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The Silver Lining (continued)

THE FINAL TEST

As a longtime consultant and mentor, Schmidt says he always asks his clients five questions that every entrepreneur should be able to answer: Who is going to buy what? For how much? When? And why?

“When I say, ‘Who?,' I want specific names, not just names of customer companies, but names of individual human beings … and when you say, ‘What?,' you have to define your product at two levels of detail deeper than your elevator pitch,” explains Schmidt. “The ‘How much?' ties in with the design, as you have to understand your value to the end user in the end user's context, and what fraction of that you can capture. ‘When?' is that very difficult question of how do you roll this out over time and how to get things cash-flow positive and fill out your product vision. And the ‘Why?' is perhaps the most critical question of all.”

It is this final question, notes Schmidt, where he needs to hear the compelling reason for why this company should begin in the first place, and what types of benefits will it offer to those who may choose to use it, or buy it.

“If you can't answer the ‘Why?' very well, that's a red flag,” says Schmidt. “It forces you to think like your customer, which is often surprisingly hard at first. If the answer is, ‘I have a burning desire to change the world with my idea,' then I say we will find a way to make that happen.”