Evaluating Ideas and Ability to Institutionalize

It is the age of ideas and startups. An interesting idea is no more a figment of imagination and the business ecosystem gives us an opportunity to execute the idea by building institutions of wealth creation and service delivery around it. A young professional who moves out of the portals of formal education seeking a career does not have to depend on building a life as an employee, if she has the ability, know-how, and a bright idea. There is guidance, support and finance available for the bright ideas.

But the tragedy of surfeit of opportunity is the ‘curse of the plenty’. We see many ideas but the lack of focus, intent to delve deeper into the nitty gritty along with hesitance to work out the details of execution continue to downplay the ideas. Efforts to build ideas ground up also get lost in the ‘clouds of valuation’ and the discussion of exit before the ‘entry’ is complete. The confusions are often multifarious. What constitutes a good idea? What are the essential components of scaling the idea into an organisation? What are the dos and don'ts? These are just perhaps the tip of the iceberg – the startup entrepreneurs and investors grapple would be a gazillion more. There is ample advice available as well. From profound theory based on the successes of large organisations across industries to veteran investors who have amassed massive wealth for their portfolio of investments and the entrepreneurs, they placed the bet on. But often one can see some common threads which run through these pearls of wisdom and here are some top-of-the-mind points to ponder not just for the en- trepreneur but also the investor. Product Market Fit ( PMF)

Popularised by Marc Andreessen in a celebrated post titled ‘The Only Thing That Matters’, PMF has been one of the most discussed concepts in start-up literature. Marc Andreessen’s definition of PMF is “Product/ market fit means being in a good market with a product that can satisfy that market”. Blume Ventures Partner Sajit Pai further elucidates PMF. Product market fit is actually a fusion of two concepts – Product Problem fit and the Go to Market strategy and Market fit. The first concept to ponder upon is whether the product/service/solution matches the problem and is able to adequately address the complexities of the problem. Does it inherently have the capability to address and scale related complications? The second part of the concept stresses on using the right ‘Go To Market’ GTM to reach the target addressable market. How have you identified your total addressable market? How are you reaching your customer segment?

Technical Robustness

The efficacy of the solution and the framework for delivering the solution is important. The solution, whether a product or a service needs the heft to manage variations, have the architecture of repeatability, and the flexibility to adapt to feedback and constructive criticism loops. This often requires a team who are dedicated, ring-fenced through smart HR policies and provided the right engagement triggers to build and rebuild the solution.

Strategic Orientation

In the initial days of the idea, the scope is often limited, and rightly so. But the charm is building scope and capability to address varied issues and pre-empting the problem by also evolving with the solution. A strategic outlook indicates framing problems from multiple perspectives and using data to figure out different scenarios. Strategic Orientation forces companies to constantly identify risks and plan around mitigation proactively.

The Team

If one engages with investors and pops the question of what they really look for in various potential investments – ‘team’ will be one of the most common factors that they would delineate. In most cases, investors don't have the time to evaluate numbers, business plans and business strategies – they would then develop a gut feel of the idea which often is the impression they paint about the promoter/team. This factor is critical – all doubts of success vanish if there is a capable and articulate team who can infuse confidence.

Operational and Financial Metrics

Dashboards and simple measures to evaluate the business is critical for every idea. How does one view success? What is the extent of failure? What are five measures that you would use to evaluate businesses on a regular basis ? This is not about complicated finance and business models – These are simple measures that paint a picture of the health of the business. It is not just paramount for others but also for the team to understand and course correct as and when.

Sense of Urgency

A great idea and an average idea is not often the quality of the idea but the urgency of communication and focus to accomplish allied tasks quickly. The relentless focus on execution often separates the also-rans from the winners. The throughput time of activities and the zest with which we implement them are critical to achieving goals and fulfilling the promise of the product or service.

This is just a glimpse into some of the areas one should ponder upon. Whatever point you add to the framework has shades of the concept in these areas. These frameworks help you evaluate your own ventures and also to sieve through the various proposals you receive as an investor. It will help you frame your options and detail the reasons for selection or rejection in mind