Founders - What Are You Trying To Prove?

An early stage start up usually starts with an entrepreneur and their idea. The idea forms and grows to point where the will to start is unstoppable.

It's unusual to meet an entrepreneur who at this stage has not yet imagined every detail of how the business could work. In fact, the ability to imagine how the idea might be brought to life is part of the essence of entrepreneurship.

Then, idea hits reality. Without being careful it's possible to waste a lot if time and money if the entrepreneur sets out to do exactly what they envisioned in the way they imagined it.

No battle plan ever survives contact with the enemy

(so observed Field Marshall Helmuth Carl Bernard Graf von Moltke 1800-91, Prussian General).

If you have an idea, build a product or service and try to sell it, all in the way you first imagined, you will probably fail. Much of what you imagined might happen won't happen. Such is life.

A better approach is to break down your idea by asking, "what am I assuming will be true?" and therefore, "what do I need to prove?" From that comes the most important question, "what is the cheapest possible way for me to prove my assumption to be true or false"?

Prove first the customer assumptions

There is a logical order on which to test these assumptions. Start with the assumptions that are closest to the customer. What motivates your customers? Who are they? What is the pain point you are trying to solve? Do they care about the pain point? Are they willing to pay? How much? Can you describe your proposition in a way that they will react to it? How can you reach these customers?

I was at a networking event this week talking with startup founders who had already built a product but who could not answer these questions. Sometimes it was because they were solving a problem that they had personally, so therefore they thought the rest of the world would also want it solved (sometimes true, sometimes not). Others had a passion for technology and had built some cool tech without really understanding to take it to market. Both of these situations made me feel uneasy. I always want to start with the customer and users first.

(By the way, customer = person who pays you, user = person who uses the product. Sometimes they're different, just think of Facebook for example).

I would urge any entrepreneur starting out to ask first, "what am I trying to prove?"

Break down this into stages...

  1. Prove that the problem exists
  2. Prove that there are customers who care
  3. Prove that you have a proposition and message that responds to the demand
  4. Prove that you can deliver a service or product that they want to buy
  5. Prove how you can reach your customers economically
  6. Prove what overheads are ended to service your customers
  7. Prove that your unit economics work
  8. Prove that your partnerships and sales models can work
  9. Prove that you can retain and grow customers

That's just a taster of some of the questions to ask. The headlines.

Under each can be further detail. Depending on the business model there will be additional questions to ask.

Do you think this is a good idea?

I'm often asked for my opinion on whether I think a business idea is a good one.

My opinion, however interesting is not important. What is important is customer opinions.

When I meet an entrepreneur, if they have a bold vision and they can explain to me what their assumptions are and how they will test them, I have more certainty that they will succeed.

The important question therefore is; What do you need to prove first to know that your idea has potential?

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