Dharmesh Shah breaks down startup ideas using three factors: potential (market size), probability (likelihood of success), and proximity (your passion and expertise). Most founders underestimate probability and dismiss ideas too quickly, but the right balance depends on your situation.
Chapters
Do you have a framework for picking ideas? Yes, I do. The first thing I look at is the potential of the idea. How big could it be? Thing number 2 is you need to look at the probability of that particular outcome to say, yes, this thing could be a billion-dollar company, but the probability of that is actually relatively small. A mistake a lot of entrepreneurs make is they look at the probability of an idea before they look at anything else, and if the probability is too low, they You kind of dismiss the idea out of hand. The third one is what I think of as proximity. Is the idea kind of close to your heart? Is it something you're passionate about, something you enjoy? Or you can also think of proximity as, is it close to your area of expertise? Is it something you know about? So those are the 3 things. And you put those 3 factors together and you can weight them different ways. The important part is actually recognizing that all 3 of those things are, are relatively important and you want a mix of those things based on your circumstance.
