Module: Think Big. Lesson: Validate Customer Demand with Your MVP. In this lesson, you will learn what is and what is not an MVP. Two, how to use MVPs to test product-market fit. Three, the role of MVPs in testing go-to-market strategies. MVP stands for minimal viable product. Your MVP is a version of your product built with the least effort possible to answer the following two questions. One, will customers buy your product as you predicted? Two, is continuing to make and improve this particular product worth your and your team's time or should you pivot to a completely different product? If your MVP sells as you expected or better than you expected, then congratulations, you found product market fit. Since your MVP is the first release of your product, we can also call it V1, which stands for version one. V2 or version two, is a generic abbreviation for the next iteration of a product after the MVP. A successful product will have many versions where hopefully it gets better and better. For example, at the time of recording, I'm using Google Chrome version 81. Topic, How People Screw Up Building an MVP. Sometimes you'll encounter founders or investors who don't grasp the concept of an MVP. They'll usually get it wrong in one of two ways. On the one hand, they take the idea that an MVP should be the least effort possible, too literally. Juicero was a company with a single product offering, a $700 Wi-Fi connected juicer that smashed a produce pack at the push of a button. The machine had 400 custom parts, QR codes, an app, and allowed customers to subscribe to farm to glass juice service. Anybody think a little bit overkill just now? Founder Doug Evans, convinced Kleiner Perkins and Google Ventures to top tier venture capital firms in the Silicon Valley to give him $120 million to build Juicero based on just one drawing. Doug told investors and the public, the machine squeezed produce packs with enough force to crush two Tesla's. Now whether or not you'd need that, I don't know. Maybe that helps you make better juices. Well a Bloomberg reporter squeezed the pack with his hands. The juice tasted the same, but the reporters hands made the juice faster than the Juicero. Kleiner Perkins and Google Ventures decision-makers, when asked about their decision, said they were surprised at how large the Juicero was in real life. Perhaps they could have made a better decision by insisting on using a working prototype. On the other hand, some people go to the other extreme and keep delaying the MVPs launch in a futile quest for perfection. You can ask these people, are your ideas must haves or nice-to-haves? Are your competitors also blocked by perfection or will they be launching soon? Do you have sufficient funds to keep paying everyone during this delay and how can you validate customer support for your product if they can't buy it? The safety valve to appease these people is to tell them that their ideas can be part of V2. For our see one, do one, teach one exercise, I'll walk you through some model MVPs. Then you will describe the MVP for your product, or if your product actually exists, show me its earliest version. Either way, you'll also explain why your MVP is minimum effort for you to build while also being the best way to validate your customer assumptions. Here's the MVP from Amazon, which was launched in 1995. Why is this MVP minimum effort? Initially, Jeff Bezos wanted to create an online marketplace, but systematically eliminated products until he only sold books because they were very cheap per unit. Rather than purchase commercial space, he and early employees sold books from his garage. The web page is essentially just text and links. How did customers validate this MVP? Two months after launch, sales were $20,000 a week. Now, this is the MVP for Twitter, which was launched in 2006. Why is this MVP minimum effort? It's the result of a few employees at a failing tech company. Apple just crushed the product it was developing by launching iTunes. Before shutting down the companies, their employees held a one-day hackathon. One of the results was Twitter. How did customers validate this MVP? Employees of the company spent hundreds of dollars on SMS to post on Twitter. Also, the employees realized Twitter's product-market fit after a San Francisco earthquake when Twitter users reported the earthquake faster than television news channels. This is the MVP for Tesla, which was launched in 2008 and discontinued in 2012. Why is this MVP minimum effort? Elon Musk wanted to build electric cars but had no auto industry experience, so he partnered with luxury car maker, Lotus, for a limited run of Tesla Roadsters built with six percent Tesla parts and 94 percent Lotus Elise parts. This allowed Musk to rush to production quickly using the Elise parts and systems that were already approved by regulators around the world. Can you tell which car on the screen is the Lotus and which one is the Tesla? How did customers validate this MVP? The Tesla Roadster cost over $100,000 compared to the Lotus Elise costing $50,000, and customers had to make a large cash deposit to reserve just one car. Critics correctly stated that Tesla was a Lotus with a battery, but twice as expensive. However, the Roadster quickly sold out, demonstrating customer demand for electric only cars. Now it's your turn. Think about your product. If it's a novel concept, write down a few sentences to explain what your MVP will look like, and side note, if you'd like to pitch it to me, you know where to find me. If, however, you are using an existing product during this course, research as MVP, just like you saw me do. Enter a picture or a link to the MVP here. Now that you have a description of your product, post it in the discussion board along with brief answers to the following questions. One, do you think this MVP reflects minimum effort? Why or why not? Two, do you think this MVP will or did validate customer demand? Why or why not? Add it to the discussion board and take a look at what your classmates also found.
