We’ve all heard the joke about what happens when you assume. If you haven’t heard it, consider yourself lucky… Actually, your luck just ran out because I’m going to explain it anyway. To assume is to make an ass out of you (u) and me. It’s a corny joke, complete with bad grammar. But it lingers because it’s not wrong.
While we tend to think of assumptions-led mistakes as applying to interpersonal relationships, founders of startups can face what I like to call an assumptions trap. The assumptions trap is when you’ve moved fast and built and marketed something that isn’t sticking with customers, because it was built on incorrect assumptions about their needs, how they live their lives, their willingness or ability to pay, or another critical element of the product.
It’s so easy when you’re boot-strapping or seeing your cash run down to try and make shortcuts to get a product in the market. After all, we’re told to “build fast and fail” and “be scrappy.”
But there’s a way to protect that investment while building confidence that you’re spending money on the right things.
Here’s what startup assumptions can look like:
- “I am the customer so I know what the customer wants.”
- “We’ve used competitive products and we know what’s broken, so people will use our product if we build it.”
- “If we make something good, people will just find it and start using it.”
I’ve worked with dozens of startups over the years as an adviser and co-founder, and I’ve yet to meet a startup (including my own) that hasn’t stumbled on this trap.
What makes assumptions so dangerous to early-stage startups is that they can consume a disproportionate amount of our resources… time, money, energy. And the more we invest behind our assumptions, the harder it is to admit they’re not accurate.
Say, for instance, you believe you know what your MVP should look like. You hire a team to build out the technology. You take it to customers and… they don’t use it. You’ve already spent a lot of money and emotional energy on this product, so it’s easier to think that the customers just don’t understand it (it’s a marketing or sales problem) than to acknowledge that you may have built the wrong thing (a product problem).
Of course, the joy of the assumptions trap is that it can catch you in any part of the business. You may well have built the right thing and yet customers don’t know about it (that is a marketing problem). Or, they may know about it but not be able or interested in the payment mechanism you built in (maybe they want to pay cash and you only take cards, they want to pay in a currency you don’t support, or they need a tax report you don’t provide).
You’ll make wiser use of your money if you get honest with yourself about what assumptions you’re making, then find small and easy ways to test those assumptions.
There are three steps to breaking the assumptions trap:
- Hold an assumptions brainstorm
- Identify the assumptions most likely to torpedo your product if you got them wrong
- Design small, cheap and fast experiments to test those assumptions, in order of priority
Hold an assumptions brainstorm
Gather your team and advisers for a couple of hours. Your goal: write down every single element of the business and product that is an assumption, not a fact. I find that using a customer journey map (awareness, first purchase, first usage, subsequent purchases, advocating to friends, etc.) can be a great way to structure this and ensure you’re not missing assumptions. But any way you want to approach it is great. The only hard and fast rule is to be really honest with yourself about what’s an assumption versus a fact. If two people disagree or you’re not sure, mark it an assumption.
When I worked with a startup in the fashion space targeting a specific, historically underserved demographic of women, the founders initially made an assumption that this group of women liked to have products customized for them. They had a series of other assumptions as well, including about how impactful word-of-mouth marketing would be with this community that tended to use online forums for sharing tips.
When we ran the assumptions brainstorm, both of these things came up as potential assumptions.
Identify the assumptions most likely to torpedo your product or business
That leads us to the second step. Once you have listed all your assumptions, consider their importance. Some assumptions, if wrong, won’t significantly impact your success. While for others, you could find yourself investing in a product that people won’t love or buy.
That was exactly the case with my fashion friends. Our big assumption, that these underserved customers wanted custom products, would require investment. But what if they didn’t? If we’d gotten that wrong, it would be detrimental to our business.
As you look over your assumptions, ask this question: If we got this assumption wrong, what would be the impact on our business? If the answer is anything from “it could derail it” to “it would cost us a lot,” rank it urgent to test.
Design small, cheap and fast experiments to test your assumptions
Once you have your list of assumptions, challenge yourself to test them without writing a single line of code or investing in big product development. You can learn a lot without spending much money.
For instance, for the fashion startup, we created a pop up retail space where we did the opposite of our assumption: we grabbed products that were already made and specifically not customized for this cohort. Then we invited in a few of our target customers and trailed them while they shopped. We didn’t ask a thing except that they talked out loud to us as they walked the store. Over and over again, the women exclaimed in delight as they saw the clothes: the resounding sentiment was joy that the clothes had not been customized for them. It turns out what they wanted was to fit in more than stand out. But, we’d never have known this if we hadn’t questioned our assumption and run a simple test.
This is what being scrappy really looks like and how to build fast and fail. It’s about being brave enough to question your assumptions, then using ingenuity rather than cash to test something out and gain confidence.
So, please, please, avoid the assumptions trap with these three steps. If we’re lucky, we may even sunset that awful joke as well.
