It’s an Experiment

“It’s an Experiment”, that’s how Egyptian entrepreneurs need to think of their startups BEFORE they go out to seek funding. It must start as an experiment, an allocation of scarce resources, time and/or money, to answer a number of key questions that cannot be answered elsewhere. A smart entrepreneur spends time thinking about two things. (1) What questions needs to be answered through the startups own operations. (2) How to design its product to answer these questions as early, as accurately, and as cheaply as possible. The smarter (1) and (2) are done the more likely the startup will end up getting the funding and support it needs to out live the experiment phase.

To do (1) start by building the “Tree of How’s” and the “List of Will’s”. The “Tree of How’s” starts with a question like, How will you make 10 million EGP in profit?. It then keeps branching out; How will you make 100 million EGP in revenue? How will you have 1 million customer? How will you make a 100 EGP out of each customer? How will serving each customer cost you 5 EGP a year? … etc. A startup should do this as exhaustively as it can. Once completed, all terminal answers in this tree, the leaves, are turned into the “List of Will’s”; Will a customers be acquired thru facebook advertising at a cost of 5 EGP? Will 3% of customers be paying for the service? Will 1 customer service person be able to serve every 100 customers? … etc.

Now, a smart entrepreneur is not one who manages to have a comprehensive “List of Will’s”. That is purely an outcome of hard work. A smart entrepreneur is able to pick which questions out of this list to verify through their product’s early performance, to pick questions that have (1) highest impact, and (2) greatest uncertainty. Then that smart entrepreneur’s challenge becomes how to carefully design the product, or more accurately the experiment, to answer these questions as early, as accurately, and as cheaply as possible. More on this in a subsequent post.

  • Muhammad Algarhy

    That’s very interesting to read, totally agreed, I like the argument and the logical flow in the article 

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