Every startup founder needs a laboratory

Here's a radical idea: Your startup isn't a business. At least not yet.

It's a laboratory for discovering a business model that works.

The most successful founders I've worked with—from teaching thousands at Harvard Business School to investing in hundreds through Flybridge Capital—approach their startups like scientists. They don't just build products; they run experiments. They don't just execute plans; they test hypotheses.

Take Songe LaRon and Dave Salvant, the founders of Squire. When they started building their "OpenTable for barbershops," they didn't just launch an app and hope for the best. They turned their WeWork office into a laboratory, setting up a barber chair and bringing in barbers to give haircuts. Each appointment became a learning opportunity that helped them refine their product and user experience.

But that wasn't enough. When they discovered barbershop owners weren't adopting their scheduling app fast enough, they made an even bolder move: they bought a barbershop in Chelsea Market. This $20,000 investment—when they had less than $40,000 in the bank—gave them a real-world laboratory to perfect their management platform.

The result? Squire now services more than 3,000 barbershops across three countries and processes over $1 billion in transactions annually. Their valuation is now over $750 million.

Test Selection as Strategy

The Experimentation Machine is the basic operating model for startups, but what tests should you run and when? In an environment where you have limited time and even more limited resources, test selection becomes the most important strategic decision. 

Startup founders should not expect to discover a working business model right away. Rather than try to carve a highway out of a jungle, they should think about their progress in terms of key milestones: Which experiments will unlock the founder’s ability to raise more capital and attract better resources? 

The strategy of test selection boils down to three essential questions:

1. Which business model component is most controversial, and what is the essential hypothesis for that component? 

2. What is the key milestone I need to achieve that will lead to my next  valuation inflection point, helping unlock more capital from investors?

3. Where does the greatest risk exist in my business model, and what does the flow of dependencies look like? 

Here are a few important questions to ask yourself during each phase of experimentation:

A startup founder’s job is that of Chief Experimentation Officer. You must guide your team to adopt the scientific method and run the Experimentation Machine operating model diligently.

When done properly, like Songe LaRon and Dave Salvant, you will have a chance to find your way out of the startup jungle and onto a dirt road.

P.S. The examples above are just a taste of what's in the book. You'll learn from dozens of founders who've mastered the art and science of startup experimentation, complete with frameworks you can apply to your own venture immediately.

The Experimentation Machine comes out March 4!

Pre-order now and start reading the first three chapters today. Use the code EMNewsletter20 for 20% off:

Happy building!

Jeff