DanTMurphy

A little place on the web where I post stuff I find interesting and useful

Make the user feel smart really quickly #product #ux

A network of connectors is exponentially more valuable than a network of end points.

Idea potential formula

Putting a ruler over a startup idea before you get sucked into months of customer development is a big time saver. I’ve always wanted to have a guiding formula that captures areas to consider.

Here’s my first cut:

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Idea potential is proportional to: (M x A x S)/(C)

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M: Market Size

M = LTV x number_of_customers

LTV: Lifetime value of a customer

A: Adoption rate

a) Disruption type

    - is this an unmet need (folks not participating in the market due to some constraint or context) and/or

    - is this a low end disruption

If it’s a *sustaining disruption* you will get out gunned by cashed up incumbents and meaningful adoption will be super slow (impossible)

See this diagram for disruption types by @claychristensen

b) Can the on-boarding process become low-friction? This directly affects customer acquisition cost (CAC)

S: Stickiness

Is the product naturally sticky (i.e. low churn)?

C: Competition

a) Incumbents

Section A(a) requires that the new business is disruptive and not sustaining in nature, but it’s still worth comparing the incumbents RPV against the new business here just to be sure.

b) Fast followers

Are there any companies with the same RPV as you? By selecting a market that is unsexy and requires a lot of *customer development* you create a large barrier to entry from fast follow competition in the valley. A good test for this is if startup folks tune out quickly when you answer the question *so what does your startup do?* at parties….then it’s unsexy.

Jack Ma

Thoughts kept in your head have the luxury of being biased, irrational or simply flawed.

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