How assumptions made an ass out of my startup

When we started Nimbus Health, we knew we were making some assumptions, but there were a few things we knew too:

  1. A launch customer is ready to use our product
  2. We know how much they’ll pay
  3. There are 50+ companies just like our first customer
  4. Our first customer is influential and will refer us to those customers

Of course, each of these things that we “knew”, turned out to be assumptions as well. Bonus! They were all wrong.

  1. Our customer was ready to use the product, but it wouldn’t matter.  There was another decision maker involved (their customers) who would make the final call.  Almost none of them did.
  2. “Our pricing isn’t just cheaper than your existing solution, it’s easier to understand!” They didn’t want cheaper or “easier to understand” – they wanted “easier to pass onto their clients.”
  3. That the 50+ other companies “understood” the pain we were solving was true.  That they felt is so badly they’d be willing to pay for a solution was not.
  4. Referrals, HA! Half the other companies are competitors and those that aren’t don’t really get along that well anyway.

So, wtf? How are we going to be able to do anything if even the things we know to be true, turn out to be false? Enter the Lean Canvas.

Lean Canvas = Assumption Destruction

Lean Canvas is technically a morphing of Alexander Osterwalder’s Business Model Canvas by Ash Mauyra, but what really matters is that it is a single sheet of paper that makes it obvious which of our assumptions are wrong.

I haven’t filled one of these out before, so we’ll be learning together. Here’s how I’m thinking it’s going to work (btw, you should follow along fill one out for your business too):

  1. We fill out each of the section of the canvas
  2. Recognize that every single thing we’ve written down is a hypothesis
  3. Call out each of the experiments we’re doing to test these hypotheses
  4. Iterate on our canvas until we’ve got a business model we’d bet our mother’s retirement on

Like you, I don’t have a lot of time to waste on documentation, so I didn’t.  Here’s what I come up with in half an hour for Bounce:

Quick, dirty and wrong, but at least we _know_ it’s wrong.

If you want to see how I went about filling it out:

Fwiw, the most helpful thing so far was to really call out my problem statement. That has really helped to drive a lot of clarity into my customer value proposition. Now I’m looking forward to coming up with experiments to test these hypotheses.

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7 comments

  1. Tristan Kromer

    Nice post.
    Your phrasing makes it sounds like Ash created the Business Model Canvas. Might want to explicitly credit the author Alexander Osterwalder.

  2. Hakon

    Great post as usual. Thank for sharing!

    I’ve been working with the Osterwalder canvas for a while now and there may be some value in also filling that one out as well. It explicitly calls out partnerships, customer expectations (or relationships), and a few other things worth thinking about and validating.

    Some feedback:

    Key metrics: In Good to Great Jim Collins tells the story of how a single dominant metric help drive a winning strategy for Walgreen’s. I’ve found this helpful in thinking about metrics. If interested, you can read a bit about the Walgreen’s story here: http://www.anbhf.org/pdf/walgreen.pdf. Search for “profit per customer visit”.

    Unique value proposition: I see how it’s valuable, but not unique. I can set up Outlook and my iPhone to give me alerts and my TouchBase app to easily send ETA. I’m sure Bounce is better, but what will compel me to switch from the tools I already have serving this need and am comfortable with?

    Unfair advantage: Is the exposure referred to sustainable? Is it at a scale that makes a big enough difference?

    Channels: It might be useful to consider Facebook groups as well. I saw an AppSumo video where Noah Kagan and Neville Medhora show how they test ideas and Facebook groups seemed to work well for them. A lot of the customer segments listed seem likely to be part of Facebook groups associated with what you’ve used to define the segments.

    Hope this is helpful. I look forward to the next post!

  3. bluelori

    Great post. I think there is another existing alternative, that may be especially important in the “chronically late” customer segment – not thinking about how long it will take to get somewhere. I’m calling that out as different because not thinking about time to destination or guessing wrong about it is a different situation from getting distracted and needing a reminder.

    • Justin Wilcox

      But once an assumption has been validated…it’s no longer an assumption – it’s been destructioned! :)

  4. David Chou

    Great post. I’ve been meaning to give lean canvas a try. Having someone else to fumble through with the first go around really helps me learn. Can’t wait for the following posts. Just filling out the canvas knowing that your assumptions are wrong is both reassuring and unsettling at the same time.

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