by Dharmesh Shah
A quantitative approach to weighing opportunities that forces a separation between the size of the outcome and the likelihood of success, preventing risk aversion from stifling innovation.
Core Principles
- 1.Step 1: Estimate Potential (0-10). Ask 'If this works, how big could the outcome be?' Do this before assessing risk.
- 2.Step 2: Assess Probability. What is the likelihood of success? Don't use low probability to kill high-potential ideas (Expected Value = Potential × Probability).
- 3.Step 3: Evaluate Passion/Proximity. Do you care enough about the problem? Are you close enough to the customer pain?
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"If you apply a filter that says, 'Oh, I only have a one in 10 chance to pull this off... not going to do that.' Well, if it's a one in 10 chance at 10 billion, it might be worth it."