I liked one question in particular, because it concerns something I’ve been thinking about recently.  Erin Turner asked about landing pages as Minimum Viable Products (@23:05 in video).  I didn’t opine, though I would have enjoyed challenging my friend David Binetti with an alternative take, and since the subject is covered in my new book, The Entrepreneur’s Guide to Customer Development, I missed an opportunity for shameless self-promotion.   One that I will now partially remedy.  ; )

I’m not sure where it all got started (I want to say The Four Hour Work Week), but for those that don’t know, there’s a “school of thought” around testing product viability by:

• Building a landing page
• Including a clear “call to action”
• Buying AdWords at $5/day

Then sitting back and watching your hypothesis proved or disproved.   Clearly, the approach has appeal: it’s fast, low cost and easy to measure.

There are pitfalls:

• Are your prospects searching for a solution (otherwise, PPC fails)?
• Are there any keyword phrases that will generate enough traffic at $5/day (I don’t think so)?
• Are you taking the time to optimize the landing page and messaging? (If so, for whom?  The whole wide world?)

As I discuss in the book, multiple MVPs can be designed to take you down your “Value Path”, where a value path is a series of “phase gates” that test key elements of your business model to mitigate risk.  As Andrew Chen says, “Test the riskiest thing first.”

There’s been quite a bit of discussion on LSC and elsewhere about the need for a “real” MVP to include the payment of money for use of the product.  Only in this way, can true “viability” be tested.  Generally, I agree with this.  But as Andrew points out, some businesses need to test something other than viability, where viability means financial viability. My approach is a bit different, but gets us to a similar place and allows for “intermediate MVPs”.

In my view, viability is defined by the tester.  In other words, a Minimum Viable Product is “A product with the fewest number of features needed to achieve a specific objective, and users are willing to “pay” in some form of a scarce resource.”

So for example, the intermediate MVP for a landing page might be defined as the minimum features required to achieve the objective of “demonstrating market interest”, via the currency of “clicking on the more info” button.  Now you might argue that you risk losing all meaningfulness of terms if you define it too loosely and I would agree that there is that risk.  But like many things in life, the true measure is in how you apply Lean Startup and Customer Development principles.   In the case of a landing page MVP, you might learn that there is some interest after all, but it will be difficult to prove the negative.

The definition works to measure “desirability” based business models, too:  “what are the minimal required features to (objective) scale users to xM/month, who are willing to (currency) “pay attention,” as measured by some individual usage metric.  An intermediate MVP for a hardware product might test a technical hurdle (e.g., audio latency on the iPhone) or market interest (objective: demo requests; currency: LOI or beta sign-up).

The art of entrepreneurial discipline is in defining objectives and currency.  Your goal is to test as early as possible, make or break decisions.  In other words, “if this doesn’t work, we need to pivot.”  Further, you should define your “final MVP” (how you will actually monetize your features/users/technology), before figuring out your intermediate MVPs.  Finally, time and money may be important variables when considering your MVP strategy.

As Rich Collins pointed out to me after the conference, if it takes nearly as long to develop an intermediate MVP as the ultimate version, why not build the latter?

Appreciate any thoughts you have on MVPs.

I am pleased to report our first failure.  : )

According to our surveys and interviews, our assumptions regarding who will be willing to pay for what appear to be wrong.  (I might add, too, that the feedback seems to be running exactly opposite of the expert advice the company heard while going through a local mentoring process.)

So now that we’ve got our answers, we’re ready to go to market, right?

Just kidding.  Customer Development principles dictate that upon failure we iterate.  So I am now rewriting our assumptions and we will start a new round of interviews.  With respect to the “who,” it’s clear to me we have not found our early adopters. Unfortunately for the “in-the-building,” “I think I’ll build an online survey,” aficionados among us, we have to put on our business development hats and hit the pavement.

I like the fact that the necessity of reaching beyond his impressive array of friends and families makes the CEO a bit uncomfortable.   In a great talk, Seth Godin says (h/t Dan Martell):

If you’re not upsetting anyone, then you’re not changing the status quo

Albeit in a different, #leanstartup context, I’d argue:

If you’re not upsetting yourself, then you’re not challenging your assumptions

With respect to the “what,” we have struggles there as well.  As a self-taught product manager working with a traditional Engineering executive, we are constantly fighting the propensity to become enveloped by the feature miasma.  We spent a couple of weeks investigating platforms, while in parallel, defining and creating mock-ups for developing from scratch, in-house.

I won’t go into the debate here, but suffice to say, it’s quite difficult to evaluate platforms without delving into feature minutiae.  The fear is, of course, that the wrong decision is going to screw us in the future.  The reality is likely to be, however, that success of the product will force a future decision and we will be happy to be in that position, even if we have to rebuild.  In other words, the platform decision we make now will not determine failure or success of the product, because either path will work to create the product.  The current objective is minimum viable product (MVP), not scalability, best-of-breed, most features, ease of development, best product support, etc.    The decision today needs to be made based on today’s objectives.  (These are not impromptu, however, but rather are defined (MVP) and tied to larger business objectives.)

In the end, we believe that time and money dictate that the  opensource platforms will best provide the best path to minimum viable product.  We will need to stitch them together, make them look good, and build the ability to monetize.

As we begin to make features public to “friends of the company,” our primary challenge is to figure out which functionality to monetize.   Based on our last round of interviews, we have some pretty good ideas.  The primary challenge we face here is the understandable, but misguided (IMO) feeling among some to offer for free, what can potentially be monetized.   The idea is driven by the fear that we need to create participation to provide value and forcing users to pay will dampen participation and therefore lessen value.

There is certainly truth in that.  But I’ve always found it more difficult to charge for something after it was first offered for free.   Someone somewhere wrote about the huge gap between Free ->1$ and 1$ -> 2$.

In a freemium business model, however, success depends on free, as well as paid.  You have to offer compelling value for free.  Making paid content free doesn’t change that equation.  So in the final analysis, making paid content free tests neither free nor paid!

Proposed solution is free version vs free trial (x months, w/o taking credit card).

Unfortunately, decision-making is often driven by fear.  Fear of making the wrong decision can lead to making no decision at all.  Typically only the latter is a death knell.  There’s an old sales adage that says the worst answer a customer can give is maybe.  When facing decisions, the worst action is not making a decision.  More on decision-making here.

Thoughts?

Updated: In comments, Sean Murphy kindly provides the post I referred to above regarding the gap between Free ->1$ and 1$ -> 2$.  Please go read Josh Kopelman’s excellent post.

“Lean Start-up” is a phrase, I believe, coined by Eric Ries of Lessons Learned. This is a great blog and well worth you spending time with it. In a nutshell, a Lean Start-up is one that combines fast-release, iterative development methodologies (e.g., Agile) with Steve Blank’s “Customer Development” concepts.  The objective is to efficiently create customer-driven products quickly and with a low burn rate.

Though I believe these principles are likely to fare well for software and even hardware products, it appears that most of those implementing the Lean Start-up are Internet-based products.   Without getting too deep into the specific practices, Internet products offer several advantages:

• the target market is assumed to be online, so product, marketing, and customer dev activities are easily conducted online;
• abundance of opensource software and tools;
• web deployment of product updates is fast;
• actionable metrics are easily tracked.

So that’s what we’re trying to do with the start up I’ve been discussing.   Parts I and II of the discussion are here and here, respectively.  Last time, we were still defining stuff.  Now, we’re getting “out of the office.”

We’ve taken a stab at defining our minimum viable product (MVP). What’s the MVP?  Here’s my working definition, though it may differ from others:  The MVP is the minimum level of product functionality needed to reach the next objective on the path of achieving your vision. Next week we will soon have HTML mock-ups of the pages.

The CEO is meeting with half a dozen potential customers, interviewing them in order to validate (as best as possible pre-product) our market assumptions.   He will continue these interviews for the next several weeks.

This week, we are also launching our first user survey.  I differentiate users and customers, since the former will not (initially, at least) pay, while the latter will (hopefully).  How did we find target users?  Through our personal networks.  I consider this first round of questioning to be for “friends of the business,” yet who still represent the target market. Again, the objective is to test assumptions and hopefully learn more about how close we are with the MVP.