The Terrifying Questions
Four questions, in order: do people pay? does it create value? can you reach them cheaply? can you defend it? Most founders only ask the first two.
Sequoia's screen for any venture is four questions, asked in order. Do people care enough to pay? Does the solution create demonstrable value? Can customers be reached at a sane cost? Can the position be defended once you're there?
They're called terrifying because every one of them has a "no" answer that kills the company, and most founders only ask the first two. The third — channel economics — is where most consumer startups die quietly: a real product, a real market, but a CAC that exceeds LTV forever. The fourth — defensibility — is where most B2B startups die noisily: they win the first hundred customers and discover the incumbent or a fast follower can replicate their wedge in a quarter.