Two Sides of the Same Coin: Assumptions and Risk

Now that you have your customer personas, it's essential to address the elephant in the room; everything you just put into that persona was a guess. It might be a good guess, but it's still unproven. We will call these guesses or preconceived notions assumptions. Assumptions left unproven present a risk to our company because our business's viability and ability to build and sell the product depend on them being true. And if they're untrue, we must shift our customer or product.

It's important to acknowledge that the entire endeavor of starting a new company has risks. After all, we're assuming that we'll be able to build the product, that people will use the product, that we'll be able to make money and be profitable, etc.

Rather than becoming overwhelmed by all the risks associated with starting a company, get ready to embrace a questioning mindset! Following the steps in this handbook, you'll adopt a systematic approach to identifying, prioritizing, and testing assumptions to reduce the associated risks.

...“strong opinions, weakly held.” Allow your intuition to guide you to a conclusion, no matter how imperfect — this is the “strong opinion” part. Then –and this is the “weakly held” part– prove yourself wrong. Engage in creative doubt. Look for information that doesn’t fit, or indicators that pointing in an entirely different direction. Eventually your intuition will kick in and a new hypothesis will emerge out of the rubble, ready to be ruthlessly torn apart once again. You will be surprised by how quickly the sequence of faulty forecasts will deliver you to a useful result.” - Stanford Professor and Technology Forecaster, Paul Saffo

Your Assumptions

• The most fundamental assumptions are those regarding the customer's needs, problems, or pain points (detailed in your customer persona). Startups often fail because there is no market need or they cannot execute. Does the customer care about this problem? Is it really painful for the customer? Or, if not painful, is it at least a frequent need? Are they affected enough by the problem that they're looking for a solution?
• If you have confirmed the questions around the customer's pain points, the next assumption founders have is that the customer's current solutions are insufficient. Is their current solution really not working? If you're planning to go up against a significant existing player, you'll have to make sure you're 10x better in some way (Peter Thiel's Zero to One video). In addition to talking to customers about their current solutions in Step 4: Industry, you will be doing your research on competitors.
• The next core assumption is around the business (getting paid). Does the customer have the money or want to pay to solve this problem? There will be no business if no one is willing to pay. I know some of you will say, "But what about Facebook? They didn't make any money for almost four years." If your business model is advertising revenue, you will need to make sure you have a substantial and engaged user base (millions). It could also work if you intend to stay very small, but it involves a whole host of other challenges because then the real customers are the advertisers, not the readers or users.
• To interview, sell to, and serve your customers, you have to be able to reach them. Will you be able to find these customers?

Future Assumptions

In future steps in this handbook, we'll also be addressing these assumptions:

• Can I solve the customer's problem?
• Are there enough people interested in my solution?
• Can I scale my solution?
• Is my business financially sustainable?
• Can I grow it into something bigger?