The 20 Reasons Startups Fail
Build Your Startup Like a Serial Entrepreneur
Designing your business model
Let’s review a Test stage FLEX example using the doggie shampoo business again.
The Roadmap question we are focused on asking here is, “Will the customer pay you to solve the problem in this way?”
The first piece is the riskiest assumption, right? So now that we know the stage, and the focus, we can build out the riskiest assumption in this stage: “Owners of large, long-haired dogs will purchase our doggie shampoo.” This is the piece that needs to be true. And if it is not true, then we are going to have to significantly change our business and potentially go back to the Validate stage and do more work.
Our hypothesis to test to find out if that assumption is valid or invalid, is: “If I pitch Doggy Doo shampoo to the six people who gave me their contact info, then four of them will preorder.”
We cannot reiterate the three components of a good hypotheses enough: what will we do, how will we measure, and what is the result we expect. In our example, we will pitch the preorder to a defined group of people, we will measure the success or failure of this experiment against an expectation of four sales out of six potential sales, and the result is number of preorders of our product.
Next we outline our action steps: email (always say how you will reach out to be specific) the six people who gave me their contact info, explain how it works, and then have them sign up for a pre-order.
Please note that this FLEX builds directly off of the last FLEX that we ran, where we had six people give us their contact info. Likely those six people are early adopters, because we had a conversation with them and we found out that not only do they have the problem, they are not satisfied with the current solutions available. Use all the data you have gathered in past FLEXes to inform your next FLEXes. There needs to be a logical progression to your experiments.
Once we have run this experiment, we can fill in the next three boxes. Our results: three out of six people pre ordered the products. We did not quite hit our goal. Two of those six people who pre-ordered were Husky owners, and two people just did not respond.
Because we did not hit our number, we may need to rethink our target audience and our methods to make sure that we are maximizing our efforts. I emailed people on the weekend, so perhaps those emails got buried in their inbox. We learned that a few people wanted to see it in action before they bought, so perhaps we need to make a demo video to help show value to sell the product. Also we are still seeing strong signals from the Husky group, so we may need need to go back and actually really hone in on just Husky owners to see what results we get running experiments with that group.