Evaluating a Product

Introduction

Everything starts with the customer, so you need to be able to understand the customer very well

As Vinod Khosla said, "Every problem is an opportunity." Try digging down deep on this one because the actual problem is always deeper than the product the customer is buying.
If someone buys a $400 pair of designer jeans, what is the pain they're experiencing? It's definitely different than someone buying regular $40 pants.

No one will pay you to solve a non-issue.
This the chronic problem with inventors. They are super smart and they come up with something that is cool. But just because something is cool doesn't mean that it will be successful.

This is actually a more efficient way to approach market sizing. Try to size the problem instead of how much people spend on the product right now.

It needs to be either significant better or cheaper. But more than that, you need to take into account what we call switching costs.
For example, a burger doesn't have a high switching cost. It doesn't take much for me to walk another few steps into the Taco Bell. But if my company's tech infrastructure is built on top of a single platform, then that's going to cost me a lot to switch.
So if a better platform comes along, I might not even switch because it's not worth it. So if you're product is going to be competing in a place with high switching cost, it needs to be really awesome or you'll get frustrated. Your product will be better and no one will care.

You need to consider how durable that advantage is. This is where we get into moats, which we will talk about when we get to the competition section.

Is it recurring? How good are the margins? How much does it cost to acquire a customer?

If a company is just a feature, that means that they could easily be put out of business by the gorilla in the space. It's competing incrementally instead of disruptively.
A good example is Yelp. They were not a product, they were a feature. Google Maps had far more users that were far more active. As soon as they decided to go into reviews, they almost instantly had more reviews that were higher quality than Yelp. Yelp was a feature that Google added, and it screwed them.

Go into the website and demo the product if possible, or at least watch videos of other people using the product or talking about it
If they operate in a technical field (tech, biotech, healthcare, etc.) then make sure to do enough background research to actually understand their product