-- Their website design -- Their code (Rails? Jquery?) -- Their hosting / scalability / "cloud" strategy -- Source control methods, dev environment, tools -- APIs, "ecosystem", social media, "viral rate" etc. -- And more...
Basically, all the things that most of us here spend most of our time discussing.
Instead: 1) Idea / Team 2) Execute 3) Talk to people with money 4) Go to #2
http://pmarca-archive.posterous.com/the-pmarca-guide-to-star...
That's all Fred is looking at in that phase-- because even an awesome team won't build a venture-sized business in a tiny or low-growth market.
At our Demo Day, there was two teams that had a veritable investor feeding frenzy around them-- and they were both attacking markets that were either huge/rich or markets that were growing like gangbusters (and they had the good sense to talk as much about the market opportunity as they did about their product).
Sure the operational factors are important (and that's why they get discussed here), but they're secondary to size of the market and the nature of the solution when it comes to how big the investment opportunity is.