Refine and document your founder thesis
You have identified a market opportunity, made a hypothesis about how it could be addressed profitably, and tested that hypothesis with your product. This is the crux of your initial business thesis.
Fleshing out your thesis in a concise, formal(ish) document can help foreshadow potential challenges and ensure you are constantly testing your most important assumptions. It also keeps all initial
stakeholders aligned through the hazy early days. Here are some practical tips for writing your thesis:
The basic components:
- Problem and solution
- ‘Why now’ (i.e. what conditions make the timing right)
- How you will build, distribute and deliver the solution (incl. resources required)
- How (and when) you will make money
- Your unfair advantage
- How you will defend your position (the moat)*
- List the hypotheses underlying each, in the order in which you intend to validate them
Attach relevant metrics (e.g. our first customer will pay $100 per month per person for our product). Use these metrics to test the statement: “if we hit these metrics, our hypothesis is
validated, and our business will work”
- Regularly revisit your thesis and update your metrics. Ask your team to contribute – they may be able to identify additional assumptions or hypotheses that you need to test.
*Most don’t consider moat until much later. We believe it’s highly valuable to consider this even in the early days. See Emery’s post on this