I work on lots of new ideas for companies. I’ve developed the following tool that helps me (and it seems many others) to quickly develop and evaluate these ideas.

In the simplest form, it helps create an elevator pitch, (e.g. for www.gist.com – We focus on relationship-centric professionals (sales, PR and recruiters) (Customer) and, save them time (Value Prop) as they prepare for meetings, by creating dynamic full-contact dossiers (Feature Set) and charge them a monthly service fee (Business model).

To get started on finding the “MVC” (minimum viable company), you need to start with the “smallest idea that is big enough” (a few customers, 1 value, 1 key feature and a clear biz model).  You can always expand over time, but most ideas become too complex (lots of customer types, lots of features, varied business models…) and are therefore too complex to get off the ground.

You need to identify real people you know (we built Gist for me and 2 sales guys, thx Kendall and Brandt) who can validate the idea, value, key features and their willingness to pay (which should be very high).  As you find representative people, you can abstract key attributes of them to start to generalize into “personas” which becomes your real target customer.  And from here you can start looking for the best beta users (more on that here). Finding real people is, in my opinion, the single most important activity of a startup!

You can then compare different parts of the model to see how well the idea works.  A few examples;

• C–V – does your target customer value what you are doing (e.g. saving time, qualifying leads, increasing revenue…) and how much (scale of 1-10)?  Is the value a real pain or just nice to have?  How do they solve this pain now?  How would they quantify value? As you are doing customer interviews, asking questions like this and comparing the answers will help you in prioritization as well as more efficient communication.
• V–B – is the value you’re delivering correlated to the business model, meaning the more value you deliver, the more you can/should charge? Work hard to correlate these things by changing one of the other.  This ends up relating to ROI (return on investment).
• F–B – are the features you are building organized to support the different price points? You can imagine your “pricing page” from this exercise.  Really great post on personas and pricing from Patrick Campbell (@Patticus) and Price Intelligently here
• C–B – does your customer usually buy in the model you are proposing?  What other services/products do they buy that are similar to yours and is the model similar for these products?  How much do they pay for related services? And, is your target user accustomed to buying in the way you propose (e.g. per user) or are you trying to educate them on a “new” business model at the same time as you are introducing a new product offering?  The latter might slow down the sales process, especially for enterprise buyers.

If you can’t make an idea work on a just a few users, just a few features, a pretty clear value prop and a clear business value, it’s probably not such a good idea.  I know one tool does not solve all the issues in considering a new idea, but this is the best one I have found.

One key area that is not considered in the above is around competitive solutions.  Most people who say they have a need, have spent no real time or money on a finding a solution.  Red flag on them as early adopters and potentially red flag on the overall idea.  But, as you identify a core need, and solid interest (yes I would pay to have that solved), look hard/ask lots of questions about competitive solutions.  In fact, I usually suggest my target users test/evaluate the competitive solutions I know about.  I would much rather they find out about them before I build my thing vs. after, and they usually appreciate the information.  If, after doing a good competitive eval and passing that through your early target base, you might find a good place to start!

Please suggest others and/or other ways this could be improved.  Good luck on your next idea.