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Draft: Five Ways to Evaluate New Ideas

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  1 +---
  2 +layout: blog
  3 +title: Five Ways to Evaluate New Ideas
  4 +---
  5 +
  6 +I've been building products for six years. Some for myself, others for companies both big and small. Within a larger corporate entity, it's been hard to quantify a successful product. How does one go about measuring the efficiency of one cog inside an elaborate moneymaking (or losing) machine? I've become selective about the products I build. At a certain point, you've proved to yourself that you can build it. Now, what you're building matters. With so many interesting problems to solve, how do you decide where to invest your time?
  7 +
  8 +## Pick a Real Problem
  9 +
  10 +I have some friends from the management consulting world. You've probably sat next to one on a plane. They have IBM ThinkPads and crunch Excel workbooks for a project that is invariably behind and over budget. They travel a lot. They're paid well. And, it seems that all of them want to start something. Bright-eyed and bushy-tailed, they ogle at Facebook, Twitter, FourSquare, Pintrest, Path--whatever's hot and on the first page of TechCrunch. They'll attend a StartupWeekend wearing the obligatory "idea guy"-colored T-shirt and pitch their idea: "I want to build a social goal setting app". Puke.
  11 +
  12 +Wake up and smell the dehydrated single-serving crap you call coffee! If you're serious about building something, tackle a real problem. Delve into your vast reservoir of corporate experience and drum up every complaint, grievance, and suggestion you can remember. Fix one! Those are problems people deal with every day. They pay money for solutions. Real problems are well-defined; a constraint you need to build a good solution.
  13 +
  14 +## Elegant
  15 +
  16 +Real problems often have complex solutions but complexity isn't something to be afraid of. Almost any time I've tried to explain how the web works, I'm stunned that it works at all. Sometimes to get this to go over there in that much time involves some wizardry. Don't sweat it.
  17 +
  18 +But 30,000 feet, an idea should be elegant. Twilio: wrap up all the madness involved in sending texts and making calls behind a developer-friendly API. Heroku: make deploying a standard Ruby app as simple as checking in your code. Uber: hail and pay for a black-car service from your phone. In mechanics, it's possible to determine the [motion of two bodies][1] but the three-body problem cannot be solved. Complexity will invariably creep into your product so keep it ridiculously simple and straightforward upfront.
  19 +
  20 +## Make Money from Day One
  21 +
  22 +> "You have customers, they pay you money... you get profit!"
  23 +>
  24 +> [David Heinemeier Hanson][2], 37Signals, at Startup School in 2008.
  25 +
  26 +If you haven't thought about how your product will pay for itself (aka you and your team), you're probably doing something wrong. If targeted advertising is your biggest potential revenue stream, you might want to re-consider. The glitz and glamor of bootstrapping wears off fast. When it does, you'll have real money coming in the door.
  27 +
  28 +What about raising capital? The last New York round of TechStars got over 1,000 applications. YC was even worse. There's more teams building products that didn't even apply. Every year, you and your idea are up against stiff competition. If you have to draw a graph that goes from the bottom left to the upper right, make it coorelate to your bottom line.
  29 +
  30 +## Scratch Your Own Itch
  31 +
  32 +Leverage yourself by solving a problem you have. When you really understand a domain you can spend more time building and less time gather requirements. "When it's all in [your] brain, it's a perfect feedback loop," [says Jason Seats][3], co-founder of SliceHost. If you don't use your own product, you're completely reliant on feedback. "You have to construct artificial ways to get information." You're likely flying blind or moving too slowly.
  33 +
  34 +## Unfair Advantage
  35 +
  36 +When I was at DreamIt Ventures back in 2010, [Josh Kopleman][4] of First Round Capital gave us some tips on being better entrepreneurs. This was one of them. If you're working on a big opportunity, so are others. Why you and not them? It may be someone you know, a patent you filed, or an exclusive contract you signed. You may simply have a killer team that can get shit done. Know your unfair advantages and leverage them as execution multipliers.
  37 +
  38 +That's it! Those are the five rules I screen all new ideas with. As my friend [Michael Dwan][5] once told me, "ideas are like the bus... you miss one, there's another right behind it." Don't take it personally if your idea doesn't make the cut. You'll make it to your destination faster by being selective about how you get there.
  39 +
  40 +[1]: http://en.wikipedia.org/wiki/Two-body_problem
  41 +[2]: http://www.youtube.com/watch?v=0CDXJ6bMkMY
  42 +[3]: http://vimeo.com/26335493
  43 +[4]: http://www.firstround.com/team/profile/josh_kopelman/
  44 +[5]: http://michaeldwan.com/

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