If you are not embarrassed by the first version of your product, you’ve launched too late. – Reid Hoffman – Founder, LinkedIn
If I were to categorise Startups in a field of study, I would put them not under Business but under Experimental Science. In a startup, the number of variables that affect the outcome are numerous and vary widely in nature – user psychology, market behavior, natural effects etc. Your decisions become calculated guesses based on certain outcomes of the tests you are running. Thus, inculcating a habit of running experiments from Day 0 is beneficial in the longer run. And you start this habit with building a Minimum Viable Product or MVP.
MVP is the bare minimum version of your product which conveys the core essence of your business without the added frills and fancies. The product thus formed might be crude, without critical features and sometimes badly designed. But, its purpose is to provide a good enough test bed to run your experiments. Say for example, you want to build an algorithmic honeymoon destination recommendation engine for newlyweds. Before building all the machine learning and intelligence, you could start by taking inputs directly from the couples and manually scourging the best options and see if people are willing to pay for it.
That’s the key: Building an experiment which lets you test whether people will pay for the solution that you are building. Let’s have a look at some real world examples.
When I lived in Mumbai, I ordered fruits and healthy meals from a place run by a lady who sometimes delivered the meals herself. She didn’t have a proper menu – it was pasted on a blogger.com link without a good design or any other detail of that sort. I am not sure how far it went but I did order from her kitchen quite a few times since I cared about the product – the healthy food in this case. Groupon – an example I like the best because it is an outcome we know of. It started out in a similar fashion as the previous example. To promote a deal so that they can buy something on their own, they wrote a blogpost with the details of one deal and shared it with their friends. Once they saw that it generated interest, then they grew it from there.
Another example I like is of AirBnB. They didn’t start thinking that this will eventually become a $1 Billion company. They just started by renting their own place because they couldn’t afford their rent. Having strangers come into your house and pay seems like the most counterintuitive of ideas even after its success and this was a good start for them to test it out.
Closer to home, Flipkart started with selling books and Snapdeal by selling physical coupons booklets which incidentally didn’t do well for them. Now, in hindsight, these things might seem like a result rather than a thought out experiment but the lesson remains the same – Launch quick and test early.