The Dangerous Game for Startups: Assumptions
We’ve all heard the old saying, “you know what happens when you assume”. Well, we’ve used that saying many times when those around us are making assumptions about something or when those around us make general statements about how things are going to work out. Sometimes they are right and sometimes they are wrong.
An assumption is simply something that we accept as true or as certain to happen without having any real proof. We do it all the time and we do it all the time in business, but this is a very dangerous and potentially very expensive thing to do in the world of startups or new product development.
The reason it is such a dangerous tactic is because in a startup there is a high potential for waste ($$) and assumptions are the main catalyst for this.
- We assume our customers want a certain feature and we go off and build it.
- We assume a customer will pay a certain price point for our product so we start to sell it at that price.
- We assume our customer segment is “x” and we go off and build our marketing strategies and plans to get our message to those customers.
- We assume the problem we are trying to solve in universal and all our customers will have an “aha” moment when they see our solutions.
And the list goes one…
Startups inherently bring with them uncertainty. Startups operate under the conditions of extreme uncertainty and the bottom line is we don’t know with certainty what will work and what won’t. We don’t know for certain if the customer is eventually going to consider what we are building as valuable enough to buy.
This is why it is of utmost importance to get all our assumptions validated by customers as quickly as possible.
In startups, one of the most important things to accomplish as early as possible is to make sure you understand your target customer’s problem and what they need in order to solve that problem. This only happens if we get out and interact with potential customers.
Here are some practical tips for validating assumptions as you build out your new business and product:
- Write all of them down: First thing to do is write all your assumptions down. You’ll probably be surprised by how many assumptions you have and it’s good to get them down on paper.
- Write a test case for each assumption: Define a way you are going to test each assumption. The goal is to quickly validate or invalidate your assumption, so figure out a practical way you can test it. Then go and test it!
- Script your customer interviews: Be intentional to write down the questions you want to ask your customers. Don’t fly by the seat of your pants with this one. Script it out so it will be consistent across interviews and you can capture your data accordingly.
- Act on the data: Take time to understand the data and then act on it. This might mean you keep going (validated) or you change directions (invalidated).
Again, the goal is to either validate or invalidate your assumptions as quickly as possible so you can focus your time and money on the activities that generate real value to your customers. You will learn from them whether you need to keep going or change directions, but you’ll know early on if your idea is viable or not.
Discussion Question: What tactics do you use to get your assumptions validated so you can focus on the activities that create the most value?
@coreytowe
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To Corey's question "What tactics do you use to get your assumptions validated so you can focus on the activities that create the most value?", getting out of the building and talking to potential customer. It's both highly valuable and humbling.