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Evaluating a (marketplace) business idea

Lenny Rachitsky
Lenny's Newsletter
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Lenny lays out his seven most essential elements for evaluating a business idea and evaluating a marketplace business idea.

Evaluating a business idea

  • Product-Market Fit: Do people really want this?
  • Market: Do enough people really want this?
  • Why Now: What has changed that now allows for this to work?
  • Distribution: Can you acquire these people efficiently?
  • Team: Is this the right team to build this?
  • Moat: Can you stay on top?
  • Business Model: Can this become a fast-growing, efficient business?

Evaluating a marketplace business idea

  • Demand Product-Market Fit: Do customers really want this?
  • Supply Product-Market Fit: Do suppliers really want this?
  • Scalability with Quality: Can you grow while maintaining the magic?
  • High Frequency and Average Order Value: What’s the potential revenue?
  • Reasons to Stay On-Platform: Why won’t suppliers cheat?
  • Non-monogamous: Will customers need to come back?
  • Fragmentation: How hard is it for both sides to find each other today?
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