[Editor's note: Seattle entrepreneurs Barry Chu and Dave Cotter share some of their startup lessons in starting the new mobile app SquareHub. The three-part series is running this week on GeekWire, starting today with their thoughts about minimum viable products. In part two, they'll talk about how they determined product features. Part three, set to run Thursday, will include their ideas on customer acquisition].
hoffman-quoteReid Hoffman is wrong. As with most memorable quotes, there is nuance that may be missed by those eager to launch and learn as fast as possible. It’s this: the point of launching early is to learn from the market. But in some markets, if your product sucks, you learn nothing.

Enter the “minimum viable product” — or MVP. This is the lightest, most scaled-down version needed to learn what the market wants.

A good MVP lets you:

  1. Prove whether you are actually solving a problem and verify that demand is there. It’s OK to target a small number of early adopters and hard-core users for this.
  2. Spend less time planning, more time responding. You’ll learn more from user feedback than from trying to think through every product feature before launch.

To figure out if Reid’s quote applies to your product, ask a simple question: Are you entering an unknown or a known market?

  • In an unknown market, users have no expectations because they’ve never seen anything like your product. A typical reaction is “Why would I ever do that?” (Remember when you first heard about Twitter?) You launch rough, fail fast, and iterate. Ideally, you find polarized users who either love or hate your product. By understanding them, you begin to understand and rationalize the size and scope of your target market.
  • In a known market, there are plenty of competitors, comparable products and substitutes. Consumers have expectations for usability, design and features. Example: Google Docs vs. Microsoft Word or Excel. When launching Google Docs, Google needed to meet some basic user expectations for how a word processor or spreadsheet would work. A lousy product in a known market can convince you that your core idea is wrong, when in fact, the idea is valid but the execution has missed its mark.

To determine if we were entering a known or unknown market, we used a Porter’s Five Forces model of user-level product dynamics.

porters5

 

  • Suppliers: Are their factors increasing potential users? Do you believe that demand for your product is increasing because of certain conditions of the market? Ideally, every startup should be able to answer yes, as this determines whether you believe your market will grow.
  • New Entrants: Do users see lots of new entrants? If you see a new startup trying to solve the same problem, it’s clear many folks feel it and have ideas for how to solve it. In our case, there are many group messaging and task management products flooding the market.
  • Rivals: Are there competitive services available? Are there services that folks currently use in lieu of a “perfect” solution, or current services that promise similar value?
  • Substitutes: Are there easy substitutes users can fall back on? What’s your user’s next best alternative to your product?
  • Buyers: Are users actively searching for a solution? Is there “pull” demand from users? Are folks actively and publicly asking for a solution? If so, you better listen to what they say.

These questions help estimate the size and growth of the product opportunity. The new entrants, rivals, and substitutes questions gauge user expectations.

When LinkedIn launched in 2003, it was entering an unknown market.  Social networks were in their infancy. Friendster was at its peak. MySpace had yet to launch. And Facebook didn’t exist yet. In this environment, Hoffman could afford to launch a first version he was “embarrassed” about because:

  1. No true comparable existed.
  2. The closest substitutes were offline and cumbersome.
  3. The overall exposure for that “embarrassing” first version was small.

The minimum bar for LinkedIn was that their solution had to be better than emailing friends of friends or building a Rolodex person-by-person in order to be valuable (and learn from). If a user entered LinkedIn circa 2003 and saw a list of people they knew who weren’t in their Rolodex, they saw immediate value.

squarehub11With a low minimum bar, in a place where networking really matters, LinkedIn’s founders could learn quickly without sacrificing reputation. They could address a need immediately with just a list of “folks in your space.” (By the way, LinkedIn ended 2003 with “only” 81,000 members – just a reminder that success doesn’t always look like Instagram).

At our startup, on the other hand, we are entering a known market. Users have well-developed expectations for what an app should behave, how messaging works, what social networks look like and what a “private family network” might mean for our target demographic.

Thus, we must meet or exceed basic user expectations, both as an app and as a network. Our MVP can’t be sloppy or “embarrassing,” or we don’t learn anything at all. It needs to be minimal enough to build with limited resources, but viable enough that we can learn from the known market we are entering.

So maybe it’s not so much that Reid was wrong. For many startups, he’s right, and frankly, it’s kind of hard to argue with his track record.

But, for some startups, especially those entering a known market, be sure to ask yourself what your MVP should be. It may not make sense to be embarrassed.

Next, in tomorrow’s post, we walk you through how we turned “minimum” and “viable” into a discrete set of product goals and features.

Barry Chu is a co-founder of SquareHub.com, a Seattle-based startup focused on improving family coordination and communication.  SquareHub co-founder Dave Cotter also contributed to this column. 

Comments

  • Leif Espelund

    Honest question: What does SquareHub do that a closed Facebook group can’t accomplish?

    • barry_h_chu

      Hi Leif – I see that Dave already responded, but my 2 cents:

      It’s a matter of design-intent:

      1. Family-focused / kid-friendly – no need for everyone in the family to have a Facebook account, just a single family account ( I don’t really want my daughter on facebook yet)

      2. No-fuss privacy – it’s private and it just works. No need to figure out privacy controls, create new groups, think about where you are posting, etc..

      3. Noise-free and simple – only messages, photos, updates from the folks that matter most: no need to filter, easy to read, easy to reply, and easy to coordinate

      We could collectively talk your virtual ear off on other differences, but these would be the three that come to mind right away

      • Leif Espelund

        Thanks. Good luck with it. Marketing looks nice.

  • Dave Cotter

    Honest Answer….SquareHub isn’t Facebook;-)

    Seriously though we’ve talke to a lot of families and they’re simply not comfortable with family details, photos, etc on Facebook. From a use case perspective, SquareHub was designed to address the day in and day coordination of family activities (espcially for famlies with active teenagers, if you’re divorced, in military). For example, parents can coordinate activities and kids can request a pickup or tell parents privately when they will be home. We’re really replacing the inconvenience of multiple communication avenues—texting, phone calls and email—between multiple people, with the ease of a single app that *everyone* in the family can use (even kids that don’t yet have an email or cell phone number). Situations where there’s lots of 3+ person coordination is where we shine. Some families may choose to FB groups, but we think there a lot of families that will choose SquareHub! Great question!

    • Leif Espelund

      Thanks, I could see this being useful in some situations, especially divorced couples raising kids together. Good luck with it.

  • Keith Jack

    Finally, somebody not assuming everyone is single and attempting to address the needs of a family. When will Android app be available? BTW, Firefox seems to have a problem with your FAQ page… a shared calendar would also be nice…

    • barry_h_chu

      Hi Jack – thanks for the heads up on the Firefox issue. We’re aiming for an Android version to be available by the end of the summer – working on it now! We have some enhancements coming soon for our Events feature as well.

  • Guest

    Let’s go back to what MVP is – MINIMUM viable product. Clearly in your situation, the “minimum” bar is much higher. But the concept is still the same.

    Not sure what the conflict is here? Or is it just link bait?

    • barry_h_chu

      Totally agree, the point is that “minimum” should be defined by the market you are entering, not by your product’s feature set.

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