Validated Learning

Find your sustainable business model through validated learning.

In order to find a sustainable business model, start-ups have to discover what their customers want and how to make money from it. They have to find the right product for the right people and understand how to sell it to them.

This doesn’t mean coming up with a great plan from the start. Rather, it requires a process of constant learning: ideally validated learning, meaning learning through a scientific approach.

To begin the process of validated learning, you must come up with hypotheses about whether and how certain products will be successful in a given market. For example, “US customers will be willing to purchase shoes online.”

Such fundamental hypotheses have to be tested, and only if they are validated by talking to customers can the start-up know it’s on the right track towards finding a sustainable business model.

Don’t use questionnaires or fictional customers though; instead, talk to real customers in a realistic environment. The most reliable way to find out whether people will buy your product is to offer it to them and see how they respond.

Take the success story of Zappos: it started with the simple hypothesis that people would be willing to buy shoes online. To test this idea, the company took photographs of shoes in shoe stores and displayed the photographs in a fake web shop. When people actually tried to buy the shoes online, Zappos saw that their hypothesis was valid.

Through this approach, the foundation was laid for one of the most successful business models of the last decade.