Should you be working on this startup?

We’ve all heard the anecdotes—the famous founder who pitched 1000 investors before any of them said yes.

That kind of story drives founders to take a “VC’s don’t know anything” approach to their business and trudge on despite legitimate criticisms of the business, often costing themselves tens of thousands of dollars or more of personal savings.

So how do you know whether or not something is worth working on?

Most founders I know who are in this mode simply haven’t done enough homework and planning on the idea. They’re waiting and hoping something will “pop” without a real sense of what kind of execution would make that happen. They often harken back to apocryphal stories of how some conference drove some consumer app “out of the blue”, without acknowledging the network that was already using that app or how much more connected to influencers that founder was to begin with.

They think that if they just had enough money to market something, it would take off, yet whenever they pitch the app in front of a crowd of 100 people, the conversion and virality rate isn’t proven out at all.

Here’s a checklist that might be helpful in determining whether or not this is something worth working on.

Give yourself a point for every one of these you can say “yes” to:

1) Are you an expert in this space because of your own firsthand knowledge—enough to be asked to speak at a conference on the topic?

2) Are you the same kind of user of this service as the person who would be the buyer of its services, spending actual dollars?

3) Have you pitched a critical mass of investors of the right stage and sector? Is the feedback still inconsistent?

4) Have you given users a real shot at signing up and using the product—and a growing number of them use it and use it more often/consistently month over month?

5) Can you make whatever product fixes you need without raising capital to do so? (Because no one is going to fund a fix.)

6) Have you built yourself a financial model that includes both the profitability of an individual user, including the cost to acquire or sell them, as well as an overall growth number with a marketing budget over the longer term?

7) Does such a model get you to a long term size that makes sense for venture capital investors (north of $100mm in revenues)?

8) Have you made significant changes to the product or business model that improved key metrics over time?

9) Have you spoken directly to customers and gotten specific numbers on how much they would pay for this?

10) Is the service built in such a way that it still provides value for just a handful of users?

How many points mean you should still be working on this?

I don’t know the answer to that—but I know a lot of people have been spending a ton of time on things that I think at best would only net them 2-3 points. That seems way off, especially when they’ve quit their jobs or they’re spending lots of either their own money or friends and family money on this.

One of the reasons we build is for those founders that are spending real money on their startups—theirs or someone else’s. We put a price on it because we wanted to make sure we were sourcing founders right at the stage where improving the service, the pitch, and the chances of getting funded was a worthwhile investment. It’s not a crowdsourcing tool for feedback on ideas you came up with today—that you can do on Twitter.

It’s a way to get specific and consistent feedback from real investors at that point when you’re ok investing real resources into moving this forward. It’s less than the cost of a flight to an investor and less than the cost of a ticket to most conferences that are promising you connections to investors.

I get that budgets for a startup are tight—but if you’re about to fundraise or currently doing so and you don’t think spending less than $200 to find out what ten real investors are willing to share off the record about your pitch and plan, then I have to wonder what is worth spending money on.

We’re confident that the spend is going to be worthwhile—so if you get your report and you don’t think the feedback was useful, we will give you a full refund.

What do you have to lose?

The chances of the very first startup idea you have being the one is very low—and the best companies often go through several iterations. Learning and getting feedback is an integral part of the process—so if you’re not getting more than a handful of points on this checklist, maybe it’s time to start asking the question as to whether or not this is the idea that gives you the best chance of success.