There are probably hundreds of books and articles addressing various factors and approaches. I wish there was a simple formula. That said, I’ve learned a lot from experience and observation about what fundamentals need to be in place, whatever the landscape. While these fundamentals are similar to what I hear from my venture capital friends, let me emphasize the perspective as an operator/builder.
The first might seem obvious, but it’s one that most entrepreneurs don’t take as seriously as they should: Is the size of the market you want to serve large enough to make you successful? I’m not talking about an esoteric market size measure that reaches into the billions. Rather, what’s the addressable market from your standpoint? It involves identifying who, how many, and what is the cost of reaching them so they hear you? Don’t diminish the “who” - being clear on your “buying centre” enables you to assess the size and whether or not you can reach them easily or not. Most companies don’t get traction simply because they aren’t clear on who can buy, who will use and what others need to be part of the process.
The second fundamental revolves around your product and the need it addresses. I like to give two simple tests along these lines. The first requires you to imagine (and hopefully test in real life) yourself knocking on the door of your ideal prospect. Try to envision all the demands and distractions on that person. When they answer, you ask “you know that problem <describe what your product solves>…” The only truly acceptable answer is “My gosh, yes! If only I could solve that because I spend a lot of time/money/effort on it!” Without that reaction, you will have a major hill to climb. The second test is related but more specific to how differentiated your product is to alternatives, most especially the alternative of doing nothing. I suggest a classic positioning statement exercise where you fill in the blanks to “For <end use>, <my product> is a <label of what it does> that <primary benefit>. Unlike <alternative>, it <main differentiator>. There are numerous books and articles that can give you more background on this exercise. I recommend these two simple items as they force you to focus on what’s at the core.
The third and final fundamental is the people you choose to join you on your journey. Do they have a deep understanding of the problem? Do you have experience in working with them? Have they had multiple successes or if not, are they at least humble enough to know that having a single success doesn’t guarantee another one?
Let me give you a personal example. My current company, Respond Software, is my fifth start-up and second that I co-founded. It is a cybersecurity company addressing a market that is in the billions of dollars - and we confirmed that the budgets were there with early design partners (who we hope/expect will be our initial customers). So far, our product is passing the door-to-door salesman tests for both the problem and our unique approach to it (we emulate a real, live security expert’s decision-making for problems that are difficult for people to handle). Finally, the team is extremely experienced in cybersecurity, modern software development, and go-to-market activities.
That’s how I gut-checked Respond’s fundamentals. We definitely believe we are addressing a large and quite painful problem for our customers in a novel way.
As previously stated, there are a lot of other factors that come into play, not the least of which is how you define “success”. However, these fundamentals seem to always be present in those endeavours that have turned out the best for me.
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