Engineering · Engineers

As a technical co founder how do you evaluate an idea

Mohit Kukreja

Last updated on December 13th, 2017

A lot of people approach me with ideas every day when they learn that i develop software for a living and have built a few things that they have heard of.

Does anyone have any methods or practices that they are currently using to evaluate the ideas that get thrown at you?

Micah Stevens Software/Hardware Engineer

Last updated on December 13th, 2017

I would evaluate other people's ideas like I do my own.. I tend to list things I've learned, mistakes I've made and seen made in a journal I keep, here's a few high level qualifications that I would definitely suggest evaluating when attempting to understand the value of a new business. Sorry if it's a bit disjointed.

  • A big litmus test is, what if they had the product in hand today. Would they be able to immediately go out and make money? What customers are ready to buy? If not, what steps would it take to get customers. Customers don't just appear, you MUST have a plan to get them and keep them coming.
  • How much work have they put in? Do they have prototypes? Do they have plans written down? If not, it's hard to take any idea seriously. Any person can drink a couple beers and come up with 5 good ideas. Good ideas aren't worth anything. (see Marketing below) - nothing is real until you start to write it down, and nothing works unless the person is willing to put in the hours to make it work.
  • Business Plan - You need one. It's often wrong almost immediately but it forces you to go through important steps to distill the goals and parts of the business that much add up to achieve success. If they haven't done this, or don't know how, this raises a flag.
  • Marketing Analysis. You need one. I don't care if it's the best idea the earth has ever seen, if you can't market it, or don't have a plan for marketing it, you will fail. Good ideas are cheap, making them work is where the skill lies. A good marketing analysis will tech you VOLUMES about the product.
  • Adequacy of capital. Things ALWAYS cost more than you expect. Make sure the other party isn't under estimating the resources (not just money) necessary to take an idea to market.
  • Costs. Write down the costs, understand them. Review them - add costs that 'might' happen, because they will. Multiply by 150%, or 200% - because you're probably underestimating the costs somewhere. Add it up. Do you have enough? Probably not. To some degree you can offset costs with sweat equity, but not always. Don't plan on sweat being a panacea.
  • Understand the resources that you and the potential partner can bring to bear. Money is one, but more importantly their network. Understand what they can provide and more importantly, what they can't provide that you need.
  • Understand your needs. No amount of hard work will fill in large holes in planning. If you're filling a technical role and the potential partner is filling other roles, make sure they understand what is necessary and they have a plan to fill them. Don't leave this until later.
  • Make sure they know their customer. Make sure of this - people often think they have this covered and they don't. Make sure they have experience in the market they're addressing. Make sure they've talked to potential customers and understand the need they're filling.
  • How emotionally invested are they? This sounds backwards, but I shy away from people who are very emotionally attached to their idea. This makes it harder for them to see the reality of their product, and if at some point you need to pivot the business, it makes it hard to do so. They shouldn't be too cynical, they should be 'into' their product, but not so emotionally invested that they will be blind to reality.
  • Just because they're making money now doesn't mean their product doesn't suck. Often people cash in on opportunity and don't realize that opportunity is fleeting. They're successful today because of luck, and luck is a poor way to achieve long term success. If they're building on a current offering, make sure that you're not blinded by today's success and can actually build on what they have now.

This is all fairly cynical, and I have many more little notes about common things people do wrong, but I see it so often that I feel it works really well to use these as a way to avoid wasting time on things that won't go anywhere.

Most of this stuff is out of your control, so why get involved if it's broken to start.

Hope this helps.

David Yeng Entrepreneur

December 13th, 2017

You can ask them about how far are they with the idea, and what's their plan moving forward, and then weigh the risks against your own risk appetite... at very early stage, for example idea to prototype, you stand a good chance of having a greater share of equity, a startup with traction wouldn't give you anything more than 10. If I were you, once I've listened to them, I'll keep asking questions such as why they do it, how it works, the biz model, and where are they at now. If I can sense a future I'll jump in even if they are super early stage

Ricky Sharma

December 13th, 2017

I strongly suggest you don't evaluate the idea at all. You and I would have easily missed Uber, Airbnb, and a dozen other horrible ideas if we did that.

Instead look at the person's background and see how they rank in the following areas:

determination: will they give up 3 weeks after you quit your job to help them?

rationality: will they listen to ideas objectively or do whatever they feel like doing?

fairness: will they keep bad hires on too long because they cant fire people or fire

people randomly that are high performers?

stability: are they working consistently, treating people properly when they are too tired, too hungry, too sick, too scared, or too busy.

focus: will they be able to identify a problem and focus on it or just run around and "play house" non-stop pitching and talking to people and "networking".

leader: will they be the kind of person that the best of the best would enjoy working under? or do they take credit for everything using the word "I" non-stop instead of "we".

The other thing I would suggest is making sure the person is a "winner". My definition of being a winner is something akin to having been through hardships and coming out stronger instead of weaker or competed at the highest level (sports, math, dance, w/e) or failed immensely but are rising up to try again.

If you find someone that matches these qualities hit me up.



Xavier Lee Founder & CEO & @spiflee_ , Serial Entrepreneur, Tech Enthusiast

December 14th, 2017

I second David. You can use a top down approach. First always ask questions to validate the legitimacy of their idea (e.g. What is the concept? Who is the target market?) and where they are at in the process (e.g. Do you have a storyboard or design?). Me personally, I'm a visual person, so I usually always ask the person to draw our their vision so I have a better understanding.