- Today, we're gonna 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 in less than five minutes.
Anyone can use the system and it will tell you
if your startup idea is great or less great.
This is Raw Startup.
I'm the founder of Vivino,
the world's largest wine app and community
with over 50 million users around the world.
I see and evaluate hundreds of startup ideas
every single year.
We'll 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 wanna 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.
Okay, let's get going.
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.
And yes, you heard me.
The big optimist said be pessimistic.
That's a weird one.
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 10 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.
We start with a product, and the question is,
"How likely is it that you can build a product
that is 10 times better
than the existing way of doing things?
If it's unlikely, give it a zero.
Yes, if the product comes out perfect. Give it a one.
Yes, there's at least a 50/50 chance of that. Give it a two.
Yes, for sure. Give it a three.
The zero is a disqualifier.
If you can't build something that is 10 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 10 times better
than the existing way of doing things.
Now, let's look at acquisition.
Can you find and market to the users of this product?
If the answer is no, it's a zero.
Yes, users can be found
and paid marketing will probably work. Give it a one.
Yes, not a viral product,
but will have some word of mouth growth. Give it a two.
Yes, the product is very viral in its nature
and it will find users automatically. Give it a three.
And again, the zero is a disqualifier.
If you can't find the users that will use this product,
it's gonna be very, very difficult to launch.
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.
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 zero.
If you're unsure of the market size and growth,
give it a one.
If the market is either big or growing, give it a two.
If the market is big and growing, give it a three.
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 not growing. That's a zero.
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 zero.
We have a headstart. Give it a one.
It will take a long time to copy,
but it's possible. Give it a two.
Yes, it's very hard to copy. Give it a three.
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 headstart
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 headstart.
Next is the buildability, ask,
"Can you get the team, knowledge and capital
to build this product?"
We will not get it and it will be hard to get.
Give it a zero.
It will be possible to get the resources
needed to build this. Give it a one.
We have most of what's needed and can probably get the rest.
Give it a two.
We have everything and ready to go. Give it a three.
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 three 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.
Now, let's put it all together and get a score.
Let's start with the math. It's pretty simple.
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 over the next 60 seconds.
How likely is it that you can build a product
that is 10 times better
than the existing way of doing things?
I'd say a two, 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 two, not a viral product,
but we'll 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 two.
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 three. 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.
That's a clear three.
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 will be able to do this.
So, we give it a one.
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 whether using the idea.
Probably not a great idea,
but maybe you can improve on the idea and get it 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.
DoorDash, 18.
Maybe not a great idea, but they executed incredibly well.
Plus 100. You have a fantastic idea.
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.
Put it all in the comments and I will comment on it.
Finally, a couple of tips here.
Sometimes you can adjust the idea a little bit,
so you 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 doesn't mean you shouldn't do it at all.
It just means it'll be harder.
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Thank you very much for watching.
Now, stop watching and go build something.
(upbeat music)