Since we launched our startup nearly 4 months ago, a certain question has weighed heavily on our minds. As we invest our time and money building our product there’s always been the burden of uncertainty… what if we spend a year building a product that nobody wants?
All the best server architecture, best people, capital, budgets and deadlines mean nothing if we’re building the wrong thing.
So how do we make sure we’re actually building something people want? This leads to the next question: how can we know they’ll want it without first having the product so they can use it? It’s the classic chicken and egg problem.
Work Smarter, Not Harder
As with most complex problems in life, the eventual answer was quite simple… fake it until we make it.
Forget asking friends, family and associates what they think of your idea… they know you and want you to succeed (hopefully!), and you’ll probably get the feedback you want to hear. The true feedback comes from people you don’t know, who could care less about you or your product. What they care about is themselves and whether your offering can improve their life.
The ultimate test to validate the offering is whether a stranger will open their wallet and pay you for it. It can force you to be brutally honest with yourself about whether or not your startup has a future, or what change in direction you might need.
When the lightbulb over our collective heads lit up and we realized we needed product validation we were forced to pivot. Our vision for Collecto remains unchanged — the product is still the same, but who we sell it to (our target market) has changed.
Our strategy has morphed into “pretending” the product exists before we’ve built it and then testing whether people are willing to pay for it. Simplistic, I know, and it sounds somewhat deceptive but we’re hoping for forgiveness once we explain the process.
Meanwhile, some of the biggest names in business got their start exactly this way…
Steve Jobs financed Apple by taking an order for 50 non-existent computers. The deal allowed him to get a line of credit with suppliers to build them.
Richard Branson promised his landlord to give him free rent on his first music store on the premise that traffic to his shoe store below would double.
Bill Gates told an early computer maker he was developing an operating system for their computers (which he wasn’t) just to get in front of the company’s president.
Specializing in “Vapor Ware”
Back to the chicken and egg problem… how do you offer a product/service when it doesn’t yet exist? How do you demonstrate it? How do buyers know what it is if they can’t actually see it? If they can’t try it for themselves how can they tell you if they want it and if they’re willing to pay for it?
Again, the answer is simple… and it’s not even an answer; it’s another question: does it really matter?
No, not really — the product/service is just a vehicle to help the buyer achieve something. If what you offer helps them achieve it then they are the star in their own success story and the product just plays a supporting role (more on this in a future post.) There are lots of clever examples of businesses that can sell their product without it yet existing or the customer knowing what it is. Often intrigue is enough to make a sale. When the buyer sees something in it for them, they’ll act.
You’re Doing It Right
An example I love is from Nightmares Fear Factory in Niagara Falls, Canada. Their photostream shows the reactions of their guests upon seeing something that must be absolutely terrifying. The photos are hilarious and sharable, with the genius of it all being that they don’t give you any clues as to what their guests can see. That’s up to you to imagine and then go find out for yourself. Brilliant.
The whole concept is called an MVP, or minimum viable product, and is the subject of a brilliant book called The Lean Startup, which I encourage every startup founder to read.
The minimum viable product is the absolute minimal offering you can put together that people will buy into, without building the final product and its associated processes and support systems. In some cases we refer to it as a concierge service, where we manually offer a service until there is sufficient demand to invest in automating processes.
If you’re in business you might already have implemented an MVP in the past without even realizing it. We certainly did in our last business, a web hosting company, where our customers enjoyed automated provisioning of services (long before this was industry standard.) But we didn’t spend a year building a control panel before accepting customers and revenue. Nope, we just put up a basic html form to request specific services and then we manually provisioned them as fast as we could and sent back an email confirmation. We did this for a couple of years until the requests coming in were taking up most of our time. Only then did it make sense to invest in automating the service.
Dropbox is another great example of an MVP that demonstrated their product with a video featuring sketches where there was no actual product.
The results were impressive. They got tens of thousands of sign-ups overnight to try the product and they subsequently raised $250m capital for growth. (note: there is a bit more to the story of how all those people came to view the video, but the message here is clear.)
And in case you need any more convincing, Eric Ries, the author of The Lean Startup and founder of the 3D chat platform, IMVU, describes how they needed to implement the ability for avatars to walk.
[Users] wanted the ability to move their avatars around. We took this as bad news, because it meant we would have to spend considerable amounts of time and money on a high-quality solution similar to The Sims. But before we committed ourselves to that path, we decided to try an experiment. We used a simple hack, which felt almost like cheating. We changed the product so that customers could click where they wanted their avatar to go, and the avatar would teleport there instantly. No walking, no obstacle avoidance. Imagine our surprise when we started to get positive customer feedback… when asked to name the things about IMVU they liked best, customers consistently listed avatar teleportation among the top three.
Let’s Do This
So here’s our MVP strategy in steps…
- Create a website with a video telling our story (and some other copy)
- Add a call to action, i.e. “buy now.”
- Put keyword-targeted ads on Google.
- Set a validation target, e.g. 10 clicks on “buy now” in one week.
- Measure traffic and clicks on the “buy now.”
To prove our product’s viability we’ll take people through a short sign-up process and then when they get to the payment page we’ll explain to them that the product is not quite ready yet but we’ll contact them when it is.
If we meet our target, the experiment will be a success and we can continue developing our product safe in the knowledge buyers are waiting. If we fail to reach the target we will pivot, try a different experiment, rinse and repeat until something works.
As you can see now this is a far more efficient way to figure out what our buyers want than building the actual product only to find no one wants it and then having a dud on our hands (as well as disappointed investors and staff and an eventual wind-up.)