10 Experiments to Test Your Startup Hypothesis

When it comes to using the 'lean startup' model, you need to run experiments to ensure your hypotheses are correct.

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By David Teten

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You know that a new idea has gained dominance when it becomes practically a cliché.

This is what I've seen happen with the "lean startup," a philosophy of viewing your startup as a scientific experiment in search of a business model. This concept began as a new idea and then became so popular people now consider it common sense. As the partner at VC firm ff Venture Capital, I am one of those people who regularly advises our portfolio companies to think creatively about how to test their operating assumptions.

But the challenge is: What experiments can you run to test your hypotheses? Below are 10. To structure your experiments, I suggest using the Javelin Experiment Board.

Related: How to Grow Your Company Lean

Step I: Explore the problem and the market

1. Blog publicly about what you're doing. This helps you to get qualitative, personal feedback, which you need to inform quantitative feedback (i.e measurable outcomes and metrics) you gather later. Also, you should include face-to-face interviews with customers (read these quick tips for effective customer interviews).

2. Ask open questions on Quora and other online discussion tools. Listen to what people have to say. Many consumers want to provide feedback, but they just need to be asked. Jump on a Q&A site like Quora or forums like Reddit or one specific to your industry and start asking questions. You can begin with a broad inquiry like, "How do people solve this problem…." For example, "What CRM tools are used by venture capital and private equity funds?" This will surface both competitors and customers.

3. Create surveys and experiment with monetary and non-monetary incentives. Sending a questionnaire to your customer base is a great way to elicit feedback and discover needs.

For instance, try evaluating response an incentive like: "$100 off our product when it first hits the market." If people are eager to apply that discount to a product that doesn't even exist yet, it's further validation of customer demand.

4. Collect pre-orders. Crowdfunding platforms like Indiegogo and Kickstarter have made it much easier to measure market demand for a product or service. By describing the product's features and offering it to the masses, entrepreneurs can get an idea of how the market outside of the crowdfunding platform would respond. Also, the instantaneous feedback and questions can help startups uncover potential issues and allow them to correct them before scaling.

5. Run test ads. Utilize Google AdWords, Yahoo!, Bing and other platforms by creating ads that take viewers to a page soliciting email signups and possibly pre-orders. Test which ads are most effective. (For instance, Tim Ferriss titled his book based on Adwords conversion rates.).

And don't just collect emails. Try to also collect data in the form of a mini survey. I suggest checking out QuickMVP, an all-in-one tool for building launch pages, driving traffic through Google AdWords and analyzing customer demand.

Related: Prove Your Business Idea Will Succeed

Step II: Explore the solution

6. Test multiple iterations of your site. Design and user experience definitely play a role in how the consumer views your startup and its offerings. So experiment with it. Launchrock is a great site for building launch pages and analyzing user data. Or try experimenting with different A/B testing campaigns using Optimizely. Here are examples of what makes a viral landing page.

7. Talk with real users of your beta product. Beta testers can potentially be your lifeline when launching a new product. To get people interested in testing out your startup, check out websites like Betali.st, Erli Bird and StartupLi.st, among others.

Step III: Market

8. Analyze site usage. Testing what words get the most hits can give you insight into the target market. Drill down in Google Analytics, taking advantage of goal tracking, demographic information, interest segmentation and cohort analytics.

9. Analyze which marketing campaigns get the most traction. Just as you need to understand your end users, it's also important to understand the behavior of the influencers who touch your end users. There are several social-media analysis tools out there that can help you with this, including Copromote and Bottlenose.

10. Test referral programs with monetary and non-monetary incentives. Referral programs can be a great way to acquire new customers, while keeping current customers happy.

A famous example of a successful referral program is Dropbox. The company was smart and used a two-sided incentive for sharing. The person who signs up for Dropbox through a referral link gets more space than through a normal sign up, and the referrer gets additional space as well.

Related: How to Know If You're Really Running Lean

David Teten

Managing Partner, HOF Capital

David Teten is a managing partner with HOF Capital, an international venture capital fund backed by limited partners across 33 countries. He is also founder of Harvard Business School Alumni Angels of NY, one of the largest angel networks on the East Coast. Teten holds a Harvard MBA and Yale BA.

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