The simplest venture equation


The more venture projects, mentor discussions, customer interviews and books you complete the more you tend to simplify stuff in your head. After 10 years of experience, when I think or discuss a new enterprise, it's always possible to describe it in 4 simple steps. See below.

Figure 1: Venture building blocks.

Figure 1: Venture building blocks.

  1. P - First you identify a problem that is big enough and can be backed up with data. This step is about markets, empathy and business vision.
  2. S - You (your team) craft a solution to the Problem and break it down in milestones or smaller versions. Reach the first version (also known as a prototype or Minimum Viable Product) with your own resources or available human capital. This step is about product development.
  3. D - You build a delivery system that allows your solution to reach the people or enterprises experiencing the problem you identified earlier. This step involves daily business operations.
  4. F - You build an easy feedback mechanism so your clients can contribute back (pay money, vote, donate) and invest themselves in making the solution more valuable in time. This step is about finance and long-term value. 

All 4 building blocks are part of a continuous learning and iteration loop. 

Bonus math: S ≥ 2xP

Translation: Make sure your solution is at least 2 times more valuable than the perceived impact of your clients' current problem. This is an absolute minimum. The bigger the multiplier the better for your venture's future.