Sometimes the simplest questions are the hardest to answer, yet they remain. Their answers can be the most insightful.

The importance and relevance were reinforced in a recent exchange with a startup founder. He indicated that he was struggling to gain traction, so I asked to know more about his idea in case I could help. 

He sent me a three-page detailed description of how his idea, which would use blockchain technology, would improve the operation of the energy markets. Technically it was well written, but it was hard to extract the key proposition, and in fact, it was more about the technology than the business. I asked him if he could summarise the paper and it still lacked clarity. It was hard to see who would care about his idea.

To provide more help in the quest to capture the real business that was hidden within his idea, I asked that he answer three questions:

#1 Who will pay me for this idea/product/service?

#2 What will they pay me for?

#3 How will they pay me?

The significance of this is that there is no business for the founder to build or investors to invest in without a revenue stream. It feels that too often a startup is a solution looking for a problem and the case is built from the bottom up, i.e. I can build/deliver XXX; therefore, I have a business. The three questions though turn the thinking around and start from what will a customer/client pay for.

In this case, it helped him understand why he was having problems and provided some ideas about who he needed to approach/persuade if this was to be more than just a good idea.

After the exchange, I reflected that this set of questions added clarity to a number of other conversations I am having in with founders and indeed should be one of the first indicators of whether I think I can provide real help.

They also form part of the answer to a question I often see, “What exactly is a startup?”. I think that a startup is “the organisation and effort required to validate the opportunity to profitably generate the revenue stream(s) encapsulated in answer to these three questions:

#1 Who will pay me for this idea/product/service?

#2 What will they pay me for?

#3 How will they pay me?” 

Anyone agree/disagree?