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Here Are Two Reasons Minimum Viable Products (MVPs) Fail

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Come to Poornima’s workshop at General Assembly in San Francisco on October 27 for an Introduction to Product Development class to learn the process for picking features to create a viable MVP – register here to save 15% as a Women 2.0 member.

By Poornima Vijayashanker (Founder & CEO, BizeeBee)

Everyone wants to start validating the idea for their startup by creating an MVP (minimum viable product), but very few people get it right because they overcomplicate the process of picking features that go into the MVP.

There are two reasons MVPs fail:

  1. You haven’t figured out how to provide a simple value proposition that differentiates your product from your competition.
  2. You haven’t identified who the early adopter for the product is.

Lets start with the first reason. Before you build anything you have to know what is already out there, otherwise you’re not really innovating. I make it a point to understand why people love and hate as many of my competitors as possible.

The reason you need to do this is because potential customers are going to ask you one very basic question: “How are you different from your competitor?” If you aren’t prepared to provide a quick response, then you’ll lose the sale. Keep in mind they aren’t asking how are you better than the competition, they are only asking you how you are different.

To be different, you have to work backwards. I start by knowing all the features that my competitors offer that their customers just absolutely love (i.e. they will never come and try my product out unless I offer these features, and even then I’d have to do a much better job offering it than my competitors).

Before moving on to what my competitors customers hate about their product, I go interview people whom I think should be using my competitors product, but aren’t. Why do I do this? Plain and simple: zero switching cost. I don’t bother wooing customers that are using my competitor’s product. Instead, I go after the bucket of people that either don’t know about my competitor or don’t like them.

I fixate on the needs of those who aren’t using my competitor’s product. This requires having conversations with people to understand what their needs are. From these conversations, patterns of problems that user’s experience will emerge, the solution to those patterns is where you can start to spot the features needed in your MVP.

For example, at my last startup, Mint.com, we knew that a number of customers of people were quite happy using Quicken, and were even willing to pay for it. They loved Quicken so much they didn’t mind all the hours of their lives it consumed syncing accounts, categorizing transactions, and providing them analysis on their investment portfolio. We didn’t even bother attracting those Quicken lovers.

Instead, we looked at all the people who weren’t using Quicken. The young 20 and 30 somethings who wanted to spend less time managing their finances. We launched a whole year after our competitors at the time: Geezeo and Wesabe, but our key differentiator was that our MVP downloaded transactions automatically from your bank and credit card accounts, and automagically categorized them. Was it perfect? No. Did everyone want to sign up even though it was a free service? No. But did people understand our value proposition through our MVP as compared to our competitors? Yes. Automation was the key differentiator for us.

Just to give you an idea of how much thought needs to go into creating an MVP, I’ve documented the process for the second product I built at BizeeBee called BizeeBee Billing, which we launched a couple months ago.

The second reason MVPs fail is because people don’t bother identifying who the early adopter is, or try to cast too wide of bucket.

In August 2010, I launched an alpha version of my current startup, BizeeBee. No one except my team and myself knows how much this product tanked. Why did it tank? Because we cast a freakin’ huge net! We went after all small businesses that offer services. We built a tool that no one wanted to use. It was a valuable lesson, and we quickly corrected our mistake by doing just one thing differently figuring out who our early adopter was.

We went after a niche inside a niche market: small independent yoga studios who weren’t using our competition. Between September and December of 2010 we built our real MVP, with our very targeted early adopters, and launched in December with paying customers. Our value offering was simple and targeted: small independent studios could stop losing money on expired memberships and know how much they were making with three basic features adding members, recording purchases, and taking attendance, BizeeBee would handle tracking the memberships automatically. Starting to see a theme here?

There is more that goes into making a product mainstream.

What often happens is that people conflate success with an MVP. With an MVP you should be testing adoption, engagement, and possibly monetization depending on your user base and growth goals. Most products including the successful ones that have grown virally had their beginnings amongst a small subset of early adopters like Facebook appealing to college students, and Groupon solving a big problem of marketing for small businesses. People forget this and think they need to design for the mainstream from the beginning, and that’s what ultimately obfuscates the initial value proposition and throttles even eager early adopters.

Want to avoid getting tripped up? Come to my workshop at General Assembly in San Francisco on October 27 for my Introduction to Product Development class and I’ll teach you the process for picking features to create a viable MVP – register here to save 15% as a Women 2.0 member.

This post was originally posted at Femgineer.

Women 2.0 readers: What have you learned about building an MVP? Let us know in the comments!

About the guest blogger: Poornima Vijayashanker is Founder and CEO of BizeeBee. Prior to that, she was at Mint where she began as employee #3 in 2006, and stayed through the startup’s acquisition by Intuit for $170M in 2010. Prior to Mint, she was in the Master’s degree program for computer science at Stanford University but dropped out to join Mint. Poornima holds a double degree in Electrical and Computer Engineering and Computer Science from Duke University. Poornima blogs on Femgineer.com and is a competitive yoga. Follow her on Twitter at @poornima.