Testing Your Hypotheses when Building a Startup

Key strategies to prove or disprove your assumptions before diving into an idea

I was speaking with an entrepreneur recently about how to test some of their key assumptions. There is a lot you don’t know when starting a business, and there are many assumptions made to get going with an idea. One tactic I have found helpful is to continually test hypotheses, learn, and move quickly to test the next hypothesis. Constantly proving/disproving hypotheses provides very tactical steps to move forward. Here are a few ideas on how to execute these tests.

Define the Critical Hypotheses to Test

Not all assumptions are created equal. You can quickly use modeling/analysis to diagnose which assumptions are most critical and need testing (i.e. which ones drive the biggest revenue/cost in your model or are most sensitive to a range of assumptions). Then be laser focused on that one test. For example, should you build your product on platform A (old, established market) vs. platform B (newer, growing, but smaller market)? You can start with a quick analysis on opportunity vs. cost/time to execute on platform A vs. platform B and evaluate the pros/cons. From that, develop an initial hypothesis that platform A is better at this time.

Design Tests

As you develop a hypothesis to test, determine how you can test that specific hypothesis in an unbiased way. Who is involved, what are you trying to prove, what results do you expect, how will you get feedback, etc. Then set a process, timeframe, and measurable outcomes to learn from the test. For example, plan a one month sprint to build on both platforms, measuring effectiveness based on speed/reliability and customer feedback.

Evaluate Results and Implications

After you have conducted your test, what did you learn? Are the results conclusive? What should you do next? For example, platform A graded out much higher on speed/reliability and stronger customer feedback, so let’s now define and test the next hypothesis on platform A (i.e. which components are most critical on platform A).

The main takeaway is to continuously be testing, learning, and revising your approach. One of the key advantages startups have is their ability to be nimble and move quickly. The more open you are to learn and react, the more likely you can pivot into a great solution. Even a hypothesis you prove wrong is valuable information!