2 Reasons Minimum Viable Products Fail

femgineer minimum viable product fail startupEveryone wants to start validating the idea for their startup by creating an MVP (minimum viable product), but very few people get it right because they overcomplicate the process of picking features that go into the MVP.  I think there are 2 reasons MVPs fail:

  1. You haven’t figured out how to provide a simple value proposition that differentiates your product from your competition.
  2. You haven’t identified who the early adopter for the product is.


Lets start with the first reason.  Before you build anything you have to know what is already out there, otherwise you’re not really innovating.  I make it a point to understand why people love and hate as many of my competitors as possible.  The reason you need to do this is because potential customers are going to ask you one very basic question: “How are you different from your competitor?”  If you aren’t prepared to provide a quick response then you’ll lose the sale.  Keep in mind they aren’t asking how are you better than the competition, they are only asking you how you are different.

 

To be different you have to work backwards.  I start by knowing all the features that my competitors offer that their customers just absolutely love i.e. they will never come and try my product out unless I offer these features, and even then I’d have to do a much better job offering it than my competitors.  Before moving on to what my competitors customers hate about their product, I go interview people whom I think should be using my competitors product, but aren’t.  Why do I do this?  Plain and simple: zero switching cost.  I don’t bother wooing customers that are using my competitors product.  Instead, I go after the bucket of people that either don’t know about my competitor or don’t like them.

 

I fixate on the needs of those who aren’t using my competitors product.  This requires having conversations with people to understand what their needs are.  From these conversations patterns of problems that users experience will emerge, the solution to those patterns is where you can start to spot the features needed in your MVP.

 

For example, at my last startup, Mint.com, we knew that  a number of customers of people were quite happy using Quicken, and were even willing to pay for it.  They loved Quicken so much they didn’t mind all the hours of their lives it consumed syncing accounts, categorizing transactions, and providing them analysis on their investment portfolio.  We didn’t even bother attracting those Quicken lovers.  Instead, we looked at all the people who weren’t using Quicken.  The young 20 and 30 somethings who wanted to spend less time managing their finances.  We launched a whole year after our competitors at the time: Geezeo and Wesabe, but our key differentiator was that our MVP downloaded transactions automatically from your bank and credit card accounts, and automagically categorized them.  Was it perfect?  No.  Did everyone want to sign up even though it was a free service?  No.  But did people understand our value proposition through our MVP as compared to our competitors?  Yes.  Automation was the key differentiator for us.

 

Just to give you an idea of how much thought needs to go into creating an MVP, I’ve documented the process for the second product I built at BizeeBee called BizeeBee Billing, which we launched a couple months ago.

The second reason MVPs fail is because people don’t bother identifying who the early adopter is, or try to cast too wide of  bucket.

 

In August 2010, I launched an alpha version of my current startup, BizeeBee’s, alpha product.  No one except my team and myself knows how much this product tanked.  Why did it tank?  Because we cast a freakin’ huge net!  We went after all small businesses that offer services.  We built a tool that no one wanted to use.  It was a valuable lesson, and we quickly corrected our mistake by doing just one thing differently figuring out who our early adopter was.  We went after a niche inside a niche market: small independent yoga studios who weren’t using our competition.  Between September and December of 2010 we built our real MVP, with our very targeted early adopters, and launched in December with paying customers.  Our value offering was simple and targeted: small independent studios could stop losing money on expired memberships and know how much they were making with 3 basic features adding members, recording purchases, and taking attendance, BizeeBee would handle tracking the memberships automatically.  Starting to see a theme here?

 

There is more that goes into making a product mainstream.  What often happens is that people conflate success with an MVP.  With an MVP you should be testing adoption, engagement, and possibly monetization depending on your user base and growth goals.  Most products including the successful ones that have grown virally had their beginnings amongst a small subset of early adopters like Facebook appealing to college students, and Groupon solving a big problem of marketing for small businesses.  People forget this and think they need to design for the mainstream from the beginning, and that’s what ultimately obfuscates the initial
value proposition and throttles even eager early adopters.


Want to learn how to build an MVP that succeeds? Then check out our Lean Product Development Course Learn more!

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6 Comments
  1. tim 18 October, 2012 at 12:45 pm

    Great post. I especially appreciated the thought on going after the niche inside a niche. Best wishes!

  2. Poornima 18 October, 2012 at 1:56 pm

    Thanks a lot Tim! Yeah its funny because we thought we were in a niche, but then realized we had to narrow our focus when figuring out who our early adopters were.

  3. Bob Gilbreath 22 October, 2012 at 5:43 am

    Great guidance, Poornima. Seeing companies just rush to building things saddens me, because even if they are developers it can be an enormous cost in lost time, money, and customer understanding. We actually created a customer research tool at our seed-stage fund to help get founders much earlier feedback. It’s amazing how much you can learn and pivot in days by just getting your idea (not the MVP) in front of potential customers.

  4. Poornima 1 November, 2012 at 5:59 pm

    Thanks Bob! Yeah just met up with a friend yesterday who has raised a lot of money but isn’t basically giving up on the idea, partly due to passion, but I think the other is of course traction. What advice to you give to your companies?

  5. Pingback: Ellas 2.0 » Blog Archive » La razón número uno por la que deberías construir un producto

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