Six Deeper Questions a Startup Must Answer!

We are talking about Startups here, right? Not just any business. It's about something new, different, making the world do differently and pay for it - thus we defined a startup - eliminating just another entrepreneurial venture or some innovation supported by a patent or PhD. And those who get this know it is tough being a startup!

So, jumping in needs some real soul searching. Answering some fundamental questions, have the guts to answer them and act based on those answers.

Every startup founder must ask themselves two levels of questions. The first level of questions that have been asked often and answered most of the time:

1. What Problem are you solving or Need you are satisfying?
2. Who is your Customer?
3. What is your Product?
4. How big is the Market?
5. Who are You and your Team?
6. By what Time will you be CF Positive? When will you think ROI? Exit?

Corresponding to the above six questions, the MORE IMPORTANT set of SIX questions that don't get asked and don't get answered:

Question 1: Is this a Problem at all? Most pitches start with a problem or opportunity statement. And the jury/investors switch off. They just feel it - not worth my time. Clearly, its the result of this question not being answered. The left side of my back itches and I can't scratch it because I am right handed. Is that a problem? Yes, I have this problem all the time and I asked my friends and they agreed. Don't tell them how many people are right-handed hence indicating a great market potential. Got the point? 

Question 2: Who is your User? Different from: Who is your Customer? A lot of times these two are different. Not just about Dependent User Vs Paying /Guardian or a B2B(2C) model. Go deeper & answer this - Who is paying you for What? And Who is actually Using what you are producing? One typical example for this: Monetizing the data of Users and make a revenue out of peripheral benefits offered to customers. The real (un-obvious) business model is data monetization. If so, are you building that into the architecture from Day One? And ensure your customer is happy?

Question 3: Does this Product Solve the problem at all? I mean actually solve it - eliminate it - make it go away. We tend to fit a solution we know, to solve the problem we see. Result: We ignore the competition. Think through this. The itching back problem: back scratching tool, skin cream, create a drug or do you want to predict which baby is prone to have itchy backs and modify the gene to eliminate it? No, I am not kidding. It's a choice you make based on what you can do. But remember some of the above are competition and some of them are market-eliminators. You can be one of them.

Question 4: How Rich is your Market? The size of the User base is not enough to gauge whether you will make money. You need to get a figure or the size of Customer base and their wealth. And at what cost can you reach out to them to provide your product. And what share of their wealth are they ready to give you, for whatever you are giving them.

Question 5: Are You the Problem Solver/s? Founders are passionate about solving the problem. Good. What's done about it? Build product and launch. Then get busy looking at the numbers - visitors, traction, revenue, cash flow etc. Spend lesser for an exponential number of signups and prove scalability. More active users, more of the problem solved. Right? Wrong. Investors are looking for someone genuinely interested in solving the problem. In the middle of the journey, you get hard evidence that the problem is not getting solved even if people are liking the product, for whatever reason. Advice: Please pivot. Or change problem statement and don't claim that you are solving the problem you started with.

Question 6: Is this the Right Time? Heard those stories of being too early for the times or too late to market? Postmortem comments on a dead startup. After trying for how long do we know we are solving a current problem with a near perfect solution. I am a crazy about Fibonacci and I have this totally unsubstantiated way to judge this. Design an engagement model with repeat engagement behaviour - trial to purchase or repeat purchase. So if I have 34 repeats and 55 new (total 89), I am good. Monitor this at every Fibo number you hit, repeat + new sweet spot. Consistent with a few Fibonacci numbers in line and you have arrived. Else, wait out and think again.

Final thoughts: Don't let these questions and answers deter you. Go startup. There is an ecosystem for you to help answer these questions. You just need to listen. To yourself.

A startup journey is not a loner's journey. Seek help, discuss, learn and then go with your judgement.

Note from author: I would love to hear from startup founders, mentors, investors involved in the startup ecosystem. Your comments are welcome.

If you are specifically interested in discussing how to apply these ideas for your startup, drop in a message on my email [email protected]