This document outlines criteria for evaluating startup ideas across six categories: customers, product, competition, timing, finances, and team. For each category, key attributes are identified that contribute to a strong score. A startup should address an unmet customer need, have a product that solves that need with low adoption barriers, enter an inefficient market with opportunity for differentiation, time entry for maximum market potential with no commoditization, require low capital and have working capital flexibility, and involve a team with subject matter expertise and skills to deliver. The document provides a framework for scoring ideas across these categories to conduct a well-rounded evaluation and identify areas needing improvement.

1. STARTUP
SCORECARD
Smarterstartup.org

2. Diligent Negligent
SuccessFailure
IS HARD WORK THE ANSWER?
Hard work alone is NOT a reliable
predictor of success. Hard working
people sometimes fail and negligent
people sometimes succeed.
PROBLEM STATEMENT
Conventional Wisdom
NOT ENTIRELY

3. x
Working hard is analogous to throwing a ball hard. The velocity is an important part of
reaching the target, but you cannot ignore other interactive forces like gravity and drag.
Gravity
(3ming)
Direc3on
(customer
need)
What Is the Whole Story?
PROBLEM STATEMENT
Drag
(compe33on)
Velocity
(hard
work)

4. STARTUP STRATEGY
The 6 Market Dynamics
CAPTURING THE WHOLE STORY
THE 3 APPLIED TOOLS
We’ve identified 6 market dynamics
That are interactively defining the
Market opportunity at any time. The
conceptual framework is the basis of
the Startup Scorecard.
customer
product
compe33on
3ming
financial
team
The
6
Market
Dynamics

5. Evaluate your startup idea across the six
scorecard criteria and be mindful of the attributes
described in each one. Give yourself a letter grade
and then an overall score, for the idea. This
provides a structured approach to evaluating the
opportunity and helps to improve objectivity by
accounting for a full spectrum of important
criteria and reducing blind spots.
Evaluating a
Startup Idea
Startup Scorecard
Finance
• Low Capital Requirement
• Clear Profit Model
• Economies of Scale
Finance Score ______
Timing
• Recent Innovation Enabler
• Demand Already Established
• No Signs of Commoditization
Timing Score ______
Competition
• Clear Market Inefficiency
• Low Barriers to Entry
• Differentiable Position
Competition Score ______
Team
• Subject Matter Expertise
• Functional Competence
• Supplier Partnerships
Team Score ______
Product
• Customer Focused Solution
• Low Barriers to Adoption
• Clear Value Proposition
Product Score ______
Customer
• Unmet Need or Desire
• Right Size Market or Segment
• Reliable Customer Channels
Customer Score ______
Overall Score _______
SmarterStartup.org
Title _____________________________________________________________________
A A
B- B+
D A-
B
Real Estate IDX Integrated CRM

6. WHAT’S A GOOD CUSTOMER?
The ideal customer has an unmet need or
desire. The size of this market should
match your ability to compete and ability
to deliver justify solving the problem.
Validate you can control means of customer
acquisition along the way.
STARTUP HEURISTICS
Customer Criteria
UNMET NEED OR DESIRE
Unsatisfied Customer Desire
RIGHT-SIZE MARKET OR SEGMENT
Need to Segment? Too Niche?
RELIABLE ACCESS TO CUSTOMERS
Diversified Channels? Gatekeepers?

7. FOCUS ON HELPING OTHERS
FOCUS ON CREATING VALUE
Mom was right! Focus on helping others and
everything else will fall into place. Find a need
or desire that is not yet sufficiently addressed,
where the customer is so passionate they’d
happily pay for a solution. This approach is
much more likely to create real value than
copying an existing solution.
CUSTOMER CRITERIA
Unmet Need or Desire

8. CUSTOMER CRITERIA
Right-Size Market (or segment)
BIG FISH STRATEGY
PURSUE QUIET NICHES
BIG MARKET STRATEGY
PURSUE LARGE MARKETS
Select a market to service that meets your needs and abilities. You must have enough opportunity to warrant
the effort. Be weary of large markets however, if you do not have significant funds and plan to be aggressive.

9. MARKET MANIPULATION
GOVERNMENT, MONOPOLIES
CHANNEL DEPENDENCE
SINGLE POINT OF FAILURE
0
5000
10000
15000
20000
25000
30000
35000
March April May June July
CUSTOMER CRITERIA
Reliable Access to Customers
A sustainable business requires control over customer supply. Don’t rely on a single marketing channel (Google
SEO). Government or monopolistic manipulation of markets can also be challenging (Online Gambling).

10. WHAT’S A GOOD PRODUCT?
A good product will be a direct response to
a customer need or desire. If the value is
well articulated and the customer is
passionate about your new solution, the
reason to buy will be compelling. Consider
deterrents also – are their high switch costs
and is the solution easy to use and
understand?
STARTUP HEURISTICS
Product Criteria
CUSTOMER FOCUSED SOLUTION
Solves Unmet Need or Desire?
LOW BARRIERS TO ADOPTION
Low Switch Cost, Usability
CLEAR VALUE PROPOSITION
Compelling Reason to Buy

11. PRODUCT CRITERIA
Customer Focused Solution (benefit)
ADDRESS NEED OR DESIRE
FOCUS ON CLEAR GOAL
KEEP IT SIMPLE!
DON’T AMBIGUATE THE VALUE
The purpose of your product is to create value by addressing a specific need or desire. Stay Zen focused.
Don’t ambiguate the value created with distracting features that aren’t aligned with the goal.

12. Albert Einstein
Physicist, Professor
Any intelligent fool can make things bigger and more complex... It takes a
touch of genius - and a lot of courage to move in the opposite direction.
PRODUCT CRITERIA
Customer Focused Solution (benefit)

13. PRODUCT CRITERIA
Low Barriers to Adoption (cost)
LEARNING CURVE
INVESTED TIME & NEW COSTS
FINANCIAL IMPACT
PRIOR INVESTMENT & NEW COSTS
WORKFLOW INTEGRATION
DOES IT EASILY INTEGRATE?
Even if you create new value, customers may hesitate to adopt your product if they’ve already invested
too much in an existing solution that is good enough, or if adopting your solution is too disruptive.

14. Easy Workflow
Integration
Addt’l Benefits(value complex)
Solves My
Problem
Existing
Investments
Learning
Curve
IS THE VALUE CLEAR?
VALUE = BENEFIT - COST
PRODUCT CRITERIA
Clear Value Proposition (value)
Perceived
value
must
exceed
cost.
If
you
can
clearly
describe
your
product
is
beneficial
and
a
compelling
case
for
purchasing
it,
then
you
have
created
sufficient
value
to
overcome
cost.
Theodore
Levitt
People don’t want quarter-
inch drills. They want
quarter-inch holes. cost
benefit

15. WHAT IS GOOD TIMING?
Every market has a natural lifecycle
driven by innovation and circumstance.
Look for new demand or interest in
something that wasn’t possible just a
couple years ago. Be a “fast follower”
into a validated emerging market rather
than speculating on new opportunity.
STARTUP HEURISTICS
Timing Criteria
RECENT INNOVATION ENABLER
Was it Possible 2-5 Years Ago?
DEMAND ALREADY ESTABLISHED
Build It & They Might Not Come!
NO SIGNS OF COMMODITZATION
Shrinking Margins. More Products.

16. Every market has a natural lifecycle driven by innovation and circumstance. Look for something that
wasn’t possible just a couple years ago & ramp up before the market capitulates (supply > demand).
TIMING CRITERIA
Innovation Life Cycle
Innovators
(2.5 %)
Early adopters
(13.5 %)
Early majority
(34 %)
Laggards
(16 %)
Late majority
(34 %)
The Golden Era The
Squeeze
ConsolidationEarly Movers
Capitulation
*
Innovation Adoption Curve

17. Opportunity to enter diminishes as the market matures. Geoff Moore suggests entering at “the
chasm” after demand is validated but still early enough to ramp before the market capitulates.
TIMING CRITERIA
Innovation Life Cycle
Innovators
(2.5 %)
Early adopters
(13.5 %)
Early majority
(34 %)
Laggards
(16 %)
Late majority
(34 %)
Chasm
Innovation Adoption Curve
Ideal point to
enter a market
- Geoff Moore
New Entrant Opportunity

18. Nicholas Carr
Harvard Business Review, 2003
TIMING CRITERIA
Commoditization of Technology
It is difficult to imagine a more perfect commodity than a byte of data.
As information technology’s power and ubiquity have grown, its
strategic importance has diminished.

19. $5,000,000
What cost $5 million to accomplish
12 years ago can now be done with
less than $5,000. Mark Suster
observed that commoditization and
availability of more building blocks
has radically reduced cost and risk
of developing a software product.
Commoditized
Technology
Hosting Commoditized
Open Source Software
Cloud Services (SaaS/PaaS)
MLS
IDX/RETS
Feeds,
SendGrid
Email,
etc
WordPress
Pla=orm,
Real
Estate
Themes,
RESO
&
Placester
IDX
Plugins,
$500,000
$50,000
$5,000
A
Web/Mobile
App

20. As cost has fallen, so has the
competitive barrier to entry.
Competitive positioning is now the
key strategic issue, not
technological capability for most
consumer Internet products. How
do you cut through the noise?
Commonplace
Commodity
2000 2002 2004 2006 2008 2010 2012 2013
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%#!$!!!$!!!"
&!!$!!!$!!!"
&#!$!!!$!!!"
!"#$%&'%()*+%)&
Data From NetCraft 2013 Web Server Survey
50x

21. GOOD COMPETITIVE LANDSCAPE?
Avoid being marginalized by excessive
undifferentiated competition. That
drives margin compression, commodi-
tization and market consolidation. Look
for inefficient markets where there’s still
‘play’ and find ways to develop a
sustainable competitive advantage.
STARTUP HEURISTICS
Competition Criteria
CLEAR MARKET INEFFICIENCY
Stagnant or Fragmented Market
LOW BARRIERS TO ENTRY
Easy & Cheap to Compete?
DIFFERENTIABLE POSITION
Something Special or Different?

22. COMPETITION CRITERIA
Inefficient Market
FRAGMENTED MARKET
NO CLEAR MARKET LEADER
NEW MARKET
DEMAND EXCEEDS SUPPLY
STAGNANT MARKET
READY FOR DISRUPTION?
When a market is efficient, a single entity captures
all of the value of a market. Look instead for a
market that isn’t efficient either because it is new,
stagnant, or splintered (fragmented).

23. Sun Tzu
War Strategist, Wrote The Art of War
The general who makes many calculations before battle is wise. He who
knows when he can fight and when he cannot will be victorious.
COMPETITION CRITERIA
Low Barriers to Entry

24. Avoid a fight you cannot win! A market can be much harder to enter if a
competitor already has a mature offering that you must catch up to.
THINGS TO AVOID
• Existing Economies of Scale
• Existing Mature Product (feature set)
• Well-Established Brand (halo)
• Price Competition
COMPETITION CRITERIA
Low Barriers to Entry

25. SEGMENTED MARKET
FOCUS ON SPECIFIC CUSTOMER
LOW PRICE LEADERSHIP
FOCUS ON VOLUME & COMMODITY
DIFFERENTIATED PRODUCT
DISRUPTIVE OR INNOVATIVE
HOW ARE YOU DIFFERENT?
WHAT MAKES YOU SPECIAL?
COMPETITION CRITERIA
Differentiable Position
In order to be a desirable signal that stands out against a background of noise, you need to have a
compelling value to some customers that others do not. There are 3 viable positioning strategies.
Porter’s Generic Competitive Strategies

26. GOOD FINANCIAL PROFILE?
Look for opportunities to maximize
returns without excess capital risk.
Look for opportunities to start cheap
and to realize higher margins through
focused efforts and economies of scale.
Avoid locking up too much capital.
STARTUP HEURISTICS
Financial Criteria
LOW SUNK COSTS
Up Front Capital at Risk?
WORKING CAPITAL FLOAT
Gap Between Payable/Receivables
ECONOMIES OF SCALE
Margins Increase With Volume?

27. How much up-front capital must you commit to
develop this product or business? Sunk capital
represents risk since you don’t know if you’ll get it
back, as well as opportunity cost since that money
could be committed to other opportunities.
FINANCIAL CRITERIA
Low Sunk Costs
HOW MUCH CAPITAL RISK?
OPPORTUNITY COST

28. Some businesses require large cash
outlay every month and payment can
take 3-4 months to arrive. As a result
the business may need to have cash
or credit to cover the gap of 3-4
months of operating costs. This is
both a cost (interest) and a risk!
Working
Capital Float
DO YOU NEED A LINE OF CREDIT?
WHAT’S THE COST & RISK?
Accounts
Receivable
60 - 120 Day
"Capital
Float"Accounts
Payable

29. Look for opportunities where profits
increase with volume (scale). Supply,
development, and distribution costs all
diminish on a per-unit basis when working
in volume. As a result profit margins and
competitive advantage both increase.
Economies
of Scale
Quantity
Profits
Marginal Cost
Scalable
Profits

30. WHAT’S GOOD TEAM FIT?
Just because an opportunity exists, doesn’t
mean your team is likely to succeed. Are
you fit to compete? Does your team have a
competitive advantage? Do you possess
deep knowledge, technical skills to deliver,
& access to key partners and resources?
STARTUP HEURISTICS
Team Fit & Fitness Criteria
SUBJECT MATTER EXPERTISE
Deep Knowledge of Market?
FUNCTIONAL COMPETENCE
Technical Skills to Deliver
SUPPLIER PARTNERSHIPS
Access to Materials at Good Cost

31. TEAM-FIT CRITERIA
The Hacker & The Hustler
“The Hacker”
Technical skills to design &
develop a well-crafted and
scalable solution.
“The Hustler”
Knowledge of customer or desire, and
understanding of market dynamics to
effectively position an offering.
A team needs deep subject matter expertise and technical skills to design a solution, in order to
succeed. It is difficult for a single person to be efficient at “heads up” and “heads down” work.
The Functional ExpertSubject Matter Expert

32. TEAM-FIT CRITERIA
Supplier Partnerships
Preferred Sourcing
Are you able to procure
supplies at competitive prices?
If affiliate mktg, can you get
preferred commissions?
Available Data APIs
Are you able to access the data
or integration APIs needed to
build your product?
Outsourced Vendors
If planning to manufacture
physical products or software, do
you have a quality vendor you
can rely on?
Consider the dependencies you may have on external sources of materials, data, and services. Do
you have access to the necessary resources to deliver your product and to price competitively?

33. Evaluate your startup idea across the six
scorecard criteria and be mindful of the attributes
described in each one. Give yourself a letter grade
and then an overall score, for the idea. This
provides a structured approach to evaluating the
opportunity and helps to improve objectivity by
accounting for a full spectrum of important
criteria and reducing blind spots.
Evaluating a
Startup Idea
Startup Scorecard
Finance
• Low Capital Requirement
• Clear Profit Model
• Economies of Scale
Finance Score ______
Timing
• Recent Innovation Enabler
• Demand Already Established
• No Signs of Commoditization
Timing Score ______
Competition
• Clear Market Inefficiency
• Low Barriers to Entry
• Differentiable Position
Competition Score ______
Team
• Subject Matter Expertise
• Functional Competence
• Supplier Partnerships
Team Score ______
Product
• Customer Focused Solution
• Low Barriers to Adoption
• Clear Value Proposition
Product Score ______
Customer
• Unmet Need or Desire
• Right Size Market or Segment
• Reliable Customer Channels
Customer Score ______
Overall Score _______
SmarterStartup.org
Title _____________________________________________________________________
A A
B- B+
D A-
B
Real Estate IDX Integrated CRM

34. Identifying & Locating Opportunity
Timing
Customer Product
CompetitionStartup
Opportunity
Finance Team
We cannot work simply work hard and
expect to have a desirable outcome.
There are many dynamics at play that
all determine whether we’re likely to
succeed. Some may get lucky but
they are the exception not the rule.
STARTUP HEURISTICS

35. CONCLUSION
SmarterStartup.org
We have posted in-depth articles,
diagrams, and downloadable references
and worksheets on our website.
Everything is free to use, so check it out.
www.SmarterStartup.org