How to screen internet startups

I have read many articles on this, but nothing came close to the post that I read recently in VentureBeat, written by Nissan Gabbay. The full article is here.

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Normally the criteria applied while screening the internet startups are evidences of high entry barrier, unfair advantage etc., which have become hard to get lately - since everything in internet has become a low hanging fruit, accessible to all. Greater user involvement enabled by web 2.0 applications have left little for the founders to think up and innovate. You just enable user participation and he does the rest. Volume of traffic determines its success.

This is a re-post of Gabbay’s own post in startup review in which I find some later mark ups. I suggest you may please read that too.

Some of the comments have also been from informed stalwarts like Mike Brown. In addition to the points suggested by Gabbay, Brown has the following add ons.

a) Instant (or near instant) gratification

This means I don’t have to download something and get a ton of friends on the thing before I actually get some goodness from the product/service.

b) Clear use case.

Some sites are impossibly hard to understand when you show up for the first time. If I can figure out what to do there in about 10 seconds, forget it. You’ve lost me.

c) Improve an existing user behavior rather than require a new user bahavior.

d) Non-linear economies of scale.

Obvious example is communication products but it could apply to cost reduction as well as user adoption.

e) Previously unknown ability to personalize.

Personalizing shopping, media, medical recommendations, restaurants, etc. The beauty of the web is in finding new ways to get ME exactly what I want.

f) New or proprietary access to data presented in simple ways.

It’s cool when companies take previously unknown, inaccessible or complex data and make it usable for consumers to make decisions. Zillow, Farecast, and lots of others do this.