Page - 88 - in Digital Entrepreneurship - Impact on Business and Society

2.2 Developing andValidating aVenture Idea In the past ten years, the concept of a lean startup, where entrepreneurs and intrapreneurs alike validate or invalidate their riskiest business assumptions, has becomeapredominant thought inentrepreneurship literature (Ries2011;Blankand Dorf 2012;Bland andOsterwalder 2020).Everyventure idea canbe seen as abulk of interconnected assumptions. Someof the assumptions are existing right from the start, and otherswill evolve during the venturing process. The assumptions impact every decision and conversation, e.g., the design of business operations, the negotiationswithventure capitalists, or thehiringof teammembers.Thebasic idea of the lean startup is to systematically test themost critical business assumptions to avoidpremature scalingof thebusiness sincepremature scaling isonemajor reason for startup failure (StartupGenome2011;CBInsights 2018). It includes developing aproductwithout evenknowing if thecustomerhasaproblemthat isworth solving or shows interest in the envisioned solution.Without the validation of demand and willingness to pay, the initiation of, e.g., an app development comes at high risk (StartupGenome 2011). Following Ries (2011), Blank and Dorf (2012), and Frederiksen and Brem (2017), the entrepreneur identifies a critical assumption to test, designs an experiment, runs the experiment, and creates learnings.Also in this book, Göcke andWeninger (2020) discussed the venture pyramid to structure the search process to a replicable and scalable business model as a response to the findings of Ghezzi (2019) that digital startups need. The venture pyramid (see Fig. 2) allows a focused experimentationof abusiness idea. It is structured into six levels ofventurevalidation/invalidation.Thequestionsnext to thepyramid indicate thecritical questions at every level.Every level of thepyramidbuildson the former level. The assumptionswith the highestmagnitudeof impact to the business reside at the bottom.Entrepreneurs are supposed towork upward the pyramid to validate or invalidate themost critical assumptions at thebeginningof their startup journey. The assumption that a solution is attractive to potential users is located at the problem–solutionfit.Anentrepreneur candevelopanexperiment to test this critical assumption.Thedevelopmentof aminimumviableproduct (MVP)wouldbebased on the validated assumption that users demand the product and are alsowilling to pay for it. Fig. 2 Venture pyramid (referenceGöcke 2017) 92 L. Göcke and P.Meier