9. Your Product

The product of invention is only an idea, not yet a sellable product.

Before you can start selling, you need to have a product or service ready for sale. Are you ready now? If not, how will you know when you are ready?

Historically, the path most entrepreneurs followed was to spend a few months doing “market research.” This meant gathering information about their target market, surveying potential customers, and then using that information to design the first version of the product. Once specified, a development team then built the product, while the marketing team created a plan for a big product “launch,” and the sales team created a sales process to close the sales. All this was wrapped around a long, detailed business plan that included projected sales for the next three years.

For many companies, this process took twelve to eighteen months between starting the research and shipping the products, plus another six months before they realized that they’d built the wrong product, and, because of that mistake, their sales projections were far from correct. In the end, most companies failed, with a total waste of twelve to twenty-four months of effort and a large loss of money.

Customer Development

Back in 2005, Steve Blank in The Four Steps to the Epiphany brought forth the Customer Development Model to try to fix this process. The new process also began with market research but advocated three additional stages of conversations with customers, to help further validate the business plan and prove out the demand of the product before spending any time or money actually building a product.

Lean Startups

The Customer Development Model was a great step forward, but, in 2011, Eric Reis, one of Steve Blank’s students, took that idea one step further, codifying his thoughts into a book and philosophy called The Lean Startup.

The key idea in that book for getting from idea to product or service is that you should not rely on market research alone to determine whether your product is viable. You should instead, as quickly as possible, create a “minimal viable product,” a real product for potential customers. At best, you should make actual sales as soon as possible or, at worst, gather feedback on what is missing.

The minimal viable product (MVP) is not the same as a prototype. A prototype is a product that contains a minimal set of features required to prove that the invention works. You may have already built a prototype to prove to yourself or others that your solution works as expected. Having such a prototype is great, because it increases the chance that your product will work as promised. However, the features on a prototype might not match the needs of your first customers.

A minimal viable product, by contrast, is the simplest possible version of your product that someone finds sufficiently useful to buy. So ask yourself: what is the minimal set of features required to get the first few customers to buy your product? You may in fact be past the minimum point today, or you may be missing one feature but have 100 extraneous features.

QUESTION 16:
What is the minimal set of features required to get the first few customers to buy your product?

Bird Watch—[MVP]: The first few dozen tags were built by hand by the founder of Bird Watch, for use in his own research projects. With very little funding available, those first tags by necessity only included the minimum of features required for that specific research project.

Concrete Battery—[MVP]: The Concrete Battery MVP is a hand-built flywheel, capable of storing one kilowatt-hour of energy, constructed from parts purchasable at a home improvement center.

Close to Home—[MVP]: A website has been launched listing a half dozen shelters and temporary homes. Customers can fill out a form to order one of these homes, with submissions emailed to the Close to Home team.

Ensibuuko—[MVP]: The Ensibuuko MVP was a simple version of the software that managed savings accounts, processing the deposits and withdrawals, uploading the account balances to the cloud, and texting the farmers a receipt for each transaction. Subsequent iterations added similar features for loans and integration with the mobile money systems in Uganda.

Your MVP does not necessarily need to be a scaled-down version of your “full product vision”. Remember, the goal of an MVP is to prove that there are customers who will buy your product. The Lean Startup book contains a variety of examples of MVPs. The most simple of these was from Dropbox, who proved the viability of their service by creating a ninety-second video, posting it on a one-page website that gathered 30,000 email addresses from people who said they wanted that product.

Similarly, the startup airline Arrow wanted to prove the viability of their subscription-based business model. Before they even bought their first airplane, they set up a three-page website, shared their story with the local press, and, within one month, signed up more customers than they had expected.

From my own experience, when I wanted to prove the market demand for Fledge, my ten-week “conscious company” accelerator, I ran a weekend social entrepreneurship event. That event let me see dozens of ideas, talk to over fifty entrepreneurs, and gather on paper and in interviews proof that most of these people wanted a business accelerator.

More commonly, however, an MVP is simply a small set of features of your product or service. Just enough features to get someone to buy, thus proving definitively that your idea may work.

Postponing the Launch

A common mistake is to hold off “launching the product” (i.e., making the product available for sale) by waiting for “one more feature,” worrying that you are missing something a customer may need. Do not do this! If you do, you risk getting stuck in the process of development, where each small addition seems like a trivial amount of work, but which, in the end, postpones launching the MVP.

Another common mistake is to postpone the launch, hoping to find one more insight into the customer or market, or one more insight of market data to presumably help with the business plan. This so-called “paralysis by analysis” is a waste of time and resources.

In postponing the launch, you are missing valuable information that you can gather only once the product is for sale. Before you launch, all you know are your own guesses about what customers need. After the launch of your MVP, you will have valuable information that can prove or disprove those guesses. Many potential customers will not buy your product. Ask them why! From talking to them, you can learn of unmet needs. A few customers will buy your product. From them you can measure behaviors and discuss with them additional services. In both cases, you learn far more about your market than is possible before the product is for sale.

The pattern for success is simple: ship, measure, learn, adjust, ship, … More on this later. For now, the task at hand is to get the MVP defined, built, and in the market.

QUESTION 17:
Am I ready to launch my minimal viable product (MVP)? If not, when?

Bird Watch—[Is the product ready to ship?]: A few hundred tags have been built and deployed, along with a few dozen base stations. These were built in small batches at commercial-grade. The cost to do that was exorbitant, but the product has been field-tested, and other institutions are now interested in this product. Thus, the current features seem to be at or above the MVP stage, and the product is ready to go.

Concrete Battery—[Is the product ready to ship?]: The flywheel design exists only on paper and has never been built. The path to the market undoubtedly will require multiple trials. The MVP awaits a few tens of thousands of dollars to build and a team that has the time and passion to make it happen.

Close to Home—[Is the product ready to ship?]: The website has been launched and conversations with potential paying customer begun.

Ensibuuko—[Is the product ready to ship?]: The MVP is live, and the latest revision of the software in use by 500 SACCOs and over 40,000 rural farmers. Several “more than minimal” features have been developed, based on conversations with those paying customers.

Before you have the MVP, focus conversations with potential customers on three learnings: First, ensure the problem is important. Not only important enough that the customer will meet with you, but sufficiently important that the customer will buy a solution when it is available. Second, ensure the solution is viable. Viable here means that the customer values the product enough that you can set a price high enough to earn a profit. Third, focus these initial conversations on the minimal features required to make a sale. You need your MVP in the market as quickly as possible, and every add-on and extra feature will cost you time.

Once your MVP is ready, you can go back to these potential customers and try to make them actual customers. Plus, continue the conversations with yet-more potential customers. With a product for sale, most of the conversations will likely shift from positive feedback to negative. Instead of hearing, “That is interesting,” you are more likely to hear, “No, I’m not interested” or the more frustrating, “Yes, but not right now.” Your job is to learn from all the “noes,” determining what must be added to turn those noes into yeses.

For more on sales, see Step 18, and for far greater detail, read The Next Step: A guide to startup sales and marketing.