The 20 Reasons Startups Fail
Build Your Startup Like a Serial Entrepreneur
Designing your business model
Let’s use the same example company to build a Grow-stage experiment.
Our focus in the Grow stage for the Doggy Doo shampoo company is: “What is the repeatable scalable process for creating paying customers?” At this point, we have honed in on Husky owners being our target market. And we think the best way to reach them where they are hanging out is by doing pop-up shops in the dog parks.
The hypothesis here is: “If I set up a pop-up shop near the Washington Park dog park, from 4pm to 7pm, then I will sell 15 bottles of Doggy Doo shampoo.” Again, we have the same three components of a good hypothesis. The repeatable action is setting up a pop-up shop in Washington Park. The metric is that we need to sell 15 bottles to make one pop-up worth our time. And our expected outcome is selling bottles of Doggy Doo.
The action steps are: We need to get the city's permission to sell near the dog park. We need to create some signage for the booth. We need to set up a Square account to take the payments. And we need to run the experiment.
What were the results? We talked to 25 people who were Husky owners. We sold eight bottles of Doggy Doo. Fifteen said they wanted to try before they buy. We did sell some but just not as much as we needed to in order to validate this experiment.
What did we find out about how we are learning? I found that I need to pay attention to the weather, as going during a rainy time meant fewer potential customers. It took longer than expected to get permits because of a lot of back and forth with government officials.
In terms of the results, I learned from my potential customers that my bottles actually might be too big. I need to have a smaller sample size for less money to give people an option to try before they buy.
When you are in the Grow stage, you should definitely be running multiple experiments in tandem to get the results that you need. So in conjunction with that experiment, I also ran this one, which assumed that local Husky clubs want to partner with me. The hypothesis was: “If I email five local Husky clubs/meetups with a demo as an example of my product, three will schedule a meeting with me.”
The detailed action steps here are to research local Husky clubs and meetups, craft an email outlining my goals, and send the email with a demo video of the product attached.
I reached out to five meetup groups. Four of them actually scheduled a meeting, and one has not yet responded. The signal is strong to keep moving forward on this path. Everyone I spoke to was very interested and said cleaning Huskies is a big problem. I got that feedback in the responses to the emails. And the demo video works really well. A few people commented on it being helpful to understand exactly how my product works and what makes it different from the competitors.
However, because the clubs and meetups are not very big, that method of reaching out is perhaps not best long-term. I can still take what I learned from this experiment to continue to craft experiments that will help me start to build out the repeatable, scalable process for creating customers.