WHY FIRST PRODUCTS AREN’T MEANT TO BE PERFECT

 

At IMVU, when we were raising money from venture investors, we were embarrassed. First of all, our product was still buggy and low-quality. Second, although we were proud of our business results, they weren’t exactly earth-shattering. The good news was that we were on a hockey-stick-shaped growth curve. The bad news was that the hockey stick went up to only about $8,000 per month of revenue. These numbers were so low that we’d often have investors ask us, “What are the units on these charts? Are those numbers in thousands?” We’d have to reply, “No, sir, those are in ones.”

However, those early results were extremely significant in predicting IMVU’s future path. As you’ll see in Chapter 7, we were able to validate two of our leap-of-faith assumptions: IMVU was providing value for customers, and we had a working engine of growth. The gross numbers were small because we were selling the product to visionary early customers called early adopters. Before new products can be sold successfully to the mass market, they have to be sold to early adopters. These people are a special breed of customer. They accept—in fact prefer—an 80 percent solution; you don’t need a perfect solution to capture their interest.4

Early technology adopters lined up around the block for Apple’s original iPhone even though it lacked basic features such as copy and paste, 3G Internet speed, and support for corporate e-mail. Google’s original search engine could answer queries about specialized topics such as Stanford University and the Linux operating system, but it would be years before it could “organize the world’s information.” However, this did not stop early adopters from singing its praises.

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Early adopters use their imagination to fill in what a product is missing. They prefer that state of affairs, because what they care about above all is being the first to use or adopt a new product or technology. In consumer products, it’s often the thrill of being the first one on the block to show off a new basketball shoe, music player, or cool phone. In enterprise products, it’s often about gaining a competitive advantage by taking a risk with something new that competitors don’t have yet. Early adopters are suspicious of something that is too polished: if it’s ready for everyone to adopt, how much advantage can one get by being early? As a result, additional features or polish beyond what early adopters demand is a form of wasted resources and time.

This is a hard truth for many entrepreneurs to accept. After all, the vision entrepreneurs keep in their heads is of a high-quality mainstream product that will change the world, not one used by a small niche of people who are willing to give it a shot before it’s ready. That world-changing product is polished, slick, and ready for prime time. It wins awards at trade shows and, most of all, is something you can proudly show Mom and Dad. An early, buggy, incomplete product feels like an unacceptable compromise. How many of us were raised with the expectation that we would put our best work forward? As one manager put it to me recently, “I know for me, the MVP feels a little dangerous—in a good way—since I have always been such a perfectionist.”

Minimum viable products range in complexity from extremely simple smoke tests (little more than an advertisement) to actual early prototypes complete with problems and missing features. Deciding exactly how complex an MVP needs to be cannot be done formulaically. It requires judgment. Luckily, this judgment is not difficult to develop: most entrepreneurs and product development people dramatically overestimate how many features are needed in an MVP. When in doubt, simplify.

For example, consider a service sold with a one-month free trial. Before a customer can use the service, he or she has to sign up for the trial. One obvious assumption, then, of the business model is that customers will sign up for a free trial once they have a certain amount of information about the service. A critical question to consider is whether customers will in fact sign up for the free trial given a certain number of promised features (the value hypothesis).

Somewhere in the business model, probably buried in a single cell in a spreadsheet, it specifies the “percentage of customers who see the free trial offer who then sign up.” Maybe in our projections we say that this number should be 10 percent. If you think about it, this is a leap-of-faith question. It really should be represented in giant letters in a bold red font: WE ASSUME 10 PERCENT OF CUSTOMERS WILL SIGN UP.

Most entrepreneurs approach a question like this by building the product and then checking to see how customers react to it. I consider this to be exactly backward because it can lead to a lot of waste. First, if it turns out that we’re building something nobody wants, the whole exercise will be an avoidable expense of time and money. If customers won’t sign up for the free trial, they’ll never get to experience the amazing features that await them. Even if they do sign up, there are many other opportunities for waste. For example, how many features do we really need to include to appeal to early adopters? Every extra feature is a form of waste, and if we delay the test for these extra features, it comes with a tremendous potential cost in terms of learning and cycle time.

The lesson of the MVP is that any additional work beyond what was required to start learning is waste, no matter how important it might have seemed at the time.

To demonstrate, I’ll share several MVP techniques from actual Lean Startups. In each case, you’ll witness entrepreneurs avoiding the temptation to overbuild and overpromise.