"Evaluation" is the first stage of the "meat grinder" that we use to find out which ideas we should execute on. During the ideation phase, the goal is simply to come up with lots of ideas with barely any judgement. But once we have a long list of ideas, we need to decide what we'll do with it. The notion "meat grinder" in this context is due do Tyler Tringas.
We certainly can't build a minimum viable version of all of them and hence need to filter our list before we move on to the validation phase.
The most common way to accomplish this is by using a spreadsheet. While there are many variations, there are typically at least two columns:
- Product-Market-Fit. How desperately do people want this? How painful is the problem? Do enough people want this?
- Product-Founder-Fit. How suitable am I to build this? Am I passionate about the problem?
You then give each idea on your list a product-market-fit rating and a founder-founder-fit rating. Whether you use numbers between 0 and 3, 1 and 5 or 0 and 10 doesn't matter. Ideally, you do some research before you rate an idea but it should be clear that rating ideas will never be an exact science. Additonally, you should determine a threshold value. For example, when you use a rating from 1 to 5 you could use the threshold value 8. A popular, somewhat quantitative way to get some data on the market in question is to do keyword research using tools like Google's Keyword Planner. An alternative method is to check if you can book "a full-page ad in a magazine targeted at your market for less than $5000". (This method is described by Rob Walling in his book Start Small, Stay Small.)
Once you've rated all ideas, you calculate an overall rating and highlight all ideas with a rating above the threshold value. These ideas are worth considering in more detail and should be validated.
Product Idea Evaluation Spreadsheets
I'd love to add more spreadsheets to the list. So if you use a spreadsheet to evaluate product ideas that you are willing to share with others, send me message!
Product Idea Evaluation Questions
Here's a collection of questions that you can use to assess the potential of your product ideas:1 Observation by Patrick McKenzie
2 Questions by Paul Graham
- Many things which purport to make particular business processes easier are not in fact solving a problem, because the existing process is Good Enough. If you can't find any book written about it, any competing software, any much-maligned downloadable Excel spreadsheets... consider that it might not be an important enough problem. Many things which purport to make particular business processes easier are not in fact solving a problem, because the existing process is Good Enough. If you can't find any book written about it, any competing software, any much-maligned downloadable Excel spreadsheets... consider that it might not be an important enough problem.
3 Questions by Andreessen Horowitz
- Who wants this right now?
- Who wants this so much that they'll use it even when it's a crappy version one made by a two-person startup they've never heard of?
5 Questions by Tyler Tringas
- Who really wants this today?
- How many of those people are out in the wild?
- What macro story must play out in the market [for there to be] market-wide demand?
6 Questions by Lenny Rachitsky
- Can I make this?
- Are people currently spending money on it?
- How will I get the first 25 customers? Then the next 250?
- If it works, will it be sustainable?
- Am I the person to build this business?
7 Questions by Peter Thiel
- Do people really want this?
- Do enough people really want this?
- What has changed that now allows for this to work?
- Can you acquire these people efficiently?
- Is this the right team to build this?
- Can you stay on top?
- The Engineering Question: Can you create breakthrough technology instead of incremental improvements?
- The Timing Question: Is now the right time to start your particular business?
- The Monopoly Question: Are you starting with a big share of a small market?
- The People Question: Do you have the right team?
- The Distribution Question: Do you have a way to not just create but deliver your product?
- The Durability Question: Will your market position be defensible 10 and 20 years into the future?
- The Secret Question: Have you identified a unique opportunity that others don’t see?
- How many miracles are necessary? (Elad Gil )
- Can you articulate why most people think it’s a bad idea, but you understand what makes it good? (Sam Altman )