How to Know If Your Startup Idea Is Big Enough to Win

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April 24, 2025

Every founder has had that lightbulb moment—a product idea that feels brilliant, disruptive, and destined to scale. But here’s the hard truth: not every idea is worth building. Some are better left on the whiteboard.

On this week's pod episode, Phuong Ireland and I break down how to rigorously test whether your startup idea has real legs. We unpacked a four-part framework that any entrepreneur can use to validate their concept and make better, faster go/no-go decisions.

1. Pain Point: Is It a Must-Have?

Big businesses solve big, painful problems. Before building anything, ask yourself:

  • Is this a burning issue for a lot of people?
  • Are people already paying for (inferior) solutions?
  • If the economy tanks, will they still buy this?
  • If it’s a “nice-to-have,” you’re already on shaky ground. Think Uber—not being able to get a ride at night wasn’t just annoying, it was a real problem.

2. Market Size: TAM, SAM, SOM (And Why It Matters)

You’ve likely heard the terms TAM, SAM, and SOM—but are you using them right?

  • TAM: Total Addressable Market
  • SAM: Serviceable Available Market
  • SOM: Serviceable Obtainable Market

While TAM is helpful context, savvy investors want to see a well-defined SAM and a credible operating model—not just a dreamy 5-year SOM projection. We discuss why the SAM is the real north star when deciding if a business is worth scaling.

Check out our VC pitch guide for more on this.

3. Product: Do You Have a Moat?

The world doesn’t need another marginally better widget. Your product must be at least 10x better—or it needs a moat.

  • Can others copy you easily?
  • Do you have IP, network effects, brand equity, or switching costs?
  • Does scale make you unbeatable?

Even in non-venture contexts, defensibility matters. Whether you’re a startup or a storefront, you need something your neighbor can’t replicate overnight.

4. Monetization: Can You Make (and Scale) Money?

Your business has to generate revenue—and do it efficiently. So ask:

  • Who’s paying and why?
  • Is this a one-time purchase, a subscription, or ad-based?
  • Can you scale without burning massive capital?
  • Software companies are a great benchmark—they scale without adding much cost. If your model requires hands-on selling or heavy manual work, you’ll need a clear plan to avoid margin crunch.

TL;DR: Validate Before You Build

Ideas are cheap. Execution is expensive. If you're not ruthlessly validating the business potential of your concept, you risk burning precious time and capital.

Use this framework to ground your vision in reality—and build something that lasts.

Looking to raise capital? Start with a killer pitch deck.

💡 FAQ

Q: Do I need a competitive advantage if I’m not raising VC?

A: Yes—just on a different scale. Your edge could be local relationships, brand loyalty, or niche expertise.

Q: How do I find my TAM/SAM/SOM data?

A: Start with industry reports, customer surveys, and usage data. Refine from there.