Value Hypothesis for Startups with Saravana Ganesh

The most important function of a startup is learning what the customer actually wants and what will lead to a sustainable business. Proper learning is having testable hypotheses, designing experiments to test those hypotheses, and interpreting the data to assess your hypotheses.

In the Founder’s Meet organized by StartupLanes, Mr. Saravana Ganesh talks about the importance of Value Hypothesis for startups. A value hypothesis is an assumption of how a product is valuable to your target customers. You have to evaluate what will you offer to your clients that is valuable, solves their problems, and at the same time convinces them to use and buy the product.

Why value hypothesis?

Saravana stresses on the importance of value hypothesis in 3 areas:

Funding and Growth: It delivers clarity to investors so they know what your company delivers and what is the proposed value it will deliver in the future. Without understanding the value hypothesis, investors might not be interested in your pitch.

Marketing: Your value hypothesis is projected by certain parameters and by having clarity on how these parameters will change in the future, you would ensure an accurate prediction.

Sales and Services: Value Hypothesis will help you in prioritizing the preferred customer, the product, targets for customer acquisition, and the expenditure.

How to determine value?

Step 1: Who has the problem?
Step 2: What is the problem?
Step 3: What is the proposed solution?

You have to speak to your target customers and ask them the right questions to understand the problems that they face. This will help you to formulate an accurate value hypothesis. You have to understand if they actually have a problem and if they will be willing to buy your product.

Saravana also suggests understanding the market type that you are entering– is it an existing market, a resegmented market, or a niche market. He suggests conducting proper market research before you go out and speak to your target customers. This will assist you in framing the right questions to get answers that will validate your value hypothesis.