Are you sitting on a billion dollar idea?
How to know if your product is ready to take to market
“A million dollars isn’t cool…you know what’s cool? A billion dollars” we all remember that scene, don’t we?
It’s every entrepreneur’s dream, wrapped up in a 120 minute long movie (for those of you who don’t know – the movie is called The Social Network). No, I’m not going to tell you how much money you can make from your start-up, but what I will share with you today are the two methods you can use to test the waters for yourself quickly enough. And here are the two methods:
The imperfect MVP (Minimum Viable Product)
You’re a cool dude (or dudette) and you have a great big idea. DON’T build it all! Instead, spend your time spinning up a semi-baked version that’s just enough to test the water. Every time I hear someone speak about not having the structure to implement that million-dollar idea they’ve been thinking about, I sigh in despair. The fact of the matter is, that they will never know if this was a million-dollar or a billion-dollar (or a thousand-dollar!) idea. They will never know because they will always wait for a perfect execution of their idea, which will never happen. Go out there and launch the first cut of your product just for serving the first 50 or 100 customers. Gather the response. If you made £5 each from the first 100 customers, put that money into preparing your product for the next 1,000 customers. Put the revenue from that 1,000 customers into growing your product for the next 10,000 customers, and so on. Chances are, that the amount of feedback you receive from the first 50 customers will put you back to the drawing board for weeks. Take that feedback, prioritise the enhancements, and get to work on taking your product to the next level. However, you, the smart entrepreneur, need to strike the right balance – there’s a big difference between an MVP and a crap product!
Fact: The very first version of Groupon was just a wordpress blog. The founders posted each deal manually.
Fact: Zappos founder, Nick Swinmurn, bought his first lot of shoes from local stores at full price on a per-order basis. As enough people started using Zappos, Nick quickly expanded and approached shoe wholesalers based on user volume.
(The right kind of) critical mass
So, you’ve built your product and you’re stuck with five people using it. No more, no less. What do you do? Do you stop or do you keep going? It’s the golden question. Hopefully, at some point during your venture, you would have figured out what is the critical mass required for your product. In my terms, the critical mass is defined as the minimum number of users/transactions/hits etc. you require for your product to take off. However, just having the critical mass is barely enough. If you’re a photo-sharing site there is no point in having a thousand users sign up with no common connections, interests or links with one another. If you’re a banking site, however, it’s ok to have people sign up with no connections with one another. If you’re stuck with a stagnant low number of users for your product, figure out what you need to do to push that at least to the right kind of critical mass before you get even close to a go/no-go decision for your product. It may turn out that you need to change something or it may turn out that you need to pour more resources in to marketing your product.
Fact: Instagram signed up 25,000 users in its first day of launch. It spent zero money on marketing.
Fact: Brian Morgan started Adventure Life back in 1998. With a start-up cost of $3500 all in for two sets of brochures and a laptop – that was his biggest expense then. Now, the company makes over $11m in yearly revenue.
Well, the bottom line is that if Mark Zuckerberg left that meeting with Sean Parker and started working on business models, technical specs or the cloud infrastructure for the millions of users he could have – Facebook would have never seen the light of day. Instead, he chose to focus on the one most important thing – getting his product out to the people. And whether you like him or hate him, he got his billon dollars.