When discussing Lean Startup methodologies with other entrepreneurs I’m frequently drawn back to an awesome presentation from Eric Ries’ Startup Lessons Learned Conference of 2010 by Kent Beck (Test Driven Development and Agile pioneer – http://www.justin.tv/startuplessonslearned/b/262656520 ) on how the Build-Measure-Learn loop should really be thought of as the Learn-Measure-Build loop. He draws inspiration from Test Driven Development (TDD) and it also just makes sense. You should always be starting out with what you want to learn and then think of how possibly you could measure it.
Step 1: What do you want to learn? (Learn)
What’s the most pressing thing that you need to learn about your startup idea? In common Lean-lingo, of all the assumptions that make up your current guess at your business model, which is the riskiest? Which assumption would break your business if it were not true? This usually has to do with what customers want and will pay for.
Step 2: Is that reasonably testable? (Measure)
How can you test this efficiently? Ideally cheaply and quickly. Early on in my customer discovery process I prefer phone “Problem Interviews” with potential users. If I want to sell a kitchen knife that comes with a gnome that sharpens the knife when it needs it, my test can be “I believe that 75% of people I talk to will believe that dull knives are a problem they would pay to have solved”. You can find out the answer in a series of conversations. Hopefully you structure your interview freely enough to learn other things about their cooking habits and frustrations and imagine alternate problems that they would pay to solve if your guess doesn’t work out.
To be a test it must be able to clearly fail.
Fun activity: Look up the term “null hypothesis” and see how it applies to Lean Startup.
Other examples of tests:
- When I put $24.99 on my landing page I predict a get a 50% sign up rate.
- Users will forward our link to other users an average of 7 times.
- If I show a mockup of my proposed software, 50% of users will say they would pay $19.99 a month.
Sometimes you can’t quite measure what you want so you tweak what you learn to the to what can actually be tested.
Step 3: Build (but hopefully build nothing!)
Finally engage in the minimal activity that you can get the answers to your tests. Do the easiest one!
Best to Worst options of activity
1) Have a phone conversation
2) Show a PDF mockup and get answers
3) Fake the product or service just enough to get your answer (sign-up page with price, ad tests)
4) Cobble together the product from existing stuff (or services)
5) Create a “prototype” of the product
6) Create a decently functioning version of the product
To get the answer to some questions you may have to actually build it. But that is a last resort. If not a failure – its a very expensive option in terms of your startups most valuable capital – time. So match with the risk.