Why refer to my concept as a hypothesis? Designer Dustin Curtis answered that question in his essay “The Science of Entrepreneurship”:
In scientific research, an experimenter develops a hypothesis with a suspected set of ideas and then builds an experiment to support the hypothesis. I think this is a great way to think about building businesses as well. Find a niche that is just beginning to show promise, develop a hypothesis about where that niche will go in the future, and then build a business to test that hypothesis. Working toward a philosophy rather than a company’s success keeps you humble. You’re not devoting your soul to the business; because it’s an experiment, you’re devoting your life and your time to supporting your hypothesis, or your philosophy.
Sometimes experiments fail, forcing you to step back and reevaluate your hypothesis. Or change your business slightly. The most successful businesses start with theories for the future, especially in rapidly evolving fields like the technology industry, and they’re not afraid to rapidly iterate when they find the company isn’t working.
I left the KDMC bootcamp sill unsure whether to form Newsbound as a for-profit or nonprofit venture. Some of the best advice I got came from Jeff Klein, who told me not to view it as a fork in the road. He reminded me that I still had the ability to straddle two lanes, that I didn’t have to commit at that juncture.
I took that to heart. In the months following the boot camp, I continued to explore each possibility. Both potential investors and foundation funders seemed pleasantly surprised by my interest in generating revenue. Ultimately, the investors’ comfort with experimentation—as well as their understanding that my concept would likely change in unforeseen ways when tested by the market—pulled me in the for-profit direction.
If you’re mission-based and have a very clear idea of what you’re going to build, the infrastructure-intensive process of starting a nonprofit often makes sense. (My only concern is that the resulting infrastructure can sometimes keep a new entity from “iterating” in the early stages, when its clear that certain assumptions aren’t panning out.)
If you’re like me—you have a problem that you want to solve, have a revenue-based hypothesis to go along with it, but need space to test your product—the for-profit way may be a healthier fit.
Ultimately, I’m grateful to be on this path. The feeling that someone is investing in my ability to experiment and adjust, rather than just my business plan or my mission, makes this process a whole lot more fun.