In the first post of this series, we reviewed steps you can take before you begin launching your new venture.
The next step is to go out to the market you have identified and test your hypothesis.
As of now, if you completed the previous exercises, you have a sentence that describes your idea for a business. We now are going to turn that into a problem hypothesis and go about trying to disprove it.
This last sentence has come to a surprise to some founders I have worked with. I sometimes get funny, head-cocked looks when I state that your job as entrepreneur is to disprove your hypothesis. Most entrepreneurs do the opposite which may contribute to why 90% or so fail to turn their idea into a viable business.
There are reasons for this.
The most prominent is that if you try to prove your hypothesis you are likely to have cognitive bias. That is, to paraphrase Simon & Garfunkel. you only hear what you want to hear and disregard the rest. You also put the customer second and your idea first. One popular tell-tale sign is that you leave too many meetings saying, “They just don’t get it.” If you find yourself saying (or thinking) this, more often than not, you have the phrase correct but not the pronoun. “They” should turn to “I” or “we”.
When you set out trying to disprove your hypothesis you employ the scientific method and focus on the problem you are trying to solve instead of the idea you are trying to prove. For example, if one sets out trying to change an industry that is ripe for disruption versus trying to help one’s customers in a better and different way that is beneficial to all then one may be in for a long and painful journey. The goal is to fail fast, learn and try again until you nail the pain (or not).
With that as a backdrop, let’s take the next steps to finding a way to build a successful startup.
From the previous post, we have our business idea statement that has been shared with at least 10 people (at least 2 being strangers) so we feel pretty good about how we are articulating the idea. Now let’s try it out in the real world.
Identify Assumptions and Problem Hypothesis
The next step is to turn that business idea statement into a problem hypothesis similar to one of these statements.
I believe [type of people] experience [type of problem] when doing [type of task]. or:
I believe [type of people] experience [type of problem] because of [limit or constraint].
Here is how we get to a solid first hypothesis:
- Identify assumptions – The following is a simple exercise you can perform to facilitate this process. It takes about 15 minutes max.
Get some pens and sticky notes and set a timer for 10 minutes. Then start writing down all your assumptions about your customers, product, and partners – one per sticky note.
If you’re doing this as a group exercise (and I hope you are), don’t stop and discuss during the 10 minutes. The point isn’t to write what you think is correct; it’s to unlock the mostly unspoken assumptions in your head. Also, please note that there may be moments where you cannot think of anything. Please go the full 10 minutes. Conversely, you may also find there are moments when you cannot write fast enough as the ideas pour forth onto the paper.
Here is a list of prompts (taken from Lean Customer Development by Cindy Alvarez) to help you bring your assumptions to the surface:
- Customers have _______ problem
- Customers are willing to invest _______ to solve this problem
- Stakeholders involved in using/ buying this product are _______
- Partners involved in building/ distributing this product are _______
- Resources required in building/ servicing this product are _______
- If customers did not buy/ use our product, they would buy/ use _______
- Once customers are using our product, they will gain _______
- This problem affects our customers _______
- Customers are already using tools like _______
- Customer purchasing decisions are influenced by _______
- Customers have [job title] or [social identity]
- This product will be useful to our customers because _______
- Customers’ comfort level with technology is _______
- Customers’ comfort level with change is _______
- It will take _______ to build/ produce this product
- It will take _______ to get X customers or X% usage
Once the 10 minutes are up, put the sticky notes on a wall or white board and organize them into logical groupings. These groupings will help inform you for next steps.(Important: Do not worry about getting the list right or it being complete. You can always add, modify or remove items later.)
2. Identify your Problem Hypothesis – From above, we know that this is a simple sentence with three parts. Here is an idea on how to get to that one crisp sentence:
Identify the following:
- Who your customers are
- What problems and needs they have
- How they are currently behaving
- Which solutions customers will give you money for (even if the product is not built or completed yet)
- How to provide solutions in a way that works with how your customers decide, procure, buy, and use
Important: The narrower the answers the better as this will allow you to disprove your hypothesis more quickly. For example, it is faster to disprove that people with red hair, freckles and fair skin tan well than all people tan well.
Here are some Problem Hypothesis examples:
[Large dog owners] are unable to [find nutritious, affordable dog food] because [there are few alternatives where they typically shop].
[Home Builders] are unable to [build energy efficient homes at a reasonable cost] because [they can’t figure out the best combination of materials to achieve cost-effective energy solutions for the typical home buyer].
Congratulations, once you have completed these, you have taken two steps closer to realizing your dream. Next time, we will review ideas on how to target your ideal customer profile and begin preparing for the interview process to test your original hypothesis.
I look forward to your comments.
One thought on “Identify and Nail the Pain (#2 in a series of how to go from startup to scaleup – 3 min read)”