Can my idea become a billion-dollar startup?

If you’re interested in entrepreneurship the idea of creating a startup might sound very exciting, but before foregoing other chances, like getting that high-paid internship at Goldman, is definitely good to have a solid framework to objectively look at your idea, and assess if it might actually be worth pursuing it.

First of all, it must be clear that a startup is a hypothetical company designed to grow very quickly. This doesn’t mean that if your idea is not aimed to grow fast is a bad one, it is just not a startup but a small business, so the principles that will be discussed here cannot be applied. So the first thing you need to ask yourself is “can this scale fast?”

Once you have figured out that your idea has the potential to grow very quickly, you can go on and evaluate its attractiveness. This can be done following 3 steps, think of these as a funnel, where if you don’t pass one of the steps, you cannot go further down but you need to stop and consider more carefully your initial idea.

1. What is the PROBLEM you are trying to solve? There are 4 questions you can ask yourself to assess if your problem is worth solving.

• Do many people face the same problem?

• Will this problem grow and become even more relevant in the future?

• Is it something that is urgent to solve?

• Do people frequently encounter this problem?

2. What is your SOLUTION to the problem? A note needs to be made here:

NEVER START FROM THE SOLUTION

This happens more often than you might think, so much so that famous startup incubator Y Combinator has even created a term for it “Solution in Search of a Problem” or SISP. The simple reason why you don’t want to start from the solution is that most of the time, you will simply never find the problem. That’s why you’re much better off starting with the problem and only once you notice something that needs to be fixed you look for a solution.

The original idea for Airbnb was born when co-founders and housemates Brian Chesky and Joe Gebbia noticed that a conference resulted in San Francisco’s surrounding hotels to be completely booked up, so they put down three air mattresses and offered a bed and some breakfast for any designers who needed a place to stay during the conference.

3. Do you have any UNFAIR ADVANTAGE? This is the factor(s) that will make your company grow faster than anyone else in the market, thus setting it apart from competitors. There are many unfair advantages you could exploit, here I will highlight the most relevant ones. Notice that even if you don’t need to necessarily have more than one (though “the more the better rule” applies here), to end up being successful you need to have at least one.

• You or your co-founders are experts in the field, which means having deep knowledge and lots of experience in the industry your idea is in.

• The solution is 10x better than the competition. Even if you might think that being 2x or 3x better than the current solution might be enough, that won’t actually be sufficient to break established consumers’ habits.

• Your startup is set up to create large network effects. This might not seem relevant at the starting point but is what will make the company resilient as it starts growing and scaling.

Now that you went through all these questions, and your idea looks solid, there is only one last question you need to answer:

Can you make it happen?

If the answer is yes, is time to focus on finding the holy grail, i.e. Product-Market-Fit, but that will be the topic for another article.