Evan Williams (founder of Twitter, fellow corn-fed midwesterner-turned-dotcommer, and someone I get to meet via YCombinator!) has a fabulous post on how to evaluate new product ideas. To sum up his excellent post, here is the matrix he came up with:
Question: How difficult will it be to launch a worthwhile version 1.0?
Question: Is it clear why people should use it?
Question: How much value can you ultimately deliver?
Question: How many people may ultimately use it?
Question: How will people learn about your product?
Question: How hard will it be to extract the money?
Question: Do you really want it to exist in the world?
He follows the list by running through a few of his startups through the matrix to see how they fare.
I don’t know if Evan put it first on purpose, but I tend to think that tractability is the most important factor by an order of magnitude. Why? Because there is a pretty good chance that what you think you’re going to build and what you go to market with are radically different. Take a few minutes and ponder this outstanding quote from Fred Wilson’s “Why Early Stage Investments Fail” post:
“…Of the 26 companies that I consider realized or effectively realized in my personal track record, 17 of them made complete transformations or partial transformations of their businesses between the time we invested and the time we sold. That means there a 2/3 chance you’ll have to significantly reinvent your business between the time you take a venture capital investment and when you exit your business.”
Another great quote:
“My friend Dick Costolo, co-founder of FeedBurner, describes a startup as the process of going down lots of dark alleys only to find that they are dead ends. Dick describes the art of a successful deal as figuring out they are dead ends quickly and trying another and another until you find the one paved with gold.”
Given that you have a 2/3 chance of having to reinvent your business (or, as Costolo would put it– you have a 2/3 chance of your first dark alley being a dead end), what could possibly be more important that tractability?