Application Development Services for Mobile and Web

Formula to Determine the Success of your Venture

At first, the thought of a formula to determine the success of your venture might sound absurd. But think about it; the success of a venture depends on a handful of factors, from how great your idea is, to your team’s capability to reach out to your market in a big way.

So here’s a simple formula that I have devised based on my experiences of being involved in a lot of hits, and also a lot of misses.

Venture Success % = I*M*C*E*F*D*T*FT*L

Where I = Idea potential in % / M = Market risk / E = Execution risk / F = Finance Risk / D = Distribution Risk / T = Timing / FT = First timer / L = Luck

Idea Risk (I)

You think your idea has merit; does the world think so too?

  •     Can you summarize your idea in one sentence and get people to grasp it and get excited about it?
  •     Have you validated your idea by talking to people?
  •     Have you built some prototypes and got feedback?
  •     Do you know who your target users are? (‘Everybody’ is not a good answer!)

How to score:

I = idea potential in percentage (10% = poor idea and 100% = the best idea)

Market Risk / Adoption Risk (M)

Does a large enough market exist? How close is it to a similar product in the market? Ironically, the more it differs from an existing product, the riskier it is. People need a reference point to make sense of something new.

Are you entering an existing market?

Are you entering an existing market with a unique differentiator?

Are you creating a new market?

Are you disrupting an existing market?

How to score:

M = Market risk (10% = no market, extremely novel … 100% = your target customers badly need your solution)

Competition (C)

How crowded is the market for your product?

How different is it from the competition? (‘More user friendly’ / ‘better’are not good answers!) Does it have a unique selling proposition that differentiates it from the rest of the pack?

How to score:

C = (10% = crowded market with an entrenched competitor … 100% = unexplored territory with a definite need for the product)

Execution Risk (E)

Do you have the right team and experience in place to get your ideal product out on time? Are you attempting a new or complex technology? Does your product require testing in the labs for atleast a year before you can get any participation?

How to score:

E = (10% = unproven team and credentials  …  100% = great team with proven ability to execute refined products and launch them fast)

Financial Risk (F)

Do you have enough financial runway to develop, launch, experiment, and tweak your product?

How easy is your access to funds?

How to score:

F = (0% = Significant Cash outflows with no sight of revenue or funding sources … 100% = Extremely deep pockets)

Marketing and User Acquisition (D)

Do you know how you will reach your potential customers?

Have you planned, and do you know,how to get your first 10K or 100K users? If you think your great product alone will propel you, add a few points to the risk meter!

(Read the excellent book – Traction – to learn ways on you can gain traction and a comprehensive online growth hacking guide on the Quicksprout blog)

How to score:

D = (100% = Your team knows how to acquire hordes of users at low cost and have done it before)

Timing (T)

An idea can be too early or too late to the party.

Does it exploit an emerging trend?

Can you ride a wave?

Why now? What are the socioeconomic factors that are favorable for your idea now?

YouTube was released when high speed broadband had just become commonplace.

Personal computers took off in the 1980′s because enough power was packed in the even shrinking and cheap processors.

T = (10% = released in a market either fatigued by an idea or with no significant interest in the solution … 100% = takes perfect advantage of an emerging and yet unexploited trend)

First Timer Risk (FT)

Is this your first venture? Well, I admit there is some beginner’s luck but you can’t rely on that!

Do you have an experienced mentor on board who has done it before and succeeded, or failed and then gone on to succeed?

FT (10% = First time with just an idea and no skills …  100% = have done it before, failed and gone on to succeed in a big way)

Luck (L)

When all is said and done, you cannot ignore the luck factor!

L = roll a die and assign a percentage here!


So there you go, a simple thumb rule formula to help you determine your chance of success. It also explains why a small number of ventures enjoy enormous success, and why such a large number fail or attain only moderate success. If you put a high score of 80% against each of the above factors, the probability of success is about 13% (0.8)9. (You need to dabble in at least 7 ventures (100% divided by 13%) to maximize the chance that one of them will be a huge success. Fail fast fail often is the mantra!)

What other factors do you think are involved in making a venture a success? 

Let me know by leaving your comment below.

  • Fergus says:

    Say you hired the first person you saw. That gives you a really terrible shot at having picked the best candidate–your odds are 1 in 24, meaning you have just a 4.1 percent chance of making the right choice. You really need to see more candidates to get a sense of what else is out there.

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