Tuesday, 30 April 2013

Get Out of the Door to test your assumptions

An interesting evening spend by mentoring a few startups that are participating in a bootcamp organised by +Paul Orlando from Startups Unplugged.

Currently 3 very different teams are participating in the bootcamp. One team exists of 3 foreigners, the next 2 of to local Hong Kong people and the last team has just 1 local Hong Kong person in it. Their products could not be more different either.

From property related stuff, through coupons to well......uhhh....undecided yet.

Visible was the determination and enthusiasm all teams had in working on their respective projects. Though, it is not always about hard work only - there is a big element of smart work as well.

A current buzz word is to follow the so called Lean Startup approach. Key here is to deliver a so called Minimum Viable Product. Get fast in the market against as less effort as possible so you can start testing  assumptions and collecting data on what customers really want.
"The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort."
There is only one way to do that and that is to literally get out of the building and talk to your (potential) customers. This is the so called customer development as described by Steve Blank. A full online course can be found here at Udacity. Key here is to define and understand the assumptions behind your product and business. When talking to your customers you would need to get those assumptions validated, or if they are invalidated changed would be needed to product or business.

Now besides getting this product in the market, most of the times teams are interested in building a business as well. A nice tool for this is the so called business model canvas. A one pager that can be used to describe a number of elements needed to run your business. The assumptions mentioned earlier play a big part here as well. Is value proposition as big as you had in mind, can you distribute your products as you had in mind against the price you had in mind, are the benefits as big as you thought.

And a test needs thinking through. The way you design your tests should support you in (in)validating those assumptions, it should help you to learn more about the market and how your target audience might response. Therefore spend sufficient time on designing those experiments, selecting the audience and asking the right questions in the right way. And is the sample size big enough to give you the information you need.

As well as testing your product, your business requires as much attention as well. Are the risks worth the potential benefits?