Tag Archives: Wesabe

MVP Minimum Viable Product Fails For Two Reasons

mvp minimum viable productEveryone wants to start validating the idea for their startup by creating an MVP minimum viable product. However, very few people get it right because they overcomplicate the process of picking features that go into the MVP minimum viable product.  Here are two 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.

Let’s Start With The First Reason An MVP Minimum Viable Product Fails: Value Proposition

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. Even then I’d have to do a much better job offering them 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 first 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. 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.

The Second Reason An MVP Minimum Viable Product Fails: Casting A Wide Net For Early Adopters

In August 2010, I launched an alpha version of BizeeBee my second startup.  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 minimum viable product that succeeds?

Check out our upcoming Ship It Course here.

Timeline: Mint.com – 2006

2006 was a year of firsts for Mint.com aka myMint.com.  It was the year Mint Software Inc. was officially incorporated, it received its seed round of funding, and formed the initial members of the Mint family.  And it was the year I officially joined Mint as “#2”.

January 2006 – Aaron starts meeting with people who have VC contacts to discuss his business plan and see if they can connect him.  He hopes that he can get funded with a concept, but most likely he will need to build a prototype.

March 2006 – Aaron soon finds that pursuing Mint and his day job are too much.  He also realizes that if he wants to impress investors and prove that he has a vested interest in his company he should be pursuing it full time.  So he quits his day job, incorporates Mint Software Inc., and begins coding daily in his apartment.

April 2006 – By this point Aaron is in full speed with development, and focused on solving difficult engineering problems such as categorizing transactions and figuring out how to automate the account sign up process.

Summer 2006 – Aaron continues to talk to people about his business plan, and also to discuss the most challenging problems they have with their finances.

August 2006 – Aaron meets Matt Snider, a front engineer and JavaScript guru.   They  go hiking, and Aaron tries to pitch Mint to Matt.  Matt declines because he is currently working at startup.  A few weeks later, looking for a place to live, Matt moves in with Aaron.

Bowling 2.0 begins, a league that brings together startups to talk shop over beers and bowling.  Aaron signs up and invites Matt and Poornima to come along to mix and mingle with other startups.

Aaron starts aggressively fund raising.  He meets with Sequoia Capital, who suggests that he join YouTube and head the engineering division.  Aaron doesn’t bite.  Other VCs are impressed by Aaron and want to hire him to come on board instead of invest in his company.  Aaron kindly declines, and continues to pursue his own idea.

In a stroke of fate, Poornima gets laid off from Synopsys.  Unsure of her future, she contemplates working for Mint, but Aaron hesitates to hire her, because she has no web development, web services, database, or startup experience!

Matt is growing increasingly frustrated with his current startup.  He decides to take Aaron up on his offer.

September 2006 – Willing to give her a chance, Aaron hires Poornima as a contractor, and Matt joins Mint full time.  Working out of Aaron and Matt’s apartment the team Mint team grows.  At this point, Aaron is bootstrapping the startup, but realizes he needs funding to attract more employees.  He starts talking to several VC firms.

October 2006 – After a few weeks of fundraising, Mint closes its seed round of funding with First Round Capital.  The team goes out to dinner with their new VCs in Palo Alto.

Unable to spend time coding, developing the product, hiring, and formulating the business plan, Aaron starts to look for an engineering lead.  He meets David Michaels, who is referred to him by another Mint interview candidate Mike Mettler.  The Mint team interviews David and is pretty impressed.  He is quickly hired as their VP of Engineering, and the first adult of the Mint family 🙂

Much to Poornima and Matt’s dismay Aaron finds office space in downtown Mountain View.  The team moves out of Aaron and Matt’s apartment, and into the second floor of an old build one block off of Castro, only being able to afford the rent for 6 cubes.

By mid-October Poornima signs on as the third employee, but is affectionately called “#2” because engineers start counting from 0.

November 2006 – One month before the Mint Alpha is scheduled to release a competitor Wesabe launches, which is coincidentally the date that David joins Mint.  Wesabe enters the market as the first Web 2.0 personal finance startup.  The team nervously all log in to see what Wesabe is all about.  Relieved that Wesabe’s product is more about socializing personal finance, they keep chugging along.

December 2006 – Mint releases its alpha version with about 100 users, mostly investors, friends, and family.  A successful launch, focused primarily on a user being able to add accounts successfully, and see their transaction history.

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