In this talk we explore why we should document hypotheses for new ventures, how to write a good, testable hypothesis, and explore practical ways to perform MVP/hypothesis testing in the field.

1. Elaine Chen
MIT Global
Entrepreneurship
Bootcamp
MVP/Hypothesis Testing
March 2016

2. You are about to get an authentic MIT experience:
“Drinking from the firehose”

3. On hypotheses
• “A good hypothesis needs to be
written down.” – Ben Yoskovitz
• Basic structure:
– I believe [target market] will [do this action /
use this solution] for [this reason].
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4. Hypothesis testing using MVPs / MVBPs
• Hypothesis testing using MVP tests the product
• Hypothesis testing using MVBP tests market viability
• A proper experiment looks like this:
1. Write down your hypotheses and define your MVP
2. Design and run the experiment
3. (Optional) Set a measurable threshold for the action, and
use the results to decide whether you keep going, tweak
the approach, or pivot. (This is very good practice!)
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5. Example hypotheses
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I believe the Frustrated Sleeper will wear a
headband every night to get more accurate sleep
data than a wristband to understand how their
night went.
I believe users of this iOS app will quickly
figure out the intuitive UI to see the layers
of data they can unlock with gestures.
I believe plant managers will make a purchase decision
without an on-site proof-of-concept trial because the price
is so low it’s not worth the time.

6. Which hypothesis should you test
first?
• Riskiest
• Longest lead time
• Costliest if invalidated
… etc
Pick the first hypothesis you want to test – and
define a corresponding MVP to test it with
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7. Case study: Lending product assumptions
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• There is demand for consumer loans between USD$100 - $500 in Mexico
• Customers most likely to use this product are:
• Age: 35-45
• Locality: Urban/semi urban
• Education: High school
• Income: USD $7,200 – $9,600
• Job: formal salaried/informal entrepreneur
• Most customers need the funds for:
 School fees
 Home improvement
 Debt consolidation/refinancing
 Auto loan
• Customers care about interest rates
• Customers will be willing to download our app in order to obtain a loan
• Customers would trust an unknown company to provide them with financial services
• Customers do not have other attractive options for obtaining these funds
• Customers need a convenient method for cash in/out

8. Case study: Lending product assumptions
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• There is demand for consumer loans between USD$100 - $500 in Mexico
• Customers most likely to use this product are:
• Age: 35-45
• Locality: Urban/semi urban
• Education: High school
• Income: USD $7,200 – $9,600
• Job: formal salaried/informal entrepreneur
• Most customers need the funds for:
 School fees
 Home improvement
 Debt consolidation/refinancing
 Auto loan
• Customers care about interest rates
• Customers will be willing to download our app in order to obtain a loan
• Customers would trust an unknown company to provide them with financial services
• Customers do not have other attractive options for obtaining these funds
• Customers need a convenient method for cash in/out

9. Workshop activity: Hypotheses
Define the top 3-5 riskiest hypotheses that, if
invalidated, could cause a pivot for your venture.
For each hypothesis, use this structure (or at least
start with “I believe”):
I believe [target market] will [do this action / use this
solution] for [this reason].
Pick 1 hypothesis to be tested first
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10. Sharing!
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11. Example MVPs
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Fake, non-functional headband
Ugly interactive prototype
Product brochure plus a video clip

12. Case study: iOS App MVP Test
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Hypothesis: “I believe users will find the gesture
UX delightful.”
MVP: Functional interactive prototype
Experiment: Usability benchmark. Users were
given tasks to complete that required them
figuring out the gesture UX on their own.
Duration: 30 min UX test + 15 min debrief
Threshold: 50% of users will complete the task.
Result: 0% figured it out.
We killed the feature.

13. Now for the “B” in “MVBP”
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You can run surveys until the cows come home, but
you won’t know for sure until $ changes hands.

14. Testing willingness to pay before there’s
anything to sell: The concept of “currency”
Short of taking $$$ from your potential customers for your
nonexistent vaporware, what are some asks you can pose to collect
surrogate currency that is a predictor of future willingness to pay?
• Yes to scheduling a meeting to discuss
• Actually getting a scheduled meeting on the calendar
• Actually meeting you
• Giving you the email of someone else you should meet
• E-introducing you to someone else you should meet
• Providing an email
• Providing Credit Card for a pre-order (no charge)
• Providing Credit Card for a pre-order (charged, rain check
provided)
• … etc
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15. Example 1: Landing Page Test
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Hypothesis: “Existing customers won’t be scared off by this new
feature.”
MVP: Landing page with product concept and webinar offer
Experiment: Send to 200 existing customers, tally signups
Duration: 1 week
Currency: Email address
Threshold: 20% of customers who visit the landing page will
provide an email (40 ppl)
Opens Email
Clicks thru to page
Clicks “Sign up”
Provides
email
30%
It’s a GO!

16. Example 2: Kickstarter
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17. Example 3: Preorder on own site
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18. Example 4: Paid concierge beta
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Hypothesis: “User will pay for this SaaS visualization service”
MVP: Fully faked via emails and Photoshop
Experiment: 10 customer, paid beta
Duration: 3 months
Currency: $199/month, prepaid
Threshold: Able to close more than 5 for beta
They closed 10. It’s a GO!
Extreme example of “get paid
from day 1” without a line of code

19. That was a lot of stuff!
You don’t have to remember it all. Save
this deck and read it as a reference after
this week.
For right now: Focus on
1. Define your #1 Use case
2. Identify & define your #1 Hypothesis
3. Define your first MV(B)P
4. Extra Credit: First MVP test

20. Supplemental Readings
• “Our dangerous obsession with the MVP” –
Bill Aulet, Techcrunch
• “Defining and Building the MVP” – Elaine
Chen (Slideshare)
• “Product definition templates” – Elaine
Chen (Slideshare)
• “Validating Hypotheses with Landing Page
Tests” - Elaine Chen (PDF)
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21. End
Questions?
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