I’ve worked with startups for over a decade. Here’s how I know if they’ll pass or fail

Photo credit: Alex Kotliarskyi.

Ryan is a star contributor for Tech in Asia and publishes high-value content that serves the Asian tech community. Read more from star contributors here.

How do I know if a business idea or startup will thrive or fail? It’s a question that all tech entrepreneurs and investors ask themselves.

After pitching and evaluating ideas for more than a decade, I’ve gotten pretty good at pattern recognition. You just know that some startups are going to make it, while others are dead in the water.

It’s not rocket science. It doesn’t necessarily require an MBA or an advanced degree in finance. Most of the time, it comes down to three words: talent, technology, and traction. This is a framework I use myself, and it’s how my company evaluates its acquisitions.

Businesses that check these three boxes are more likely to get funding and, more importantly, succeed. Whether you’re an entrepreneur pursuing an idea or an investor thinking about funding one, it helps to keep these simple criteria in mind.

The talent

Great business ideas are everywhere, but great implementers are one in a million. I always start assessing a business by gauging the entrepreneur and the team behind the effort. What’s paramount to me is evidence of fanatical dedication. Part-time entrepreneurs, those who might be starting a business as a side gig or maybe have a bunch of pots on the boil, really don’t cut it.

The reality is that entrepreneurs face a monumental task—to create something out of nothing. To succeed in this primal act of creation, you need a cult-like devotion to your cause. Weekdays and weekends make no difference. Ditto for job titles. An effective entrepreneur must be willing to wear multiple hats—from salesperson and designer to customer service rep and even dishwasher.

Above all, I look for their ability to get things done. Great entrepreneurs find a way to move the needle fast. Rather than passing the buck to someone else, they race to track down a solution and don’t rest until they’ve found one.

Having a critical mass of “can-do” entrepreneurs—an entrepreneurship golden ratio, so to speak—is critical inside any business whatever stage you’re at.

The technology

This happens to me all the time: An entrepreneur presents a solid business idea, runs through an awesome pitch, then concludes by saying, “All I need is to find someone to handle the tech part.”

Tech is not an afterthought, especially in the online space. It’s the underpinning of almost every successful company today, and it’s not easy to get right. Behind all those tools and platforms we use and take for granted is a game-changing technology. The nuts and bolts of code and engineering itself are just as important as the business idea, if not more so.

For that reason, I’m a fan of the co-founder model for startups or some variation of it. A classic formula is to have one founder dedicated to technology (who eventually becomes the CTO) and another dedicated to everything else (who goes on to be the CEO). This model ensures that technical considerations are tackled head-on.

The alternative is to race forward with a concept, secure funding, initiate marketing, and line up customers, without any real assurance that you can “walk the walk.”

The traction

Conclusion