Imagine for a second…
You’re early in your founder journey. You’ve been exploring various ideas for a few months, and you’ve found a likely co-founder with a complimentary skillset who you get along with.
One of your experiments generated a bit of attention after launching and people you talk to about it (maybe even investors) seem excited. They’re asking you what your plans are for it.
But the truth is… you have no idea! It’s not like it went viral or anything, you tell yourself. Maybe you should go get a job at Google after all... Your co-founder isn’t sure either.
So how do you know whether to go “all-in” on the idea? What evidence do you need to decide this is the thing you want to build, potentially becoming a central focus of your life for years?
This is the most important decision you’ll make as a founder. Here’s how to make the call 👇
The Most Important Thing
Deciding what to build is both a personal and practical decision. I’ve broken down both into separate sections below.
One Thing First
You might be thinking… is this really the most important decision you’ll make as a founder? More important than your cofounder?
It is.
The wrong co-founder can make your life hell, but there’s a solution to that: one of you leaves the company. And having a co-founder leave is tough, but it happens and many startups get through it.
At my last startup, one of my co-founders left due to health concerns and then I later left as well.
On the other hand, committing yourself to building something that people don’t want to use or buy has a 0% chance of ending how you’d hoped. Yes, you learn things — but you lose time.
Personal Factors
Before we even get to the strategic factors, let’s set a baseline — what needs to be true for you, as a founder, to go all-in?
Timing
Where’s your risk tolerance at right now?
Even if your goal isn’t to be one of the <1% of startups that IPO, there’s about a 90% chance your startup will end up being worth $0 eventually.
So, before anything else, do an honest evaluation of what your goals are for the next ~5 years. If your startup fails, do those goals become harder or impossible to reach? If so, are you ok with that or will you be resentful?
Market Size
Yes, this is first and foremost a personal factor.
Not everyone has the same goal for their startup. Maybe you want to create a Silicon Valley Small Business (one of my favorite new concepts to emerge in the last year).
If you’re IPO-or-bust, though, be sure that the market can provide venture scale returns for investors. VCs invest in companies that have a high likelihood of failing, but the potential to return their entire fund (and then some).
They’re looking for moonshots, not safe bets, and if raising venture is your goal you need to be able to show that x people you can reach will pay $y for your product, leading to $z annual revenue.
Additionally, early on you’re really picking a market more than a specific idea anyway. When we founded my last startup, we thought it was going to be a reality show instead of a venture-backed company. TLDR, things change and pivots happen.
Co-founder(s)
Are you ready to get (professionally) married?
I mentioned complimentary skillsets, but it’s also important to have complimentary ambitions. Successful startups have a clear line between what each co-founder is responsible for, and everyone agrees that’s what puts the company on the path to success.
The bottom line is you need to figure out if this is the person you want to celebrate, commiserate, and build with.
A lot of people recommend running through what’s become known as the First Round Capital co-founder dating questions, but I prefer YC’s list— they are more direct, and there aren’t as many to sort through.
I also always recommend building something small together first, entirely separate from your startup, to see how well you work together and establish a rhythm.
Passion
No, you don’t need to be blindly passionate about the idea you work on, but it makes it about 100x easier to put your all into it if you are (so you might as well be).
Remember that a crisis might hit on day 778 of building your startup and it might be the worst day of your life. Passion helps in those moments. So if you find an idea that meets your other criteria, and you’re passionate about it, go for it.
Strategic Factors
Ok, now let’s assume all those personal factors are checked off. You’re passionate about a potentially big market alongside co-founders you trust at a time in your life where you feel ok taking on massive risk.
What about the specific idea you got some early traction on? Well…
Has anyone tried this before?
Webvan failed, but Instacart became a unicorn. It’s a classic story, and far from the only example where the same idea worked after failing the first time.
If no one has tried to solve the problem, explore why. Is it a new problem that people are experiencing for the first time, or in a new way, as a result of a cultural shift or technological advancement?
If someone has, but they failed, explore a few things:
Is it actually a painful problem for users? (More on this below)
Did the previous team miss something about the problem space that you understand? Validate this.
Is the market large enough to support a startup?
Did they have other issues? (Ex. co-founder disputes or bad financial decisions, which may be hard to validate, or macro-shifts that decimated them are common examples here)
Was the available technology at the time not advanced or cheap enough to support the business? Has that changed?
Do you have founder-market fit?
I wrote a few weeks ago about how founder-market fit is more important than product-market fit until you’re at least at the Series A (or even B, in many cases) stage.
Based on your understanding of the market and the needs of the business and product(s) you’ll need to build to capture it, do an honest evaluation of how your own and your cofounders’ strengths and weaknesses line up to those needs.
If the answer is something like “sort of” or “not really” then you probably want to move on to a different space, or find a different co-founder (I’d argue that the former is easier at this stage).
How painful is this problem for users?
Another, similar question is “will people pay for your product?”
Validate both versions of the question before deciding to go all-in. Venture money isn’t cheap anymore, like in 2020 and 2021.
You don’t need to have a product built to do this. Second-time founders know that getting people to pay before investing in building something out can save weeks or months.
In fact, I just did this this week — I launched a small service to help founders grow their startup faster. Nothing was built yet, I’m still doing everything manually, but I have multiple paying users already. This tells me it’s a painful problem and worth investing in a small initial MVP build.
(Reply and let me know if you’re interested in joining the beta.)
Do you have a way to get in front of customers?
You don’t need to have a scalable growth channel built out at this stage, but if you can’t figure out how to get responses from people in your target market then it’s probably a sign that what you’re pitching isn’t resonating.
Do things that don’t scale — just make sure one of those things is getting users.
What if we get crushed?
Every founder hates the question of “why wouldn’t some big tech company just build this?” because it’s often irrelevant, and a sign of a lazy line of thinking by the person asking it.
But sometimes it isn’t. If an incumbent can copy your product and use a massive distribution advantage by integrating it into an existing product suite, your growth rate is in trouble. Just look at Slack:
With that said, Salesforce bought Slack for $27 billion (not too shabby), but there were many reports of issues after the acquisition.
In Summary
The decision to go all-in on a single startup is both deeply personal and highly strategic. Make sure you run through both sides of the equation before jumping in.
📚️
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One essay every Sunday on the decisions that make or break founders.