It’s a question which internet entrepreneurs perhaps don’t ask themselves often enough.
Easy to say of course, but let’s be clear that it’s entirely understandable entrepreneurs don’t ask this question enough.
To branch out on your own to go and build the worlds ‘next big thing’ whether for consumer users or a fantastic thingy-wotsit for enterprise customers, you need to not only dream but suspend your realism-gland to actually take the risk to invest your entire life into acheiving what often feels like the impossible.
However there ARE actually things you can do to de-risk your start-up and increase the likelihood of your decisions about the nature of your service and the functionality of your shiny new thing, being right, not wrong.
Getting Others To Eat Your Dogfood (before you invest $500,000 in dog cans, entrails, label design and advertising)
I’ve learned the hard way that building the wrong thing is virtually inevitable unless you actively embrace a process against doing so. Once we got lucky and got it right, another time we worked out what we should have been building but by that time when we realised the error we’d been at it a while.
In summary, without testing ASSUMPTIONS you risk having already burned through a bunch of cash and being in a weaker position to a) get more cash and b) pivot, even if you do finally work out what is wrong with your product.
Don’t feel bad, even experienced entrepreneurs make the mistake of just accepting their own ASSUMPTIONS. Just look at Color (although at least they don’t have much chance of burning through all their cash – yet – as they’re sitting on $40m). Most start-ups -especially in Europe- don’t have that luxury.
The temptation to assume a product is not getting 100,000’s of active users is to say because “it needs X functionality”. This is almost always wrong.
It analogous to when Sales people come back and say “The problem is, if it just did X we could sell it.” In my experience it is usually the sales person selling the product in the wrong way or to the wrong people.
The simplest solution to avoid this problem is that BEFORE you start building your shiny new thing is to sit down and right out all the ASSUMPTIONS you are making about your product.
Then find the quickest, dirtiest way – ANY way – to test these ASSUMPTIONS and prove them right, or not. That means even if you do it all by hand, or fake your website automation and do it manually: in other words, whatever it takes.
Imagine building a time machine. Your assumptions are:
- People want to travel in time
- People will pay for travelling in time
- People won’t be so shit-scared they will never take the leap of faith to trust your technology
Three basic assumptions. The answer is to all three “yes”, right? well, perhaps; but until you have PROVEN it you really don’t know.
So you've worked out how to build a Time Machine, but will any one actually agree to try it?
The capital expenditure of building a time machine is high, the technology significant. Be much better to find a way to test if people really want to travel in time first.
Furthermore, what other features would people expect? 100% guarantee of not re-appearing with limbs in the wrong place? What risks and worries do users want removed before they will risk using the service? What should the price point be?
How could you test these assumptions?
Maybe set up a room at CERN, advertise in person at a suitable event where people have lots of money and ask them if they will book a trial visit to come and see the Time Machine.
Clearly, I’ve chosen an absurd example – but you get the idea.
Back On Earth
What did Dropbox do to test if it had demand for it’s product? While simple it is a big technological challenge to build something across as many platforms and as seemlessly as they have.
The answer is that investors were unconvinced of the size of the pain being experienced by users doing file transfer before Dropbox existed, despite the Founder having a list of 4000 people wanting a trial (i.e. existing services were NOT easy or slick, but was this a big enough pain that users in their 100,000’s would pay for a service like Dropbox? This was an assumption and there was no proof of an answer, no even quantitative evidence).
Not being able to build the service properly without lots of time and money, the Founder created a slick video, targetted at geeks, full of in jokes, to fake a demo of what his product did. 75,000 beta sign up requests later, he had a significantly larger weight with which to argue his ASSUMPTION was correct.
We’re No Longer A Start-Up (or we have a product!)
This also applies to to new functionality, a product or division from a larger company. Indeed, any enterprise large small funded or not which is trying to build something which involves unknowns.
With a healthy step back toward reality, one wonders if Richard Branson was testing ASSUMPTIONS when he started taking pre-orders at $125,000, years before Spaceship One even took off, to fly into the earths orbit. Would he have continued if no-one signed up and paid the money?
The Dropbox example comes straight from a new book called “Lean Start-up” which was launched last month at Techcrunch Disrupt. If you’ve not read it, I would recommend it 100%. Rarely does a book appear which could literally make the difference between your start-up succeeding or failing.
Eric Ries has done a brilliant job and although the initial blurb regarding the ‘nature’ of a start-up at first seems hypothetical, he soon gets down to examples of why proving ASSUMPTIONS is all important; and finally thanks to him, I have a far easier way to explain to first-time start-ups what they should be doing, before they launch into building a time machine.
Excerpt of his book here on Techcrunch; or better, just click below and order it now.
The Lean Startup: How Constant Innovation Creates Radically Successful Businesses