Fundamental assumption on which the entire business model is based.
A Leap of Faith Assumption is the fundamental assumption on which an entire business model rests. If it proves false, everything else collapses with it — regardless of how good the execution is. This is precisely why it must be tested first, not last. The term describes the most dangerous form of assumption: one so deeply embedded that it is rarely questioned.
Eric Ries distinguishes two types: the Value Hypothesis (Does the product create value for the user?) and the Growth Hypothesis (How do new users find the product?). An example: a startup for AI-powered legal advice is based on the assumption that law firms are willing to entrust confidential client data to an AI. This assumption cannot be answered through market research — it must be tested through a concrete experiment with real decision-makers. Everything else (technology, pricing model, marketing) is secondary as long as this foundational assumption remains unconfirmed.
The concept comes from Eric Ries and forces founding teams and innovation units to prioritize honesty over optimism: What exactly would have to be true for our plan to work?
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