Your First Startup Experiment
Your First Startup Experiment
About the Book
How many pairs of shoes did you buy online in the nineties?
In 1998, UK born film-school grad Nick Swinmurn was scouring the Bay Area for a pair of Airwalks, but couldn't seem to find the right size and style. Yet he knew most consumers didn't buy much of anything online. Especially shoes, which are very personal. The assumption that consumers would actually buy shoes online needed to be tested.
Swinmurn began by putting up photos of shoes from local shoe stores on a website to gauge demand. When someone ordered a pair online, he bounced back to his local shoe store, bought it, and shipped it out at a slight loss.
Even though he lost a bit of cash up front, Zappos won out in the long run. Instead of investing in technology and inventory, Zappos answered the single most important question: will consumers accept the online distribution channel for shoes? And they did. To the tune of 1.9 bln USD, when Amazon acquired Zappos ten years after it was founded.
Lots of recent converts to Lean Startup think that the main thing you need to be running a lean startup is a minimum viable product (MVP). Yet annoyingly, if you start your startup by immediately building an MVP and skimp on formulating a clear hypothesis, you're not already following the lean startup process from the get-go. You're just building a beta product, and fooling yourself with buzzwords.
What's the difference between a Lean Startup talker and a Lean Startup doer?
Experiments. Actually running them.
From the start.
Before you do anything else. Including writing a line of code.
The most common challenge founders have with Lean Startup is getting started on that first experiment. Figuring out what's actually worth testing. And then getting out there. Interviewing prospects.
Without running experiments and learning systematically, you pretty much guarantee your product's mediocrity. You're stuck with the same checklists, tools, and best practices which your competitors are already using. Not only that, Lean Startup gives you the tools to test what matters the most for a new product: the market and the marketing.
If you are just getting started as a founder, and you're not sure how to apply the critical Lean Startup skill of testing, this book is for you. The book aims to help you, as a startup founder, get started on your first experiment. When you've read the book, you'll discover how to:
- identify the riskiest assumption in your business idea
- formulate a hypothesis which tests that assumption
- choose a metric the captures the essence of that risk, and establish a signpost value
- practice a customer development interview
- learn simple techniques to keep track of your experimentation
You'll see case studies of how this approach worked at a number of successful tech companies today, back when they were still startups.
Who knows, maybe you'll even become the next Nick Swinmurn.
About the Author
Reader Testimonials
Atakan
Designer of children's products
Just what I needed. Thank you!
Table of Contents
-
Business plans are broken…
- Postpone until certainty of success?
-
Why market testing velocity is a success secret hidden in plain sight
- Why you always start with a vision
- Choose your canvas
-
Why your riskiest assumption is a great place to start
- Let’s look at AirBnB, to see why risky assumptions matter in practice
- Proving the risky demand side assumption (as they were ignored)
- Proving the supply side (as they were ridiculed)
- Then AirBnB were attacked as they drew attention scaling up
- Finally, they built monuments to AirBnB.
- Key Takeaways
-
How to identify your riskiest assumption
- With new products, your primary goal is to manage your risks
- 1. Intuition
- 2. Who is the customer and does the customer actually have problem you think?
- 3. Analogs
- 4. Antilogs (or Picnic in the Graveyard)
- 5. Risk Scorecard
- 6. Pre-Mortem
- 7. My “ace in the sleeve” questions
- 8. Talk to industry experts
- 9. Red team, Blue team
- What you are after
-
How to track your assumptions
- Economic impact of risk factors
- Approach 1: Tracking risk factors in spreadsheet
- Approach 2: Business Modelling using a canvas tool
- Approach 3: Going even wider doesn’t make sense at an early stage
- Approach 4: The most important boxes according to published research
- It doesn’t matter where you keep track of assumptions as long as you do
- Key takeaways
- Riskiest Assumption Test (RAT)
- How to construct your test backlog
-
How to verify your assumptions
- Start With Assumptions About Your Market
- Implicit Assumptions
-
How to test one specific hypothesis
- Aim For Financial Significance With Pre-testing
- The Painful Suck Of False Positives
- Test One Assumption At A Time
- How Much Does One Spend?
- How Many Experiments Should You Run?
- When Not to Test
-
Why customer outcome discovery trumps product discovery
- When do you know you have a useful outcome?
- 1. A Specific Person, Company, or Role in a Narrow Market Segment
- 2. Their success metric
- 3. No side effects
- 4. Easy to execute or confirm
- Case Study
- What if my releases require Herculean efforts?
- Why discovering outcomes first matters even more than discovering product
- Key Takeaways
-
Why founder-market fit helps mitigate your risk
- Hence the importance of “founder-market fit”
- Strongly tied to how the founders expect to acquire customers
- High growth markets will buoy up the business
- Founder core competencies are surprisingly a strategic decision
- What about industry outsiders as successful founders?
- Summary
- Key Takeaways
-
Epilogue: why minimum viable products are how to continue testing
- A minimum viable product enables you to release earlier
- Examples
-
Case Studies
- A Marketing Experiment: The content upgrade
-
Take action now
- Key takeaways
-
Additional resources
- Books
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