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EXPERIMENTS AND ASSUMPTIONS
EXPERIMENTS
Idea 1
Idea 1b
Idea 1c
Idea 2
Idea 2a
Idea 2b Next big
idea
Assumption 1
Assumption 2
Assumption 3
Assumption 4
Assumption 5
Assumption 6
Assumption 7
HEART BREAKING ASSUMPTIONS?
No customer problem
ASSUMPTION: CUSTOMERS WILL REVIEW AND UPLOAD DATA ON STARTUPS AND PRIVATE COMPANIES
CUSTOMER PROBLEM INTERVIEW (1 TO 4 HRS)
1. Interview 5 to 20 customers 2. The Mom Test 3. Never ask opinions on your idea 4. Ask about past behaviour
Do you think it’s a good idea?
Do you think it’s a good idea?
How do you currently solve your problem?
How do you currently solve your problem?
Talk me through theLast time you had this problem?
Talk me through theLast time you had this problem?
How much would you pay for this?
How much would you pay for this?
How much does the problem cost you?
How much does the problem cost you?
Is there a budgetfor it?
Is there a budgetfor it?
Series1
0 10 20 30 40 50 60 70 80 90 100
1 dayCustomerProblem Interviews
90 days
DO YOU WANT TO WASTE 89 DAYS?
HOW TO FIND CUSTOMERS
1. Friends and family (Facebook, Linkedin, Email) 2. Shopping malls 3. Bored people (Waiting in lines) 4. Cold calling (LinkedIn, Facebook, Online search)5. Lead Generation (Landing Page, OLX, GumTree,
Google Ads, Facebook Ads)
Assumption Learning Task Expected Result Actual Result Decision
Experi
ment 1
Experi
ment 2
Entrepreneurs attend seminars
Interview 10 entrepreneurs
7 / 10
entrepreneurs
attend seminars
1 / 10 entrepreneurs
attended seminars,
but all spent on
websites, consulting
and branding
Tweak:
Add websites,
consulting and
branding
Early stage
entrepreneurs Startup seminar
HEART BREAKING ASSUMPTIONS?
No customer problem
No customer interest
CUSTOMER INTEREST ASSUMPTION: MUSICIAN’S WILL WANT TO SELL THEIR MUSIC USING DYNAMIC PRICING
0 /1700
CUSTOMER INTEREST ASSUMPTIONS
1. Sales MVP Create a sales presentation and pitch to 5 to 20 customers
2. Landing page MVP Set up a landing page and measure how many customers sign up or click the buy button
3. Explainer video / Crowd funding Set up a video explain the product or service and measure pre-orders
4. Startup concierge Offer the product or service using a highly resource solution not built to scale
Assumption Learning Task Expected Result Actual Result Decision
Experi
ment 1
Experi
ment 2
Musician's want to sell goods using dynamic pricing
Pitch product to 20 musician’s
5 / 20 musician’s
will sign up 0 / 20 signed up Pivot:
New idea
Musician’sZillionears
Series1
0 50 100 150 200 250 300 350 400
1 day
365 days
DO YOU WANT TO WASTE 365 DAYS?
HEART BREAKING ASSUMPTIONS?
No customer problem
No customer interest
Not enough
customers
MARKET SIZE ASSUMPTION: I WILL BE ABLE TO BUILD R100 MILLION BUSINESS
MARKET SIZE ASSUMPTIONS
1. Find market research statistics Use Google to find industry statistics or industry reports
2. Search traffic volume Use Google Keyword Planner to estimate search traffic volume
3. Facebook users with interest Use Facebook Ads to determine number of people with interest
4. Traffic to competitors websites Use Alexa.com and Compete.com to determine competitors web traffic
Assumption Learning Task Expected Result Actual Result Decision
Experi
ment 1
Experi
ment 2
Market is large enough to build
R100 million business
Research market size R200 million R10 million Get out of the
business
Rowers / Clubs
Macarbi Racing
Shells
Series1
0 10 20 30 40 50 60 70 80 90 100
1 day
180 days
DO YOU WANT TO WASTE 180 DAYS?
HEART BREAKING ASSUMPTIONS?
No customer problem
No customer interest
Not enough
customers
Can’t attract
customer affordably
CUSTOMER ACQUISITION ASSUMPTIONS: GROUPSPACES COULD NEVER ATTRACT CUSTOMERS AT A LOW ENOUGH COST TO SCALE
CUSTOMER ACQUISITION ASSUMPTIONS
1. Expert interviews Interview 1 to 3 people who are familiar with your industries sales and marketing methods. Suggested questions: What is the most effective customer acquisition strategy? How do the industry leaders currently acquire customers? What is the estimated CAC? What is the normal sales cycle?
2. Test and measure customer acquisition strategies Personal sales, blogs, PR, SEO, referrals, affiliates links, Google Adwords, Social media, Email, Events, Other relevant marketing strategies
Series1
0 500 1000 1500 2000 2500 3000
350 days
2500 days
DO YOU WANT TO WASTE 180 DAYS?
HEART BREAKING ASSUMPTIONS?
No customer problem
No customer interest
Not enough
customers
Can’t attract
customer affordably
Can’t make
money
FINANCIAL ASSUMPTIONS: I CAN MAKE $1 MILLION PER YEAR
75 cents per chain
$ 1 000 000
= 1 333 334 units
Series1
0 50 100 150 200 250 300 350 400
15 min
700 days
DO YOU WANT TO WASTE 700 DAYS?
FINANCIAL ASSUMPTIONS
1. Calculate predicted profits Price x predicted sales x net profit = Predicted net profit
2. Interview revenue experts Interview 3 people familiar with your industries financial models
3. Build an assumptions based financial model Create a financial model that highlights all key assumptions
4. Validate key financial assumptions Create a minimum viable business to validate key assumptions in the financial model
Assumption Learning Task Expected Result Actual Result Decision
Experi
ment 1
Experi
ment 2
Can build a $ 1 million business
Calculate potential profit
$1 million $50 000 Pivot: Find a new
product to sell
Mass MarketKey Chain Condoms
HEART BREAKING ASSUMPTIONS?
No customer problem
No customer interest
Not enough
customers
Can’t attract
customer affordably
Can’t make
money
Can’t make the product
PRODUCTION ASSUMPTIONS: I CAN PRODUCE THE PRODUCT
PRODUCTION ASSUMPTIONS
1. Interviews Interview 1 to 3 people familiar with your industries production methods. Suggestion questions: Can my product be produced? What will it cost to produce? How long will it take to produce?
2. Create a product plan Create a product plan to estimate cost and time
3. Develop your MVP / Prototype Create an MVP or prototype and measure your production metrics
Assumption Learning Task Expected Result Actual Result Decision
Experi
ment 1
Experi
ment 2
I can attract a developer to my
startup
Talk to 20 developers
At least 3 will be
interested 0 / 20 interested Pivot: Find a new idea
or raise funds
Web App
Developer
Nouncer
Series1
0 50 100 150 200 250 300 350 400
20 days
360 days
DO YOU WANT TO WASTE 360 DAYS?
HEART BREAKING ASSUMPTIONS?
No customer problem
No customer interest
Not enough
customers
Can’t attract
customer affordably
Can’t make
money
Can’t make the product
Can’t attract
resources
PRODUCTION ASSUMPTIONS: WE WILL BE ABLE TO RAISE FUNDING
KEY RESOURCE ASSUMPTIONS
1. Interview Interview people that have previously acquired your key resources
2. Quotations Get quotations and timelines to acquire they key resources
3. Acquire resources for pilot Acquire key resources to test the time and cost
Series1
0 50 100 150 200 250 300 350 400
2 days
120 days
DO YOU WANT TO WASTE 118 DAYS?
10:30 – 13:00 GREAT IDEA? PROVE IT!
Idea 1
Idea 1b
Idea 1c
Idea 2
Idea 2a
Idea 2b Next big
idea
Assumption 1
Assumption 2
Assumption 3
Assumption 4
Assumption 5
Assumption 6
Assumption 7
Aim to kill your business idea quickly so you can find the idea that will WORK!
