The solution can be an idea, technology, product, service, or a business model that will take advantage of a market opportunity. This assessment will verify that the solution directly addresses the market opportunity in a feasible way, and that the solution offers a benefit such that target users will accept it.

It is important that solving a problem does not add another problem. This was the case of pets.com, a company that went from startup to IPO to liquidation in less than 2 years. They made ordering pet food very simple, but at the same time customers had to wait for delivery and had to pay higher delivery costs which made their products unattractive. When the dot-com bubble burst and their revenues didn’t grow as expected, they were forced to shut their doors.1

The market opportunity should always be kept in mind when evaluating a product or solution. The product or solution should always map directly back to the market opportunity that a business wishes to exploit. Businesses often fail because they begin solving problems that are not a part of the market opportunity and thus are unneeded solutions.

It is important to know:
What are the product descriptions and product differentiations?
What needs are addressed?
What is the definition of a unit? What exactly will be sold?

Value proposition describes the single largest influence on the buying decision. Startups should be able to describe it in very few sentences. This should be thought of as an “elevator pitch” for customers. Very quickly an entrepreneur should be able to describe how their product or solution will help a customer. An entrepreneur must describe their value proposition both in terms of what the customer receives from the product or solution compared to its price, as well as what the customer receives from the product or solution relative to the other competitors in the marketplace.

It is important to know:
What is the product description and differentiations?
What needs are addressed?
What is the definition of a unit? What exactly will be sold?

The collapse of Iridium LLC is perhaps the largest startup failure in U.S. business history. Iridium was a 1990s era phone company that developed a satellite-based, worldwide phone service. The tough technical problems were daunting, but solved. The huge and expensive undertaking of building and getting the satellites into orbit was knocked off. Expenses ran into the billions. Smart money was brought in, including Bill Gates and Craig McCaw, the cellular phone pioneer. The service was turned on. And no one bought. No one.

The issue? A very fundamental one. It turns out, even though the service was built in the time of portable cellular phones, the phones themselves were very large in size and the use charges were astronomical. All that could have been identified with some basic market validation without billion dollars of investments.

It is important to know:
Does the solution really fulfill the market need/demand without any side effects?
Do those who have the problem agree that the solution is a good one?
Do the target users accept the solution with reasonable adoption rates? And is the market willing to pay for it?
Are there beta customers committed to “pay” for the product or service?

Hoping that engineering management will make a business profitable is generally now a good idea. Engineers are focused on improving the product's technology and not on selling the product. However engineers are the engine of innovation for the product and responsible for bring the vision into life. These innovators also need to evaluate the feasibility of a product or solution. If a solution or product is only some concept based on some new technology, it needs to be proven that this product or solution could be brought to the marketplace in a viable way.

The assessment questions identify how realistic the proposed solution is and if it is conceptually proven, or feasible to be implemented.

It is important to know:
Is the solution being proposed humanly/technologically possible?
Is the technology ready for commercialization, or is there still basic research to be done?
How many months are needed to achieve revenue on a production-ready product?
Are the technical risks identified and are there sufficient resources budgeted to overcome them?
How significant are technology and product development risks?

Having developed a great product is not enough. Job is not done until target customers actually perceive the differences between their product and the competition. A business must make sure customers fully understand the differences between their product and competitors’ product and perceive those differences as valuable. While some of this effort will be in marketing, a business must analyze the cometitors products, their own product, and the customers’ needs in order to understand what benefits their product offers over the competition.

To customers cost is not just in the product, but also in training, and other changes that may be required to use the product. This must be kept in mind when evaluating a products benefits over substitutes. A product may have many advantages over the competition, but if there are two many barriers to adoption the product will never sell.

It is important to know:
Does the solution present a clear benefit compared to alternative solutions already in use or available today? Is there sufficient customer perceived value to yield attractive gross margins?

Does benefit outweigh the cost and risk? Or does it solve one problem and add another one for customers?
Has everything that requires the solution to work been considered?

The coordination of activities, information and resources involved in producing the solution in physical or virtual manner has to be fully considered. If a product depends on other resources in the marketplace, a full understanding of the supply chain is needed so that risk can be managed.

This means more than just having a supplier who can supply the goods and services needed. The suppliers dependability must be evaluated, and if a company is forced to deal with an independable marketplace, backups should be in place so that production can always continue.

It is important to know:
What has to be in place for the company to successfully produce the product/service?

Are all needed supplies identified? Who will be the major source of supply? Who will be the backup suppliers? How much time will it take to get the supplies in?

Has the company established arrangements with leading suppliers?

What pre and post sales support and service (warranties, training, repair services, etc.) will customers demand and can this startup meet that demand?

For startups, early identification and planning for potential risks can mean the difference between success and failure, especially in the pharmaceutical area. Depending on the market, there could be a number of regulatory and legal hurdles that can stand in the way of success. Understanding any current patents in the market, or governmental organizations that regulate a market or industry is key when evaluating a products viability.

It is important to know:
Are the liabilities that the solution poses and potential regulatory requirements taken into consideration?

Are there governmental or political factors that may delay or block sales (i.e. FCC spectrum allocations, EPA waivers required, FDA approvals, etc.)?

“One-trick-pony company” may succeed in short-run. However investors prefer platform business model, which allow companies to deliver products and services beyond their initial offerings as follow-up products, services and new products. While a startup may begin with 1 revenue generator, it is important for a business to have a plan to expand their products and solutions, and to grow as their business does to fit the needs of the customer. In most cases, one product can only get so much market-share, and more growth can come only through offering a family of products for a family of market opportunities.

It is important to know:
Will the product or service not become obsolete quickly?
Are there obvious follow-on products or supplementary services that the company plans to offer?