This article was written by Taylor Wescoatt, one of Seedcamp’s Experts-in-Residence. Follow Taylor on Twitter @twescoatt.
Startups are bets. “Housemates would like to have an app that helps them track expenses in a shared household.” (Splittable is a great new Seedcamp startup) The realisation of your vision is actually a whole series of these bets or hypotheses. You test them, learn, and move forward. What users like, don’t like, how much, and what they will respond to. These are beliefs that investors buy into, and it’s your job as a Founder to ultimately prove them to be true, or if not, try something else!
But when you dig into your Vision, there are a lot of underlying assumptions. What are they? Which ones do you address first? The risk of not thinking about this methodically is that you spend a long time operating under an assumption that ultimately turns out not to be true.
Here’s a helpful tool I’ve come across a few times, the Assumptions Matrix. It asks you to graph your assumptions based on how ‘Fundamental’ they are to your business and by how ‘Unknown’ they are. Imagine using a scale of 1-10 for each axis. The result, as you can see, suggests a priority of what you should be addressing first.
Naturally, you want to focus FIRST on the ones in the upper-right, this is called the Pivot Zone.
For things that are highly ‘unknown’ – how can you learn more? Talk to an expert? Get a research report? Reference competitors? Test with users? Of course, the most important things you just can’t know beforehand, that’s what makes startups ‘bets’.
For things that are ‘fundamental’ – if they turn out not to be true – what alternative approaches could you take? Imagine my CarSparkle example. If people don’t want a better way to get their car washed, I am kind of hosed. If, however, they simply don’t care about a 30-minute response time, I can change the timing model of the business, which probably alters staffing requirements.
This is a good exercise to make sure you’ve got the 30,000 feet view, at least, and can also be helpful in your day-to-day debates. It’s also a good platform to make sure people don’t get too locked into their own functional way of thinking and understand what each other are up to. Go Team!
For more Product articles, see my index at https://seedcamp.com/eir-product-articles/