Testing the market before you build a product

Mangabox on Instagram

Jason Kottke’s just shared an interesting story about Instagram shops which are doing gangbusters in Kuwait.

A description from ‘shop’ owner Fatima Al Qadiri:

If you have an Instagram account, you can slap a price tag on anything, take a picture of it, and sell it. For instance, you could take this can of San Pellegrino, paint it pink, put a heart on it, call it yours, and declare it for sale. Even my grandmother has an Instagram business! She sells dried fruit.

Amazing. This is not only such a low-impact way of testing the market for a particular product, but it’s so smartly circumventing issues around modern shopping cart systems.

Specifically, the sellers can:

  1. Easily update their inventory from their mobile phone.
  2. Quickly share new inventory across multiple networks.
  3. Easily conduct their business from their mobile phones by leveraging low-cost options like WhatsApp.
  4. Leverage another network without the need to integrate APIs. In this case, by using Instagram directly.

No storefront maintenance, no hosting requirements, no need for a desktop or tablet, no fancy marketing. Just the goods.

This kind of lightweight testing is great for getting an understanding of market interest in your product and can lead to great insights, just like the four noted above.

[Ed.note: This post originally appeared Say Yeah! blog on Friday, July 12, 2013. It has been republished here with permission]

Nail it before you scale it

Editor’s note: This is a cross post from The Meaford Group written by Peter Smith (LinkedIn). This post was originally published in January 28, 2012 on The Meaford Group.

The Homer by Carlos Bisquertt © 2007

I love working with Robin Hopper, my co-EIR at the Innovation Factory, for the simple fact that the guy has more catchy cool acronyms and phrases that make me sound so smart when I repeat them. “Nail it before you Scale it” is one of his latest.

Put simply, too many start-ups try to scale their marketing and sales organization before they have nailed their value proposition and the sales story that goes along with it. The consequences can be disastrous.  Over a beer, ask Robin about the story of how he blew through $3,000,000 in investment capital on one of his early start-ups because he expanded too early without really having the customer-compelling value proposition figured out.

Howard Gwin talks about the need for first time founders to create momentum and velocity in order to overcome the investor bias against funding first-time teams. (The Three P’s of a Technology Company). If you haven’t read his blog, do so now. He offers sage advice to wait before seeking VC funding until you have “proof points and a traction story that is damn near breathtaking”. Beyond that, don’t fall into the trap of trying to create that momentum before you fully understand why the market wants your technology and how you package it for consistent, reliable and predictable sales.

At the Innovation Factory, we work with many start-ups. Most go through one or more “Pivots” before they find the kernel at the core of their product or idea that will really sell.  Unfortunately, some will never find it because even though the idea or technology was interesting or cool, the product will never be compelling to an intensely competitive marketplace. Good entrepreneurs figure this out fast and kill the idea but then move on to another.

I recently met one of these entrepreneurs. He built and sold his first company when he was 19 for $100,000. (It may not sound like much but I wish I had a hundred grand when I was 19). His second company was a professional services company. He built it, had success and then killed it because he realized he could never scale it fast enough to fulfill his dream. His third company was a software company and dealt with project management infrastructure. The idea and technology were good but the market was crowded and more importantly, the sales process would be long. There also were too many factors out of his company’s control in the value chain of customers getting value from his product. He had arranged Angel funding and was ready to launch but instead he listened to advice and killed the company before taking the investment. His fourth company looks like a winner. It is in a hot space, has uniqueness, has the ability to scale quickly around a solid value proposition and he has surrounded himself with a good team. He has also already pivoted at least once on his value prop in order to get ready for traction.

So, if you are early in your game, my advice to you is simple:
  1. Figure out your value prop
  2. Keep pivoting it and your company until you have proof points that you can create massive momentum and traction quickly
  3. Use Friends & Family and Angel funding to keep you going through these phases
  4. Then go talk to VC’s.

In other words, “Nail it before you Scale it.”

Editor’s note: This is a cross post from The Meaford Group written by Peter Smith (LinkedIn). This post was originally published in January 28, 2012 on The Meaford Group.

Startup’s Razor

Here’s is a lesson I (almost) learnt the hard way.

Back in 2006, I met a talented developer who had built a novelty web telephony product. We caught up for a tea and discussed applications for the technology. One ambitious idea was to create something akin to Yahoo Pipes with the Asterisk open source PBX. Pretty awesome, right?

With one developer and one designer we got started with a simple proof of concept. Then he broke (and almost lost) his leg snowboarding – out of commission for months, the project got dropped. Had he not wrapped his leg around a tree, in retrospect I am fairly certain the project might still have been left in the dust… read on.

There is a principle known as Occam’s Razor, which has been tabled by many great minds. It goes something like this:

Frustra fit per plura quod potest fieri per pauciora. – William of Ockham

Make things as simple as possible, but not simpler. – Albert Einstein

Keep it simple stupid. – Kelly Johnson

Fast forward to 2009, along came Twilio, an IP telephony platform exposed as a service via a simple API (it rocks, check it out). Fact: an API is far less complex than building a drag and drop pipes type solution.

The simplest solution, all else being equal, wins.

Why? The simplest solution is fastest to implement (aka Minimum Viable Product). The simplest solution addresses the broadest possible set of customer use cases. The simplest solution leaves the most capital to direct into the drivers of growth other than product development.

Can your product be too simple? Can you cut too much? Sure. That said, I’d bet you need to keep shaving (we did).