The Delta participates in one of the largest seed investments in European history: €30 million in Luca 🚀

The Delta participates in one of the largest seed investments in European history 🚀

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May 24, 2022

Experimentation: Why Founders Should Test Their Idea Before Writing A Single Line of Code

Experimentation matters. It can save your business, or it can kill your business (and sometimes that’s a good thing).

In this series, I’ll walk you through the theory underpinning rapid experiments in the world of startups, examples of cheap, fast experiments you can run as soon as today, and case studies of successfully run experiments at The Delta.

But first up, I want to impress on you the importance of testing whether your idea has legs, before you make any major time and/or money investment into it.

A visual graphic of idea experimentation turning into a seamless business idea
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Written by

Jono Hart

Venture Manager

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Free ebook
The 5 Quick (and Cheap) Validation Experiments We Use Daily

A compilation of our favourite experiments that we use to validate business ideas before we start building.

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Why experiments matter

As a founder, your first job is to validate that your new business idea is desirable, feasible, and viable (in that order), and there are better and worse ways to do that. By doing so, you significantly de-risk the venture and only put as much effort into it as is supported by evidence. 

This marks the difference between founders who spend a lot of time and effort on one idea and quickly exhaust their runway, and founders who effectively pivot between ideas until they strike gold and build a unicorn.

Trust me, you want to be part of the latter crowd - running out of your savings, or worse, your investors’ money, makes venture building risky, stressful, and is a fast-track to exiting the world of startups and taking up a corner desk at a Big 4 consulting firm.

Before diving into the theory behind experimentation, consider the following case study:

A group of university students felt that behind every great business, there are great co-founders. That for every pair of student co-founders who dropped out and started something amazing, there were many more startups never founded because those co-founders never met. That great, like-minded people walked right past each other on campus every day, because they lived in silos such as class, year, and gender.

They envisioned a platform, with Tinder-like functionality, where entrepreneurial students could match with co-founders based on skills and interests, and presumably go and start a venture together. For this connection, the platform would take 1% of equity in the business.

They pitched this concept to a panel of judges at an ideation competition, and won; emboldened by this, they went into almost a year of product development, confident they would launch a game-changing product to students at their university and then to the world beyond.

Over the course of many months the team wireframed and designed a complex, beautiful application, going on to develop it for web and mobile with a stack including Angular, Firebase, PostgreSQL, Cordova - you name it. They built a separate website that would direct users to the app. They mapped out automated email flows for different user journeys. They assembled a database of thousands of students they could contact upon launch. They registered a business, paid for a Google workspace, a domain, and software licenses. They thought they were being clever and lean by connecting users via email instead of building an in-app chat like Tinder. They brainstormed future add-on products and business models that would turn their app into an entire ecosystem for entrepreneurs.

And when they launched their product…

No one was interested.

Confused, the team contacted students they had reached out to as part of their launch campaign, trying to understand what had gone wrong. Notably, they discovered that:

  1. There just weren’t that many students at their university interested in starting a startup. People were overcoming tough academic challenges, paying off student loans, participating in club activities, and trying to maintain a social life. The team had assumed everyone was as interested in co-founding great ventures as they were.
  2. People didn’t really care to have Tinder-like interactions with possible co-founders. Dating, it seemed, was more exciting than starting businesses.
  3. Those that were somewhat interested in the product felt like it would be ridiculous for the platform to take a 1% cut in the new business, especially if that 1% of equity would be worth millions of dollars a few years from now. They were also skeptical of how that ownership structure would be facilitated. The team hadn’t thought about that either.

This story might sound far-fetched, but it’s absolutely true. How do I know that?

Because it was my venture.

Frankly, we should have spoken to ‘customers’ sooner. There are dozens of ways we could have reached a similar conclusion, way faster, including:

  • Showing our early app designs as a ‘prototype’ and walking possible users through them; where we would have likely discovered that the matching functionality was unnecessary.
  • Sending out a survey to all the people in our database, trying to understand how many of them were aspiring student entrepreneurs, as well as pitching the general idea to them; where we would have realised the market was small and that people thought the business model was whack.
  • Putting up posters around campus with a QR code to the site we had built, before building the app, to see how many visitors would try and create a profile; where we would have seen few site visitors and even fewer people try to start their journey with the product.
  • Talking to people we knew who had co-founded startups while students, to understand whether our product would have solved any challenges they had faced; where we would have probably heard that our solution was ‘nifty’ but not necessarily a game-changer.
  • Hosting a networking event with students to try and facilitate genuine connections between them, possibly resulting in a few co-founder relationships forming, and then asking the co-founders whether they would have paid for the value we had created for them; where we likely would have heard that they were grateful for the experience, and might have even paid for entry to the event, but that no way were they going to give us 1% of their new business for that.

In each of these cases, it’s apparent that, with less effort, we could have reached the same level of validation (or in this case, invalidation) of our idea. Killing our idea earlier on would have freed us up to try something completely new, or change an aspect around the functionality or business model that would have resonated more with entrepreneurial students.

The truth is that, in 99% of cases, there’s at least one simpler way that you as a founder can validate your business idea. And if you could reach the same conclusion with even slightly less effort, there’s no logical reason you should wait that extra week, build that extra feature, invest in extra automation, or hire that extra team member.

That’s where experimentation comes in. It’s a methodical way of testing ideas, validating assumptions, and ‘knowing unknowns’, and as a founder it will save your life.

In the next guide I’ll walk you through modern experimentation theory, drawing on many of the principles of The Lean Startup.

We’ve validated hundreds of ideas for early-stage entrepreneurs and unicorns alike. It’s what has helped us curate a venture portfolio worth more than €3.4bn.

If you’re a founder, startup, or scaleup with a great idea for your next business, feature, or product, and are unsure about how you can get running with it today, talk to us and get a free consultation with one of our top strategists.

Don’t make the mistake of countless entrepreneurs that came before you, who decided to forego experiments and rather take shots at the dark in the hope of massive success.

Free ebook
The 5 Quick (and Cheap) Validation Experiments We Use Daily

A compilation of our favourite experiments that we use to validate business ideas before we start building.

Download now

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