Many entrepreneurs have ideas about products their customers should be interested in. Often they take that idea and work on it for months, only to launch it to lacklustre response. Usually this is because they failed to talk to people to see if the product was something that a) solved a real problem and b) that customers were willing to pay for. If only they’d known about the lean startup model!
How the pros start new businesses
Today, we’re going to talk about the lean startup method of creating new products or services. As the name suggests, the idea is to spend as little money and time on your prototype as possible. There are three main steps to building a lean startup.
- Create a minimum viable product (MVP).
- Measure and learn.
- Evaluate your prospects.
As you’ll see, this method is a smarter way to create a product or service than the close-your-eyes-and-leap method.
1. Create a minimum viable product (MVP)
The first step is to build something as fast as possible and get it into customers’ hands. This is called your minimum viable product (MVP).
Don’t spend hours on a business plan to get money from investors so you can build build every feature from scratch — build a basic version that solves the problem and test it.
Another way to look at this for very small businesses is to treat your whole business as a product and aim for Minimum Viable Profit (MVPr) as Paul Jarvis outlines in Company of One.
MVPr is the minimum revenue you need to earn a profit in your business, including paying yourself a salary outside of the profit number.
Thus each product is aimed at MVP, and your business as a whole is aimed at MVPr. Notes Paul:
“Every minute you spend as a company of one in the ongoing development of a new product is a minute you aren’t seeing how well it solves a problem, and even worse, you aren’t making money from it or building toward your MVPr.”
For example, if you’re looking at building an online course, the first version might be coaching or consulting on the topic of your course. This will tell you if people are interested in the coaching you’re offering. If they’re not, change the message until you get consistent signups or purchases. That’s when you’re ready to invest in the video work that will be needed for the course.
Lean startup founders realize that at first, all they have is untested assumptions about what people will buy.
It’s only by getting something in the hands of customers that they can get real feedback on the validity of their assumptions.
One caution on building an MVP: this doesn’t give you license to build something that barely works. In Reach, Andy Molinsky cites this practice as a common avoidance tactic when you really don’t want to be pushed outside your comfort zone because you’re scared of failure. You can say you’ve done the job, but you’ve done it so badly that failure is really the only possible outcome.
This is not what an MVP is, so don’t let yourself fall into that trap.
2. Measure and learn
Once you have your MVP out in the world, it’s time to gather feedback and use it to improve your product or service.
And the first step in this process is deciding the single measurement that matters most. Maybe it’s the number of:
- Sales
- Email signups
- Social shares
Whatever it is, you need to identify it up front and then measure it. You need to put a hard number on what success looks like (500 shares? 200 sales?), and then not waffle from that number.
Ask and learn
As you measure, make sure you talk to your customers to find out why they’re interacting with your business. What problem does it solve for them?
Is it the same problem you think you’re solving or are they using your products in a unique way?
You don’t need to spend a ton of money to do this. No, you can’t talk to every customer for the life of the business, but you can do that with your first 100 customers — maybe even your first 1,000 customers.
When I worked with AppPresser, the owner and I sent out an email to a large group of customers and got on phone calls. We had numerous problems come up that were not evident at first, and we changed the marketing aim of AppPresser because of it.
After our initial push, we still aimed to talk to 10 new customers a month, so that we could understand where they were having issues with the product — and then solve those issues for them.
3. Evaluate your prospects
At some point in every business, things aren’t going like the owner dreamed and they need to decide if it’s time to stop and try a new idea or keep going until they find success. This may happen on the second product version or on the 50th, but either way you’ll need to make a decision.
Paul Jarvis provides some helpful questions here:
- First, is your core assumption still something you believe in? Do you think that the problem you set out to solve still exists?
- Second, given the struggles you’re having now, would you still embark on solving this problem?
If your answer is yes to both questions, then keep working on the problem by following the lean startup cycle of:
- Build
- Measure
- Learn/adapt
Keep figuring out what your customers want to buy, and tweak your offerings so that they match up with the problems your customers are having.
The wisdom of lean startups
Really, that’s the essence of building a lean startup. Build something that you can put in customers hands with as little investment of time or money as possible. Watch the feedback from your customers, then produce the next version of the product based on that feedback and repeat the process.
If you can stick with this build, measure, learn cycle, you’re going to create a business that only offers exactly what customers want, without any of the extra bits they didn’t care about. And that is how the pros do it.
