Using the cost-risk matrix to answer every startup’s biggest question

Here’s the 3-step process I use when helping startups evaluate and prioritize opportunities

Step 0: Is this opportunity valuable?

  1. Establish what we care about as a company and as individuals (our customers, goals, etc).
  2. Capture all opportunities under consideration in a format that’s sufficiently detailed and concrete.
  3. Get a gut check from the team on which opportunity is most promising.
  4. Gather criteria we can use to prioritize each opportunity (“we should prioritize this opportunity because it’s ___________”).
  5. Evaluate each opportunity with each of the criteria — the “winning” opportunities are those that score most highly on the most criteria.

Step 1: What’s the cost-risk relationship?

  • Use your gut.
  • Don’t overthink it.
  • Remember, at a startup, cost = time (you’re likely not spending money on anything but salaries!)

Step 2: What zone are you in?

  • “Table stakes” features (which you need to build because all of your competitors have them)
  • Direct customer requests (which are so overwhelming and consistent you feel like the risk is low)
  • Infrastructure or “technical debt” projects (maybe you need to rebuild your back-end to scale more efficiently; it’s valuable, it’s going to take a while, and it’s pretty low risk as long as your engineers are good!)

Step 3: Act accordingly

Stay in the zone

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John Zeratsky

Supporting startups with capital and sprints. Co-founder and general partner at Character. Author of Sprint and Make Time. Former partner at GV.