Every innovator has an idea of what the successful version of their product will look like. But one of the failings of a typical MVP is that it usually results in more questions than answers.
We want to believe that just getting the product out to market is a win. Selling a few units, generating those first revenue dollars, analyzing that initial data, those feel like the steps that will ultimately show us which levers to pull, which features to prioritize, which segments to target. After that it should all be academic.
But the gap between an initial plan and a viable product is filled with false positives. I’ve spent enough time at the bleeding edge of product development to know that I can always find data that guarantees a winner. I’ve also spent enough time back at the drawing board to not be swayed so easily.
So let’s talk about whether or not your MVP is really viable.
Viability and the (False) Coincidence of Failure
Despite conventional wisdom, failure doesn’t sneak up on us. We get plenty of warning signs. Whether or not the product fails usually comes down to whether or not we react to those signs.
There’s a pattern I notice a lot. Smart, talented person gets a great idea, spends a lot of time and brainpower developing the MVP, takes it to market with solid results, goes all in. Then the thing immediately nosedives.
This is not coincidence. The product wasn’t viable.
A more positive pattern I notice is when that same smart, talented person follows the same process and stops to take a breath at some point. When this happens, what at I usually hear is one of these generalizations:
- “It’s good, but it’s not great.”
- “There’s something missing but I can’t put my finger on it.”
- “I know it will be a success, but I don’t know why.”
- “I’ve got a bad feeling about this.”
In all of those cases, the smart, talented person sees the warning signs but might not even know that what they’re looking at are indeed warning signs. They have data and anecdotes and all the reasons why the MVP will be a success. But they lack confidence because they know something is wrong.
This is what it usually is.
The Wrong Product
It’s easy to be fooled by the simplicity of the question: “What’s my product?” Where an innovator or an entrepreneur runs into trouble is when they don’t realize they’ve taken a guess at what the actual product is, and they’ve guessed incorrectly.
The result is that all those data positives speak to the potential success of something that’s substituting for the actual product. Here’s a short list of some of those substitutes:
- The service component is not the product. This happens a lot when companies are raising money. They show great revenue numbers but most of those dollars are generated by people, not product.
- The brand is not the product. I mostly see this when the strategy is to build audience — users or members or fans — then worry about revenue later. That revenue rarely materializes at the conversion rate that’s imagined.
- The company is not the product. A good recent example of this is WeWork, and whether or not they’re a technology company. Spoiler alert: They’re not.
- The customer experience is not the product. A good product delivered with excellence is not a great product.
- The marketing plan is not the product. No matter how much buzz a company or a product generates, internally or externally, there is never a causation between excitement and revenue.
If the substitutes are what we’re measuring our MVP against, we wind up with a product that won’t sell, won’t stick, won’t scale. In other words, it’s not viable.
The Wrong Market
I get really concerned when I ask what the market is for an MVP and the answer is one word, like “educators” or “moms” or “millennials.” I get especially concerned when that one word is “everyone.”
I’m not saying you have to come up with a dozen or more customer personas before you launch an MVP. But just as we have to know what our product isn’t in order to narrow down what it is, the same process of elimination has to happen with our market.
Misidentifying a market is usually the result of an effort to define a large enough Total Addressable Market (TAM) to give the product a better chance at success than it deserves.
For example, if we’re selling a privacy tool for social media users, our market is not “3.5 billion social media users.” We have to think about how many are active enough and care enough to pay for it, how many networks we can sell into, and then about 20 or 30 more questions that drill even deeper.
Most of the time, the real answer on TAM is a much smaller number than we’d like. That doesn’t mean our product is DOA, but there’s definitely a cycle of product and market definition that we need to repeat. Probably several times over before viability is even an option.
The Wrong Pricing
Pricing is easily the most difficult aspect of an MVP, which is the reason why it’s often the area where the most common viability mistakes are made.
The single largest mistake I see is when the price is simply an entry point to grow the initial customer base. In other words, not a lot of thought has gone into:
- Cost to Acquire the Customer (CAC): From first touch to when their payment hits our bank, how much money is spent? It’s also good to know how much time is spent.
- Margin: This is not profit, this is the minimum and the maximum number we can get away with between our costs and the price the customer pays. We also need to know how margins rise and fall as the number of customers scales.
- Lifetime Value: Our customer won’t be our customer forever. We need to know when they drop out, how much they’ll end up spending on us, and what it will cost to support and retain them over that period.
These are just a few of the pricing factors that impact viability. There are several more, including some that are specific to the product we’re selling and the market we’re selling to.
The Wrong Positioning
We may have a perfectly defined product and a well-defined market, but each product and each product-market fit is unique and different. Positioning is the how and the why of our product as it addresses our market.
In other words, just being an option for our customer is one thing, being the obvious choice for our target customer all comes down to how we position our product. It’s what separates our offering from all the others.
There are two mistakes I usually see in positioning. The first is that positioning is either an afterthought or not thought about at all. The fix for that is obvious.
However, the second mistake is a little more tricky, and that’s when market trends are used as a unique differentiator. Market trends are good, sometimes mandatory, and taking advantage of advancements gained through trends like machine learning, blockchain, or the gig economy can create separation.
But those trends don’t create viability for a product.
A recent and descriptive example comes from about 10 years ago when everybody was rushing to create a mobile app for every possible need, demand, or want. The handful of companies that built traction in that space were the ones that positioned themselves as something more useful than just a mobile app for X.
The Right Questions To Ask
So if you’re feeling that vague lack of confidence with your MVP (and even if you’re not), it can’t hurt to ask a few questions about its viability.
Will the MVP sell? And come up with a list of all the reasons why it won’t. A lot of people ask this question and stop when they get to yes. That’s a mistake, because the next two questions are just as important.
Will the MVP stick? Are you creating long-term customers who are going to be engaged and satisfied with your product? How?
Will the MVP scale? Are you setting yourself up for growth or are there question marks around the costs as more and more customers adopt?
Review your answers and ask yourself if any of the problems are related to product, market, pricing, or position. If any of those are the case, it might make sense to go back to the viability drawing board.