Your most critical decision is often deciding what to spend time working on.
Work occupies a significant portion of our lives, and it’s the determining factor of our wealth and happiness levels.
Most entrepreneurs I know sit on hundreds of ideas, but they struggle to pick one to pursue.
At least I'm like that...
Determining the value of an idea at face value can be challenging, if not impossible.
This is why C-level executives are paid so much - not because they work harder, but because their judgement is better.
Put simply, they have the necessary experience that improves their judgement. (When was the last time you saw a twenty-something CEO of a notable company).
But what should you do if you lack that experience and are struggling to choose a project.
This is where decision-making frameworks come useful.
I'd like to share the framework I'm using to choose my next project.
"You have to put in the time, but the judgment is more important. The direction you’re heading in matters more than how fast you move, especially with leverage."
My framework ranks ideas on 9 different dimensions after which I can create a final score for an idea.
The essence of the framework is to answer the question "Is this idea low/high effort to make work?"
- Market size
Market size - "The next big thing"
Let loose your mind and imagine how big of a thing your project could be.
Essentially you want to measure the market size, so you can also do some research to find the exact numbers.
You should also factor in whether that specific market is trending up or down.
A large market means you'll have more potential customers - which is good.
Large market = good score.
Feasibility - "Could build this in a weekend"
The truth is that no one knows anything about anything.
As much as we think our judgement to be right, we can never know for sure.
Therefore, the time to build our MVP is critical, so we can either validate or kill our idea quickly.
As a rule of thumb, I'd only start a project if I can create an MVP in 1- at most 2 months. In fact, I think most MVPs can be built in 2 weeks, if you're a decently skilled engineer.
Another way to think about this is time to first sale.
If you can sell the product without even building it first - that's great - then you can validate your idea super quickly.
If we're not getting sales after 2 months, I'll reevaluate and probably kill the project.
Easy to build = good score.
Profitability - "More value, more profit"
Say you want to make $100.000 per. month.
Now figure out how profit you'll make per customer, let's say $1.000. That means you need a 100 customers to reach your goal.
On the other hand, if your profit per customer is $10, you'd need 10.000 customers - In theory a hundred times harder.
In order to charge a premium, the value of your product must be high. You can establish some sort of idea about the value using three factors:
Value = (Time Saved) x (Frequency of Occurrence) x (Severity of the Problem).
In other words, if you save your customer a lot of time, every day, on something very important, you can probably charge a F*CKTON.
High profit per. customer = good score.
Monetisation - "Take my money!"
A very profitable product is cool and everything, but it's not so great if it's very hard to get the customers.
We want to know how easily the product can make money.
Expensive products will naturally require time consuming high touch sales. Ugh!
Cheap products on the other hand, will often have customers sign up and pay by themselves. Nice!
But, some golden ideas will have very clear value propositions, making it easy to sell, even at high prices.
Easy to sell = good score.
Promotability - "Marketing cheat codes"
I'm lazy, so I like products that promotes itself.
It's like cheat codes for user acquisition.
An example is HelpKit a knowledge base builder where free pages include a backlink to the HelpKit homepage.
Another one would be TikTok that includes a watermark on every video that gets posted.
It could also be that your product is an extension to existing platforms with passionate users. These projects tend to piggyback on the marketing efforts of the mother-platform, making it a breeze to get the first many users.
Or maybe you're product is so niche that you can easily reach your prospects by cold emails or ads.
Lastly, you might have access to an audience that aligns with the values of your product. Great! You're just a tweet away from getting your first customers.
Easy to promote = good score.
Competition - "Navigating the Field"
Don’t let established competition daunt you - it often represents a healthy market.
Every market has room for improvement, but watch out that the market is not fully saturated with existing products.
A saturated market makes it harder to penetrate the noise.
On the flip side, the absence of competition can indicate an untapped market, though it might also hint at a nonviable one.
Existing unsaturated market = good score
Risk management - "Or, try not to get fucked"
We rather not end up creating something profitable and then have the rug pulled out under us.
I just mentioned the benefits of building a product on top of an existing platform, but I also think one of the biggest risks for solo founders is platform risk.
In essence, try not to rely on third parties.
A good friend of mine once created an integration marketplace for Notion. The community was highly engaged, but as he was launching the product, a call from the platform company came as he was launching...
They required him to shut down the project and in a matter of days the whole project was dead.
Other examples includes businesses that were built using the Twitter API. Once Elon Musk took over the company, the API usage price shot up to 42.000 US$ per month.
This forced the majority of Twitter-powered tools to close up shop.
Another type of platform risk is to build on top of government regulations. These rules can change unexpectedly, and once they do people may not need your service anymore.
Low risk = good score.
Moat - "Find your competitive advantage"
Building software products is becoming easier and easier.
Ideally you'll have some competitive advantage, making it harder to copy your product.
This competitive advantage may come in various forms, but it’s usually because the product is technically challenging to create or requires time to get off the ground.
For instance, a marketplace might need a critical mass of users which takes time. Or, a SaaS that accomplishes a difficult task requiring skill.
The product may also be linked to your persona, making it impossible to copy.
Don't be too discouraged if the core product is easy to copy.
Simply putting in the work and consistency to keep improving the product, puts you ahead of 99% of people.
Hard to copy = good score.
Passion - "Talk to your inner monkey-mind"
Forget all the other dimensions and think about how excited the idea makes you.
When I'm passionate about a project, I’m like an unstoppable force, working ten times harder and enjoying every moment of it.
Now, on the other side, a sensible and profitable idea, but so unexciting that I’d rather go bungee jumping without a bungee cord than work on it.
Note, if you find yourself extremely excited about a project, take a step back and reconsider the other eight dimensions.
Emotions can distort our judgment and cloud our perception of reality. Be optimistic, but also try to see things from an objective point of view.
Lots of passion = good score.
In this example I have 3 different ideas for projects:
- Mental health App
- Automated Blog Writer
- YouTube DJ App
I choose to score each dimension from 0-3.
3 is the best and 0 means the idea is instantly disqualified.
|Mental Health App
|AI Blog Writer
I'll qucikly go through the scores for the first column:
Mental Health App:
- Market size: A quick search shows the mental health market at USD 386.10 billion and growing. Score = 3.
- Feasibility: I don't think I can validate this fully without a product, so I guess I can build an MVP for this in around a month. Score = 2.
- Profitability: This is a B2C app, and usually we can't charge much for that. Score = 1.
- Monetisation: I've seen other similar apps doing well, but at the same time I'm not fully convinced people will rip out their wallets. Score = 2.
- Promotability: Cheatcode alert! My cofounder is big on social media in the mental health space. Score = 3.
- Competition: There's an existing market, but a bit more competition than preferred. Score = 2.
- Risk: This will be built on top of OpenAI + App Store, exposing us to platform risk. But I'll give it a score of 2 because: a) there are multiple LLM providers and b) I believe OpenAI will not raise their prices.
- Moat: The product is not super hard to copy. Score = 1.
- Passion: Do I want to build it? Yes. Does it keep me up at night? No. Score = 2.
One point of this framework is to force you to reflect on some things you might had missed otherwise.
For example, I've scrapped the YouTube DJ idea because there's simply too much platform risk - YouTube could (and probably would) shut it down any time.
In most cases, your ideas will have comparably similar scores as seen here; thus, it comes down to your personal preference which categories to give priority.
Personally, I lean towards a product that is feasible and quick to create, leading to lower opportunity costs and allowing for a swift pivot if necessary.
If I'm more passionate about one project, I'd work on that over other projects with a similar score. I know I'll just move faster and increase my chances of winning.
Lastly, I dread marketing. So I prefer a product that can promote itself.
In conclusion, both the Mental Health App and the AI Blog Writer appear to be sound ideas. I'm inclined to work on the Mental Health App because of the overall better score and increased promotability. Stay tuned for the announcement 😜
Feel free to reach out with any questions on X.