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Home > Founder to Founder > EP 80: PHILHSC On Why You Should Revisit Old Assumptions (And How To Do It)
Podcast: Founder to Founder
Episode:

EP 80: PHILHSC On Why You Should Revisit Old Assumptions (And How To Do It)
Category: Business
Duration: 00:10:23
Publish Date: 2018-11-15 05:00:00
Description:
Assumptions are the basis for most startups. After identifying opportunities, founders use assumptions to begin piecing together a narrative to communicate their vision. And it’s just expected that each assumption in a startup’s business model will get tested and iterated over time.

The reality is, however, that there are assumptions that don’t get tested. Some of these are linchpin assumptions, ones that are critical to the business model that founders are selling to customers, investors and partners.
The punchline is that founder’s risk building a ‘house of cards’ by relying on untested assumptions.
And there are two reasons why founders press on with untested assumptions. One is legitimate, the other convenient.

The legitimate reason is limited time and resources. Assumptions live on a semi-prioritised but nonetheless messy Trello board and you keep hearing yourself say ’I’ll get to them’. I’ve been there many times. As a side note, and while resource constraint is a legitimate reason, I recommend you putting your mentor(s) to work to help prioritise assumptions. This will bring them closer to your business (which they will enjoy) and you get help from a ‘friendly’.

‘Convenient’ untested assumptions are more dangerous because they:
  • Are important to the business model’s viability
  • Are difficult to test (and may reveal a fatal flaw in the business model when tested)
  • Receive the most positive feedback when a founder declares that the assumption is under control or well understood

The third characteristic is as subtle as it is important.

Consider this. You pitch to your first potential investor. They query a few of your assumptions and in the haste of wanting to appear like you have your act together, you offer a response. It is plausible and the potential investor accepts your answer. The meeting finishes and you agree to meet again shortly.

You meet another prospective investor (or partner or customer) and they ask the same question as the first investor. You offer the same answer. They accept it, the cycle continues and it gets reinforced when the founder raises money using the same thesis.

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