Evidence & Entrepreneurship

So many entrepreneurs still jump straight into building before they validate their business model, it's a costly mistake to make, especially in the current climate. I am an engineer, but don't get carried away with developing. Focus on Customer Validation, not company building. Do it in the correct order, otherwise you're building on a house of cards.

Is this something people need? Yes or No? Quick iterative process. Land on something golden way quicker. Evidence in Entrepreneurship is about having a solid understanding of the tools available to entrepreneurs to receive early customer feedback and acquiring new methodologies for data collection and experimentation. This will lead to hypothesis-driven entrepreneurship and distinguish its key elements from other forms of entrepreneurship.

Ideas are untested assumptions unless you have decades in an industry. You really have no idea what the market is like. This wiki is about going out early and getting feedback and incorporating that into your beliefs. Hypothesis testing is the scientific approach to Entrepreneurship; you can be proven wrong with data. These are testable, to validate or falsify your hypothesis.

E.g. We may believe that:

Start with something like "we believe certain people or certain action leads to a certain outcome or cause". "people using plastic leads to climate change" etc. You want to narrow this down, so you can come up with new hypotheses. Assumptions include:

• We believe [these people] do [this action].
• We believe [these people] (will) do [this action] for [this reason].
• We believe that [these people] (will) do [this behavior] with [this outcome/impact].

Can we test and measure these assumptions?

Again, start with the target group, or action you want to investigate, and form hypotheses around your idea or solution. Maybe people have had the idea before, but it may not have been well implemented. This can all be proven:

• We believe [these people] will use [this product or service].
• We believe [these people] have trouble with [this product or service].
• We believe [this intervention] will [change these people's actions].
• We believe [this intervention] will [change these people's actions] for [this reason].
• We believe by [doing this] for [these people] will achieve [this outcome/impact].
• We believe [these people] need [this product or service feature] because of [this outcome].

Use methods and design experiments and metrics that tell you when you are right or wrong. You need to make sure the design of the hypothesis fits a certain data collection method: observation, experiments, interviews etc. How to really narrow it down:

The key is being super specific. "At least X% of Y will Z".

• X: How big a slice, what percentage, of your addressable market can you capture?
• Y: What is your addressable market?
• Z: How and exactly to what extent will the target market engage with your product?

The next step is to make it small, local and representative with skin in the game. "skin in the game" means your customer shows you that they are willing to purchase your product - a real interest.

Key here to read chapters 4 & 5 of "The Right It" by Alberto Savoia.

This is all about iteration. When we realize we were wrong, we bring in a new hypothesis and test that instead. Then we begin the process again. As an entrepreneur you would learn that our hypothesis is falsified then we would create new hypothesis and continue learning based on this iterative principle and get closer and closer to the actual problem and a solution that matches it. Then you develop pretotype with that solution feature and it works. That is where you want to be. And people are really putting in skin in the game. That is what will happen in practice. Takes 10, maybe 20 iterations.

How to Generate 'Good' Data

What is the easiest way to generate good enough data? There are two approaches; the perfectionist way and the pragmatist way. It is best to:

• Be Creative
• Be Safe (don't risk your health to collect data)
• Be Fast
• Be Inexpensive
• Be Scrappy

Getting good enough data is not great but better than no data (be aware of data limitations). As long as you are conscious of the limitations of your data, it is good data that you can use. As soon as you see repetition, then that is good enough to draw a conclusion.

Ethnography for Data Collection

Founders are always on the job. Experience the existing customer experience. Go through sales cycle without completing it, meet potential interviewees/clients while doing it. Learn about "day in the life" of customer and Conduct Expert/preferred witness interviews. Stealth mode? Do no harm!

For example, if you were selling cars, why not go through a car sales pitch? Or a house viewing if you're interested in a house business. If they are alone, you can ask questions and have a customer interview right there.