In 2004, Eric Ries was a Chief Technology Officer (CTO) of a Silicon Valley start-up called imvu. IMVU's vision was to create a new online product that would allow users to build 3D avatars and interact with friends using their existing instant messaging network. Their product would combine two popular trends at the time.3D gaming and Instant Messaging.
However they grossly misjudged what their customers wanted and with complete confidence, put in crazy hours to complete their product.
On launch day, they eagerly waited for people to download their product but, No one was willing to download it. In an act of desperation, they invited target customers into their office and asked them questions, as they interacted with the product. It became obvious after a few interviews, that their basic assumption of what the customer actually wanted were completely wrong.
It turned out that people did not want to use existing instant messaging networks to invite their friends because they did not know if the product was cool or not. However people were willing to install a new instant messaging service that would allow them to talk to strangers using their 3D avatar. This meant Eric and his team had wasted a lot of time integrating existing messenging services like AOL and MSN among others into the product.
Eric was frustrated having wasted nearly 6 months of work, building something nobody wanted. But he was thankful for having learnt what his customers actually wanted before the company ran out of money.
However Eric couldn't help but wonder, did he really have to waste months of work to learn what his customers actually wanted? He quickly realised that the answer was ''No, of course not.'' He could have simply integrated one instant messaging network (and not the twelve that he did) and shown it to his customers, and learnt that no one wanted to use it.
Eric took a step back and saw that his approach to building an innovative product was fundamentally wrong. His focus should not have been on executing the perfect plan.
Rather, his focus should have been learning which of his plan was valuable to his end user in the least amount of time. Instead of relying on past experience, intuition or focus groups to determine, what he was doing was valuable, he should have been deploying ''Minimum Viable Product''.
A ''Minimum Viable Product'' or ''MVP'' is a product made with a minimal amount of effort, that is used to test specific assumptions, regarding the value of an idea. (don't worry it gets simpler to understand it when you read below)
Ries realised that in order to validate if an idea or project is useful for the end user, he had to follow a few steps, which would help him to understand if the product or idea would be a success and that is what Ries ended up doing.
1. User Experience Vision:
Firstly, an entrepreneur has to write down his vision for what the user will experience with the product, when the product is complete.
For eg: I have an idea of a new board game which is a combination of Monopoly and Risk. The game lets players go round the board, collecting properties while at the same time collecting an army to take down your opponent.
The first step in developing this product would be to come up with a brief step by step description of how the game is played. From the inital setup till the end of a single game.
2. Identifying Critical Assumptions:
Now that you have created your idea of the game, you can now tell your friends about it. Let's say, they absolutely loved it and they tell you that they will definetly buy your board game when you complete it. You maybe tempted to build it already but you must remember one critical assumption. Will your target audience actually buy the product? People can say they will buy something but when it comes to actually paying for it, many people tell a different story. Hence why we need the third step.
3. Build an early version to validate a critical assumption:
To test whether your customers will buy your product you will need to build an early version of it, so you know the response to it by the consumers.
The two most common ways to do this is to build:
a) a Concierge MVP or
b) a Smoke screen MVP.
The Concierge MVP is a manual method, which is quick and cheap to test an automated process. An example of this is the FIFA demo that is released every year.FIFA can test how many customers are actually buying or testing the product.
The Smokescreen MVP is about creating a front, or an illusion that you have a great product and it's at the final part of it's development. It's about marketing without a finished product and collecting pre-orders before you have a finished product. People do this by making animated videos, that talk you through the product or in this instance, our game.
4. Release and Measure:
In this step, it's time to show your MVP to a small segment of target cusotmers and then measure their behaviour. At this point in our board game example, we can buy a few ads on FB and target a small group of boardgame players. The advertisment will include the name of your game and a catchy sub-title and a link to your animated video, with the option to pre-order. After releasing your ad, you can measure the amount of clicks your ad gets vs a typical FB ad, or you can compare the average amount of people watching the videos and your number of orders.After allowing sometimes to measure this you can go to the next step...
5. Pivot or Persevere:
You can now decide to pivot or persevere based on the above steps. If your ad gets a lot of clicks but you don't get many pre-orders, it might be worthwhile to spend a bit more time tweaking the design of your boardgame.
However, if after a couple of retweaks you still don't get more than 2 or 3 pre-orders, it might be worthwhile to pivot to another boardgame strategy or an entirely different business idea.
Eric Ries says ''The sign of a successful pivot is that,these engine-tuning activities are more productive after the pivot than before.''
And that is it, now you can have all the ideas in the world and use the Lean Startup method to test which ideas are worth pushing forward and which require more improvements. I hope this breakdown was helpful and worthwhile your time. In the next breakdown I will be tackling ''The personal MBA'' by Josh Kaufman.
As always, I suggest you to read the book to get your own take from ''The Lean Startup''.
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