A sequence of 5 steps for validating business ideas/models. It is named pyramid, because each step builds upon the steps before.
The steps are:
Accepted Solution (→Problem-Solution-Fit)
Whenever a step is validated, all steps with a smaller number are validated as well. E. g.: if your customers can imagine to use your prototype in reality and pay money for it, they must have a relevant problem.
Hypotheses can be validated. This is done by designing and running an experiment, then interpreting the results. If the data does not falsify the hypothesis, the hypothesis is validated. The main effect is, the probability of an assumption goes up (which you hope) or down (which you fear, but should know the sooner the better).
An experiment is a way to collect data, which could falsify a hypothesis (H). If the amount of data is so large that it could falsify the hypothesis, but it doesn’t, then the hypothesis is considered true. Or: How much data do you need to convince yourself, a team mate, or a VC of H or its contrary?
Most experiments measure user behavior, for which customer conversations is the main technique. Others kinds of experiments are data research and technology tests.
Go to the central cafeteria of the university and ask 20 students how much they spent on their bike-lock.