The Startup Owner's Manual

CHAPTER 4Customer Discovery, Phase One: State Your Business Model Hypotheses

THE DIAGRAM ABOVE IS AN OVERVIEW OF PHASE 1 of customer discovery. Note that hypotheses for physical products often differ from web/mobile products. Where the hypothesis issues differ, each is described separately, physical startups in the upper, lighter-tinted row and web/mobile startup considerations in the lower, darker row. Since physical startups are presented first, readers of the web/mobile process will be referred back to start with the physical-channel section when it’s appropriate.

This phase starts by developing a rough market size estimate to size the opportunity for your new venture. Next, the rest of customer discovery uses the business model canvas to record short summaries (hypothesis briefs) of initial hypotheses about your business. The canvas provides a picture of the business model on a single page, serving as a reference for team members and a scorecard keeping track of pivots and iterations as the company’s business model changes.

The hypothesis briefs provide the detail, but remain short and to the point, with enough clarity to ensure that all team members understand their meaning. No hypothesis brief should be more than two pages, and as a rule, bullet points are far more helpful than paragraphs or even sentences. Almost every hypothesis concludes with the experiments you’ll ...