Saturday Morning - Experiments

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!