5-Minute Hack to Validate Your Million-Dollar Startup Idea

Today we’re going to find out if your startup idea is good, or maybe even great. I will show you a system that will let you evaluate any startup idea. We will use five simple factors. You will answer five simple questions, and in less than five minutes we’ll see if your idea is good or maybe not so good. After this simple exercise, you’ll get an actual score that tells you how good your startup idea actually is.

Building a startup is a lot of work. Yes, years of hard work. So you might as well start with a great idea. This is about startups, fundable and scalable startups. If you run a regular business, like a lifestyle business or something like that, you can still do fine without passing this test. The reason why I think this is important is because you should really test multiple ideas before you start building. Test a few ideas on a test like this, then you start building. In the end, it’s all about execution and building stuff. This is something you do early before you start building. As soon as you start building, other things become more important. This is more of a test to really see if you want to get started building. Although it comes down to execution, you would rather execute with a great idea. It is much easier to swim with the stream than it is to swim against the stream.

Now let’s get going and test that billion dollar idea. There are five factors and one question for each factor. Each question you give a score of one, two or three. I’ll tell you exactly how to answer the questions. We’re gonna look at Product, Acquisition, Market, Defendability, and Buildability.

Important note here, don’t lie to yourself. When you do the scoring, be very truthful, be pessimistic rather than optimistic when you do the scoring. Being optimistic here is a really short term strategy. You will celebrate for three minutes. You came up with this amazing idea. In reality, you’ll pay back over the next ten years because the idea was horrible. So be pessimistic here and quickly move on to the next idea if this one isn’t good enough.

How likely is it you can build a product that is ten times better than the existing way of doing things?

We start with the product and the question is how likely is it you can build a product that is ten times better than the existing way of doing things?

• Unlikely, give it a 0.
• The product comes out perfect, give it a 1.
• There’s at least a 50-50 chance of that, give it a 2.
• For sure, give it a 3.

The zero is a disqualifier. If you can’t build something that is ten times better than the way of doing things now, it probably isn’t a good startup idea.

Peter Thiel came up with this concept in his book from Zero to One. I really like the idea. The thing is, it’s very, very hard to change people’s habits. So if the product isn’t a lot better, people won’t change their habits. So start by answering how likely is it that you can build a product that’s ten times better than the existing way of doing things?

Can you find and market to the users of this product?

Now let’s look at acquisition. Can you find and market to the users of this product?

• If the answer is no, give it a 0.
• Users can be found and paid marketing will probably work, give it a 1.
• Not a viral product, but will have some word of mouth growth. Give it a 2.
• The product is very viral and you will find users automatically, give it 3.

And again, the zero is a disqualifier. If you can’t find the usage that will use this product, it’s going to be very, very difficult to launch it. The best products are viral and find their own users. In that case, give it a three. But that’s very rare. Give it a one. If the only way to find users is paid marketing and give it a two. If it’s somewhere in between with some word of mouth and maybe not exactly viral.

Is the market big and growing?

Next is the market. And we ask, is the market big and growing?

• If the market is not big and not growing, give it a 0.
• If you’re unsure of the market size and growth, give it a 1.
• If the market is either big or growing, give it a 2.
• If the market is big and growing, give it a 3.

First and important advice, don’t solve a big problem. In a small market, you’ll never get your money back. With a big and growing market, you give it a clear three. If either it’s growing or is big, give it a two. If you’re unsure, give it a one. I would not build a startup for a market that’s small and and not growing. That’s a zero.

When the product gets traction, will the product have unique features that are hard to copy?

Next is defendability. Ask when the product gets traction, will the product have unique features that are hard to copy?

• No, anyone can copy it easily, give it a 0.
• We have a head start. Give it a 1.
• It will take a long time to copy, but it’s possible. Give it a 2.
• Yes, it’s very hard to copy. Give it a 3.

Investing in and figuring out how to build a product that anyone can copy right after is no fun. Investors are usually not willing to invest in products that can be easily copied. You have to build something that gives you a head start or else nobody will invest in you. It’s much, much easier to raise money for a startup that’s defendable.

Vivino is a good example of a three. Now the product’s up and running with 50 million users. It’s really, really hard to copy all the data and information we have about the wine. Vivino is very, very defendable. Most products are not like that. They will just get a one or a two with a good head start.

Can you give the team knowledge and capital to build this product?

Next is the buildability ask, can you give the team knowledge and capital to build this product?

• We will not get it and it will be hard to get. Give it a 0.
• It will be possible to get the resources needed to build this. Give it a 1.
• We have most of what’s needed and can probably get the rest. Give it a 2.
• We have everything and ready to go. Give it a 3.

There is no point in having an idea that you can’t do anything about, that you can’t build. I mean, having a flying car that will take you anywhere in the world in 3 seconds would be amazing. Great idea, but you can’t really build it, can you? A three is when you have the team, the money and the resources to start building. This is rare unless you’re already in the business. A zero is a disqualifier when you can’t get the resources to start building. No point in working on that idea.

Startup Idea Score Calculation

Now, let’s put it all together and get a score. Let’s start with the math. It’s pretty simple.

Product x Acquisition x Market x Defendability x Buildability = Startup Idea Score

You just multiply all these scores with each other. You multiply Product, Acquisition, Market, Defendability, Buildability, and you have a startup idea score.

Although the highest possible score is 243, most scores are between 1 and 100.

We’ll get to what that means in just a minute. You can use a calculator or just build a simple Google sheet like I’ve done.

Okay, let’s do a test. Let’s do Vivino.

How likely is it that you can build a product that is ten times better than the existing way of doing things? I’d say a 2. There’s at least a 50-50 chance of that.

Can you find and market to the users of this product? Again, I’d give it a 2.

Not a viral product, but will have some word of mouth. I’d say we didn’t know this at the time, but this is probably a three. It is a semi viral product with 20,000 people still installing the app every single day.

And the market, is the market big and growing? In this case, we give it a 2. The market is definitely big. The growth is a little bit up and down.

And defendability. When the product gets traction, will the product have unique features that are hard to copy? And this is a clear?. Yes. When you have millions of millions of data points on every single wine, that’s very hard to get. It’s hard to copy. we give it a 3.

And finally, buildability. Can you get the team knowledge and capital to actually build this product? I would go a little bit low on this one. This was really, really tricky to get started. We weren’t sure we would be able to do this, so we give it a 1.

Now to the fun part. Let’s see what the score is.

We multiply the numbers and we get a 24. Now, what does that mean? 24 is good. Not amazing. In our case, it turned out to be good enough.

Okay, let’s have a look at what these scores mean.

Under 10. I would not do it.

This will be an uphill battle between 10 and 20. I would think carefully about using the idea. Probably not a great idea, but maybe you can improve on the idea.

Over 20. Over 20, you’re probably okay.

Still, the higher the better.

Now let’s try to look at a few known companies, see how they come out really fast.

Facebook: 162 – Wow

Uber: 24 – Not bad.

WeWork: 6 – Yeah, kind of makes sense.

They are rare, so don’t expect to see that. So please test this with your own idea. Put the results in the comments and let’s see what comes out.

Feel free to challenge the system. Try other companies.

Finally, a couple of tips here. Sometimes you can adjust the idea a little bit to get a much higher score. So try and optimize the idea. Always remember that in the end, it’s about execution. It doesn’t matter how good your idea is, if you can’t execute, you’re much more likely to succeed with a poor startup idea and great execution than a great idea and poor execution. A low score score doesn’t mean you shouldn’t do it at all. It just means it’ll be harder.

Now stop reading and go build something

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Conclusion

This 5-minute framework empowers you to quickly assess startup ideas, saving valuable time and resources. By focusing on key factors like market potential, feasibility, and personal fit, you can confidently prioritize promising concepts. Remember, this process is just the beginning. Promising ideas warrant deeper research and validation. Stay curious, remain flexible, and don’t be afraid to pivot based on new insights. Now it’s your turn. Apply this framework to your next big idea and take the first step towards building something extraordinary.