market and all existing technology exists and is proven)? Is the market big enough so that you think you can easily sell 1000 units per month at $10 per unit, 10 units per month at $1000 or equivalent in billed hours of service? Can the business be revenue positive in 6-months? Can the business be automated or are profits recurring (ie could the business be successful with minimal human resourced or still be successful with minimal oversight by the founders)? Are there any barriers to entry for your market or possible intellectual property opportunities? Can you start the business without substantial upfront capital outlays (ie no inventory, etc)? Can the business stand on its own (ie doesn't need a huge existing customer base, mailing list, big advertising outlays, or additional features to make it an full product)? Do you have any other secret sauce not covered in the above?

No need to answer yes to all of them, but having 5 to 6 of these things in spades would be my criteria for doing more exploration.

Great set of criteria -- I appreciate that this is much more broadly applicable than the narrow spectrum of web startups typically discussed here. Sounds like you've gotten an MBA from the school of experience (the best kind!).

Only other criteria I would add is (1) if your business and product have a substantially lower cost structure than whatever they may be replacing, and therefore can get traction at the low end of the market (not that premium never works, it's just tougher, in my experience) and (2) your product can be bought with existing institutional market processes (meaning, it does not take a lot of behavior modification for people to buy your product -- whether it be corporations who don't yet have a buyer for your category, or if it's an entirely new way to buy a category, it makes it much tougher to get traction).

That's a pretty good addition, maybe added to the point of being able to sell 1000 units at $10 point. That point is the most abstract, Im not saying that your business model needs to fit those criteria specifically, just that 10k somehow per month needs to be quite possible, relatively quickly in order for it to be a positive thing for the business idea.

My first business went against both of your points (it was a premium product and we needed to change behavior of the users). I can vouch for the fact that this is tough, and things are slow, but that business also developed the most ardent followers of anything I have done since. It takes time (which is usually a bad thing if you dont have other revenue streams keeping you afloat), but once you do it, you have a serious asset in your customers. If you want to check it out, its HoboHookah.com, we actually patented the product and recently got our claims approved (I wrote the patent myself, which isn't experience you get in an MBA program!).

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