How do I evaluate a startup’s product and/or service?
A great product and/or service should be solving an urgent and burning problem faced by many people. Ideally, it is able to do so with a low cost structure, while still delivering and capturing a lot of value.
Startup investors frequently make the mistake of gauging the ability of a product and/or service to solve a problem based on their own opinion of it, as if they were the target user or customer. No single person ever constitutes the entire market for a given product/service. What actually matters is the market’s opinion of it. One way to gain this insight is to look at publicly available information sources for people’s opinions of the product/service, to interview prospective or current users or customers of the product/service, and if possible, to access the key metrics of the business if the business has launched. This is not to dismiss one’s own ability to distinguish good products from bad, but to emphasize that one needs to rely on more than their own opinion to truly evaluate how a given product or service resonates with a given problem and market.