So, you’ve got the got the idea, what’s next?
Every new business idea is based on multiple assumptions. It’s like an equation with dozens or hundreds of variables and lots of companies fail because they treat their assumptions as facts when they are not (speaking programming lexicon – variables are not constants 🙂 ). When a product is built based on the founders’ guesses – the risk of being wrong increases significantly. The more unknowns you have – the smaller the chances of getting it right from the first version of the product. How can you minimize the risks?
The core principle of the Lean Startup methodology is constant learning and iteration, a.k.a. “Build-Measure-Learn” principle. The goal is to minimize time (and effort) between iterations. A great approach is to capture your assumptions on a paper (I prefer putting everything on a whiteboard; some people use sticky notes and put them on the wall, or just on paper). I am a big fan of the Business Model Canvas as a way to capture my assumptions and start validating them one-by-one. Also, a great book I can recommend – “Business Model Generation” by Alexander Osterwalder, which describes in details and colour how to work with a Business Model Canvas (Buy on Amazon→).
The biggest and the riskiest assumptions of all (and the most common one) is – the problem you are trying to solve is indeed the problem. The more I talk to starting entrepreneurs, the more I see that this is the most popular assumption. Of course, it’s almost impossible to validate everything, but it will increase your risks. If rely on your guesses without validating them, it doesn’t mean you will fail, but looking at the startups success and failure stats – you can waste lots of your time, and depending on your financial situation you may not have enough time to fix the mistake.
That being said, there are a few examples when people built very successful products relying on their personal real-life pains and experience, so their target audience was people like themselves. A very inspirational example is Basecamp. In brief, there was a small team that realized that some parts of their work process weren’t good enough, and they developed a product to address the problems they had. It turned out that there were a whole lot more companies (from various industries) who had exactly the same challenges. I love this story and believe that this is a possibility, but unless you are a “representative” of the large enough target audience, it is very risky to rely solely on your personal (or professional) pains.
To summarize, you want to define the most important assumptions, and test if you are right or wrong, one-by-one. In order to validate an assumption, you should think carefully how you can do this with minimum effort and time. This brings us to MVP term, which I will cover in a later post.