Jason Cohen's rubric for an ideal bootstrapped business

I really like talks that present actionable information like this one.

I recommend watching the video to understand where each of the following bullet points comes from. It's less than an hour long if you skip the questions.

For those who won’t watch it, the speaker discusses what he believes are the key factors to consider when evaluating a business idea.

I simply took the transcript, fed it into ChatGPT, and asked it to generate a rubric. I’m pretty happy with the output, and now that I’m starting a blog, I thought I could use it as a knowledge database (or a set of tools) to refer back to.

Without further ado—and hoping others find it helpful as well—here’s the rubric.

Rubric

Each criterion is rated on a scale of 1 to 5, where:

• 1 = Poor fit / Major obstacles
• 3 = Moderate fit / Some concerns
• 5 = Strong fit / Ideal for bootstrapping

1. Revenue Model

1.1 Recurring Revenue Potential

• 5 = Predictable, ongoing revenue (e.g., SaaS subscription, annual contracts)
• 3 = Some recurring elements but depends on periodic repurchases
• 1 = One-time purchases with no built-in repeat sales

1.2 Ability to Charge a High Price

• 5 = Can charge $70+/month per customer
• 3 = Can charge $20-$50/month
• 1 = Difficult to charge high fees (e.g., consumer apps, low-margin products)

1.3 Cash Flow Management Potential

• 5 = Can use annual prepay models to generate upfront cash
• 3 = Some potential for prepaying but mostly relies on monthly billing
• 1 = No ability to get upfront payments, making cash flow tight

2. Market Selection

2.1 B2B vs. B2C

• 5 = Pure B2B, selling to businesses with purchasing budgets
• 3 = Hybrid model (serves businesses and consumers)
• 1 = Pure B2C, relies on mass-market consumers

2.2 Market Size

• 5 = Large market with many niches and expansion potential
• 3 = Moderate market size, possible to scale but has constraints
• 1 = Small niche with limited long-term growth

2.3 Pain Persistence

• 5 = Solves a long-term problem that customers experience regularly
• 3 = Solves a medium-term pain point that happens occasionally
• 1 = Solves a temporary or one-time problem (e.g., wedding planning software)

2.4 Competitive Differentiation

• 5 = Boutique or niche positioning (not competing solely on features)
• 3 = Some differentiation, but feature competition is a risk
• 1 = Highly commoditized space where differentiation is hard

2.5 Aftermarket Potential

• 5 = Taps into an existing ecosystem (e.g., plugins for Salesforce, WordPress)
• 3 = Related to an existing market but requires standalone branding
• 1 = Requires creating demand from scratch, no existing platform benefits

3. Customer Acquisition & Growth

3.1 Predictable & Scalable Acquisition

• 5 = Can acquire customers via paid channels with clear ROI (e.g., Google Ads, affiliates)
• 3 = Some organic or social media potential but lacks repeatable paid acquisition
• 1 = Relies on viral growth, PR, or word-of-mouth without a clear acquisition cost

3.2 Sales Cycle Length

• 5 = Short, low-friction sales cycle, self-serve or easy close
• 3 = Medium-length cycle (requires demos, but not enterprise-level sales)
• 1 = Long enterprise sales cycle with legal hurdles and approvals

3.3 Pricing Strategy & Upsell Potential

• 5 = Tiered pricing structure, natural upsells & expansion revenue
• 3 = Some ability to increase ARPU (Average Revenue per User), but limited expansion
• 1 = No meaningful upsell opportunities, fixed pricing with low margins

3.4 Avoidance of Labor-Intensive Support

• 5 = Low-touch support model (e.g., self-serve, AI-powered)
• 3 = Some customer support required but not overwhelming
• 1 = High-touch customer support required, making scaling difficult

4. Business Model Efficiency

4.1 Capital Efficiency

• 5 = Can be self-funded without outside investment, uses customer revenue for growth
• 3 = Requires some external funding, such as loans or grants, but not VC
• 1 = Needs significant investment to scale, making bootstrapping impractical

4.2 Avoidance of Two-Sided Marketplaces

• 5 = Single customer type, no need to balance supply & demand
• 3 = Some elements of a two-sided model, but manageable
• 1 = Marketplace model, requiring simultaneous supply and demand growth

4.3 Avoidance of Real-Time/High-Support Business

• 5 = Asynchronous value delivery (customers don’t expect immediate responses)
• 3 = Some expectation of real-time availability, but manageable
• 1 = Mission-critical or real-time expectations (e.g., hosting, security monitoring)

Final Scoring & Assessment

• Total Score = (Sum of all ratings) / 16
• Interpretation:
  • 4.5 - 5.0 → Excellent fit for bootstrapping, highly recommended
  • 3.5 - 4.4 → Moderate fit, could work with adjustments
  • 2.5 - 3.4 → Challenging, likely requires external funding or pivots
  • < 2.5 → Poor fit, not suitable for bootstrapping