There is a lot of conventional wisdom out there concerning the characteristics and indicators of success for potential startup opportunities. I decided to see if I could quantify this wisdom, and come up with a method for ’scoring’ a startup opportunity. The score in itself probably doesn’t mean much, but by using a consistent framework I’m able to compare the relative score between several opportunities to decide which is the most attractive.
I thought I’d share the results with you, so take a look at my Acid Test spreadsheet.
By ranking each criterion with a score of 1-5 (1 worst, 5 best), and then taking a weighted average of these based on a categorization into 8 important general areas, the spreadsheet will give you a percentage score. The criteria I have used come from a variety of textbooks, lecture notes and blog postings that I have read.
Does this score mean much? I don’t really know. When I sent the spreadsheet to Guy Kawasaki for feedback, his response was “I don’t use such a systemization–I just go with my gut: do I like it or not?“
My feeling is that a tool like this will be useful for someone whose gut instinct is not quite yet ‘honed’. Indeed, I think the value in this tool is not the final number that it spits out, but the thought processes it encourages. After spending an hour or so thinking through the various criteria and how your business idea meets them, you will at the very least have a more thorough understanding of your opportunity, and at best might find this a useful way of ranking and comparing several of them.
Let me know if you find it useful!
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Ryan,
I think there is only one thing you need to look at: the people. Everything flows from that. If you surround yourself with great people, in the worst case, you learned a ton and built great relationships.
There is one exception: companies that are growing so quickly that the people involved don’t matter as much as the market pull. I would consider those opportunities if I was only in it for the money.