The Flaw in VC Vetting Most Miss (Hint: It's Not the TAM)

The venture capital world runs on identifying the next big thing. Billions are poured into promising startups, yet the stark reality remains: a significant majority fail to deliver on their potential. We see endless pitch decks, analyze market sizes (TAM), scrutinize team bios, and track early traction. But what if this traditional vetting process, despite its rigor, is fundamentally flawed? What if it’s focusing on lagging indicators and surface-level signals, rather than the core reason a startup might succeed or fail?

Current vetting often gets caught up in the founder's vision or the solution's features, neglecting the most critical element: the customer's underlying need. This post argues that the traditional process is broken because it doesn’t adequately assess whether a startup truly understands and effectively solves a real, important customer Job-to-be-Done (JTBD).

Jobs-to-be-Done theory offers a more reliable lens. It shifts the focus from the what (the product) to the why (the progress the customer is trying to make). By understanding the customer's Job, their struggles, and their desired outcomes, VCs can gain a much clearer, more predictive view of a startup's potential for genuine product-market fit and long-term success.

This post will outline how to conceptualize and build a VC investment vetting tool grounded in JTBD principles – a tool designed not just to evaluate ideas, but to predict success.

What is the "Job" of Investment Vetting?

Before building a better tool, let's apply JTBD to the VCs themselves. What is the real Job VCs are trying to get done when they vet potential investments? It's likely something like: "Identify startups capable of delivering significant returns by predictably solving important, unmet customer needs."

Now, consider the current "solutions" VCs hire for this Job:

• Spreadsheets tracking deal flow

• Pitch deck analysis templates

• Hours spent in diligence meetings

• Reference checks

• "Gut feeling" and pattern recognition

Where do these fall short? They often struggle to:

• Objectively quantify the customer need.

• Differentiate between a genuine unmet need and a "solution looking for a problem."

• Filter out charismatic founders pitching weak value propositions.

• Predict future market adoption based on current customer struggles.

The desired outcomes for the vetting process itself might include metrics like:

• Minimize the time spent evaluating startups unlikely to address significant unmet customer needs.

• Maximize confidence in predicting a startup's potential for achieving product-market fit.

• Increase the ability to identify non-obvious opportunities based on deep customer understanding.

• Reduce the influence of bias (founder charisma, market hype) on investment decisions.

A JTBD-driven tool aims to deliver better on these outcomes for the VC.

Applying JTBD to Evaluate Startups (The Tool's Core Logic)

The core of a JTBD vetting tool lies in systematically evaluating how well a startup understands and addresses the customer's Job. This involves a shift in questioning and analysis:

Step 1: Identify the Customer's Core Job: The first, most crucial step is defining the fundamental progress the startup's target customer is trying to make, independent of the proposed solution. This requires pushing beyond feature descriptions. Examples:

• Instead of: "We are an AI-powered scheduling tool."

• Ask: "What Job are customers hiring scheduling tools for?" (e.g., "Ensure critical meetings happen with the right people without friction," or "Maximize productive time by minimizing scheduling overhead.")

Step 2: Map the Customer's Desired Outcomes: Once the Job is defined, identify how the customer measures success. These are their desired outcomes – the metrics they use, consciously or unconsciously, to judge how well the Job is getting done. These outcomes should be:

• Solution-agnostic (describe the result, not the method).

• Measurable (even if subjectively).

• Stable over time.

• Examples for the job "Ensure critical meetings happen...": Minimize the time it takes to find a mutually agreeable slot; Maximize the likelihood that all necessary participants attend; Minimize the need for back-and-forth communication.

Step 3: Uncover Importance vs. Satisfaction Gaps: Not all outcomes are created equal. The real market opportunity lies where outcomes are highly important to the customer but poorly satisfied by current solutions. Systematically identifying these gaps points directly to where innovation will be valued.

• Tool Feature Idea: A dedicated module within the vetting tool where VCs (or founders as part of diligence) can input and rank customer desired outcome statements. The tool could guide users to rate each outcome's importance and current satisfaction based on founder insights or, ideally, data from actual customer research (interviews, surveys). Visualizing these gaps (e.g., on an opportunity map) would highlight the most promising areas for innovation.

Elevating the Abstraction: Vetting for Disruptive Potential

JTBD isn't just about finding incremental improvements; it's also key to identifying potentially disruptive innovations. Often, customers today achieve a higher-level Job by stitching together multiple tools, services, or manual processes. Think about managing personal finances fifty years ago versus today.

A truly disruptive startup often doesn't just do an existing step better; it enables the customer to achieve the overarching Job in a fundamentally new, simpler, or more effective way, often by operating at a higher level of abstraction. This can make previous solutions or even entire categories obsolete.

• Example: Consider the Job "Ensure my team delivers projects on time and budget."

  • Lower Abstraction Solutions: Better Gantt chart tools, time tracking software, faster messaging apps. These optimize existing steps.

  • Higher Abstraction Solution: An integrated platform that automates resource allocation, predicts bottlenecks using AI, and proactively manages stakeholder communication based on project goals – getting the entire job of "predictable project delivery" done more effectively.

A JTBD vetting tool should assess this potential:

• Tool Feature Idea: Include a scoring mechanism or qualitative assessment module focused on the startup's potential to elevate the level of abstraction. Does their solution consolidate multiple steps? Does it address a higher-order customer goal directly? Does it potentially change who performs the job or how success is measured?

Important Note: I’m currently working on the next generation of prioritizing customer success metrics that eliminates time and cost and is dynamic and predictive over time. You should get involved 😉.

Building the JTBD Vetting Tool: Key Modules & Features

A conceptual JTBD Vetting Tool could include the following integrated modules:

1. Job Definition & Context Capture: Guides VCs and founders through exercises to clearly articulate the core functional (and relevant emotional/social) Jobs-to-be-Done of the target customer, including the circumstances and context.

2. Desired Outcome Library & Prioritization: A structured way to input, refine, and rank the customer's desired outcome statements, capturing importance and current satisfaction levels. Could include templates or examples.

3. Competitive Analysis (JTBD Lens): Evaluates incumbents and alternatives based on how well they address the prioritized customer outcomes, rather than just feature comparisons. Highlights underserved areas.

4. Founder/Team Assessment: Assesses the team's depth of understanding of the customer's Job and outcomes. Do they speak the customer's language? Is their strategy aligned with addressing the biggest outcome gaps?

5. Abstraction Potential Score: A module specifically designed to evaluate the startup's potential for market disruption by changing the level at which the Job is addressed.

Conclusion: Investing in Outcomes, Not Just Ideas

Shifting to a Jobs-to-be-Done perspective in investment vetting isn't about adding more process; it's about changing the focus to what truly drives value creation and market success. It provides a structured, customer-centric framework to:

• De-risk investment decisions by grounding them in validated customer needs.

• Move beyond subjective founder pitches and market hype.

• Identify startups with a genuine, defensible competitive advantage built on solving real problems.

• Increase the predictability of identifying successful innovations.

Building a tool based on these principles can transform the vetting process from an often-intuitive art form into a more rigorous, data-informed discipline focused on investing in outcomes, not just ideas.

And I’m building it.

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What are the biggest struggles you face when vetting potential investments or seeking funding? How could focusing more on the customer's Job-to-be-Done change your approach? Share your experiences and thoughts in the comments below! 👇🏻

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If you’d like to take action, I would love to help. Here’s are some steps you can take to make that a reality for us:

1. Join my community and get access to more content and tools

2. Apply for coaching so we can do projects together and build a new business-as-usual with someone who will share the knowledge, and hold you accountable. (I have limited seats so hurry!)

3. I do project work as well. Use the coaching link and we can discuss.

Why Me?

I’ve been trained by the best in Outcome-Driven Innovation. Part of that training involved how to understand what the future should look like. As a result, I’ve taken what I’ve learned and begun innovating so I can get you to the outcomes you’re seeking faster, better, and even more predictably. Anyone preaching innovation should be doing the same; regardless of how disruptive it’ll be.

How am I doing this?

• I’ve developed a complete toolset that accelerates qualitative research to mere hours instead of the weeks or months it used to take. It’s been fine-tuned over the past 2+ years and it’s second-to-none (including to humans). That means we can have far more certainty that we’ve properly framed your research before you invest in a basket of road apples. They don’t taste good, even with whipped cream on top.

• I’m also working on a completely new concept for prioritizing market dynamics that predict customer needs (and success) without requiring time-consuming and costly surveys with low quality participants. This is far more powerful and cost effective than the point-in-time surveys that I know you don’t want to do!

I believe that an innovation consultant should eat their own dog food. Therefore, we must always strive to:

• Get more of the job done for our clients

• Get the job done better for our clients

• Get the job done faster for our clients

• Get the job done with with fewer features for our clients

• Get the job done in a completely different and novel way for our clients

• Get the job done in a less costly manner for our clients

You could be an early tester of the latest developments, but at a minimum take advantage of an approach that is light years ahead of incumbent firms that are still pitching a 30 year old growth strategy process but haven’t grown themselves. 👈🏻It's worth thinking about.

All the links you need are a few paragraphs up. Or set up some time to talk … that link is down below. 👇🏻

Mike Boysen - www.pjtbd.com
Why fail fast when you can succeed the first time?

📆 Book an appointment: https://pjtbd.com/book-mike