3 Keys to a Successful Startup – Part 2 – MVP

How to go from product market fit to a proven minimum viable product (MVP)

In part one of this series, I shared the #1 key to success – getting product market fit or PMF by listening deeply to your ideal clients (targeted buyers) and engaging them discussions about solutions that work and the value of that to them (the pricing discussion).

This gives you confidence that what you are launching is something people want to buy–key to know if you are going to devote significant time and money to your launch and expect to earn revenue rather quickly.

Today, we are diving into Part 2 – What you do after you have a proven concept to get your product or service to market?

What you need to prove–to yourself and potential investors–is that you can connect with and convert your ideal clients into ideal buyers. Once you do that, you have MVP–minimum viable product. What’s involved in getting to MVP?

When I left my corporate career at 55 to start The Great Do-Over, I had 20 years of product launch experience under my belt and it was still hard.

I invested in online courses, “6-figure” training programs and high-end masterminds with other newly minted entrepreneurs learning the skills to launch.

But… I noticed most of these (mostly) women failed to get a viable offering into the market. They took the course. Built their program. Invested in the tools and software to create a marketing funnel. Attempted to build a following and launch, then…

78% of them failed–most bootstrapped themselves right back into a job.

Sometimes you hope for a magic bullet. Someone must have the 5-step formula to your first 6-figures, and many will happily sell you the formula that generated millions for them.

Except – unless you have done the background work and have proven that people will buy what you are selling….unless you have differentiated yourself from your potential competitors, unless you have done a ‘soft launch’ to prove your MVP, you have a “hope” marketing strategy.”  Hope marketing strategies rarely, if ever, work.

“Vision without traction is merely hallucination.”  Gino Wickham, author, “Traction”

Let me take the mystery away for you now on how those who succeed do it and I’ll use AirBnB as an example of two guys who had a need for cash and stumbled upon a gap in the market that needed to be filled. They didn’t have a lot of capital to do it–in fact, raising money to pay the rent was the necessity that drove this invention.

Joe Gebbia and Brian Chesky innately knew the keys to a successful startup – first proving their concept and then getting people to come on board and buy–thus proving MVP. How did they do it?

Step 1 – Establish that there’s a market need

Unable to pay their rent in 2007, Joe and Brian saw that hotel rooms in San Francisco were booking up for a popular design conference. The pair decided to turn their living room into an “air bed and breakfast” by purchasing 3 air mattresses. They then built a quick and dirty website. Three guests paid $80 each, got breakfast with their hosts and a design tour of San Francisco. [Proof of Concept – check]

Step 2 – Keep iterating through failures
Joe and Brian (and new partner Nathan) tried a second and third time yet failed to get any significant traction in the market. They put together a new website and launched again, then did a bigger launch at SxSW which resulted in only two sales. They pitched investors and no one would bite. So they kept iterating.

Step 3 – Get a mentor
Broke and in debt, they realized they needed money. They set up shop at the Democratic National Convention in Denver in 2008 where designed custom cereal boxes with images of the candidates in limited editions and netted $30,000 to invest in the business. VC Paul Graham took notice and invited them into his Y Combinator accelerator and invested another $20,000 in the team.

Step 4 – Talk to your potential customers
Graham said, “Do things that don’t scale.” It’s better to have 100 people love you than to have 1,000,000 people like you,  He told them to get out to their customer base, who at that time were predominately based in New York, and get feedback on how to develop and improve their product. The founders headed to New York City to talk to actual customers.

“We learnt early on to go meet the people, to go talk to the customers, to achieve what I would call ‘enlightened empathy,’ which is getting into the shoes of the customers as close as you possibly can to see the world through their eyes.” Brian Chesky Airbnb

It was a chicken and egg problem. No one wanted to list their homes because there were no users. They weren’t getting any traction with users because there were no homes online.

It was this last step – going into the homes of their ideal clients – providing professional level photographs and holding their hand through the process of becoming a “host.” They renamed their site from Air Bed and Breakfast to Airbnb and started gathering true momentum. It was at this point, after taking a year of learning through doing, that the founders finally got true momentum off the ground.

With momentum came money from investors and the rest is history.

Stay connected for Part 3 – Traction – How to build momentum after you launch.

Til then…