Test Your Assumptions
Successful Startup Founders Validate Their Assumptions
Successful founders make core business assumptions that eventually turn out to be correct. Others make wrong assumptions that eventually kill their companies.
Airbnb’s founders believed that people would be willing to make additional income by renting out their rooms to strangers. In addition, they believed that travellers would be willing to stay in someone else’s house during their travel and in return cut down their accommodation cost.
SpaceX’s Elon Musk bet that if he can build reusable rockets it would lower costs by an order of magnitude and people would pay billions of dollars for that product.
Uber’s Travis Kalanick made a big assumption that people would love using an app to call a taxi and that it would be faster, more convenient, and economical for them to do so.
"It is very common for founders to build products that the market doesn't need"
A lot of assumptions are made when building a product and launching a start-up. In the early stages some founders spend a lot of time and effort to increase their chances that the assumptions will turn out to be true before committing a substantial amount of money and time to build a new product. However, it is very common that many founders fail to do this and end up building a product that the market doesn’t need.
The list below has been created from experience working with deep tech start-ups (that will eventually succeed or fail) and would work equally well with other startups. Work at validating these assumptions early on and work towards building a successful company.
Market Problem Assumptions to Validate
- The identified market problem is real
- You understand the impact the problem has on businesses and individuals
- The perceived magnitude of the problem is accurate
- You understand how the problem is addressed today
- You understand the competitive solutions to this problem
- You understand the minimum requirements to resolve this problem
- You understand the drivers of customer’s perception of value
Assumptions about Your Customer to Validate
- X group all have the same/similar problem
- There are a lot of people in X group
- The customer cares about the identified problem
- They are looking for a (better) solution to the problem
- This problem ranks high on their list of relevant/urgent problems
- They need a solution to this problem
- They are willing to pay to resolve this problem
- They are willing to pay to solve this problem today (not next year)
- You understand what a day in the life of the customer looks like
- You understand their workflow
- You understand the status quo and inertia drivers
- You understand why they are not happy with existing solutions to this problem
Not all the assumptions above can be validated in a start-ups’ early days but every time one of those assumptions is, a start-up can bring itself a lot closer to success.