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?