Follow the value: How to sanity check startup ideas
Afridigest is your intelligent guide to Africa’s tech ecosystem. We provide ideas, analysis, and insights for startup founders, executives, and investors across Africa and beyond.
This Saturday essay highlights a quick and dirty, 5-minute framework for evaluating startup ideas — and it uses Flutterwave, Gozem, and Ajo as examples.
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Value creation is the foundation of business.
And the way to create value, to borrow a leaf from Y Combinator, is to make things that people want.
But many startups fail to do just that.
Indeed, one of the main reasons startups fail is that they simply don't provide value to customers.1
It might be said that there’s “no market need,” “poor product-market fit,” “low market adoption,” “poor traction,” etc., but those terms of art get at the same thing: the business didn't create (enough) value for (enough) customers.
“The mistake that a lot of founders make is to build something they think users want, but that users don’t actually want.”
— Paul Graham (2008)2
Of course, no one sets out to build a startup that doesn't provide value. No one purposely invests time, energy, and capital to build something that no one wants.
So here's a quick and dirty template to check if a startup idea plausibly creates value.3