Tuesday 26 March 2024

Team and TAM

Two questions to ask yourself when evaluating a startup idea:

1. Is the Market large?
2. Are we the right Team for this?

The first question helps you ensure that you're chasing a sufficiently large opportunity and that you aren't wasting your time pursuing something that won't lead to a big outcome.

Of course, "big" is a relative term. But then you won't be able to build a big Business with a Product that Teaches say Vietnamese in China. Your Customer acquisition costs would be higher and because of the weak need, Customers won't be too keen to pay. The Business would become unsustainable.

However, if you're building something in the Lending Market in India, you know that you'll never fall short of demand from the Customers.

The second question helps you identify your "right to win". Sure, there are problems in every industry. But if you've always been into Education, and you want to build something for Lending, you'd have to spend a few years just understanding and learning the Lending space. Someone who understands the Lending ecosystem will have an unfair advantage over you because they already know a lot of it and their focus would be on building on top of what they know rather than learning from scratch.

If you're chasing a large Market that you understand well, then you probably are in the right direction. If you execute well, your chances of success will be high.

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