#7 MVP & Crossing The Chasm
⭐ Minimum Viable Product: Y Combinator’s blueprint.
🏃 Crossing The Chasm: If Wealthfront did it, so can you.
💵 Recent Deals: Smart Protection, Paack, Ladorian and more!
💭Thinking or Reading: Death by powerpoint and Siddhartha.
Check out the Community Group to meet fellow riders and share your experience 🤙
⭐ Minimum Viable Product
“ An MVP is a ridiculously simple first thing you can build to your first users and see if it delivers any kind of value.”
We’ve all been there - wasting time finding excuses about not having the perfect idea to go execute on. Michael Seibel from Y Combinator teaches you one thing on this:
LAUNCH SOMETHING BAD, QUICKLY.
The goal of a pre-launch startup is to:
Launch an MVP quickly - weeks, not months (few exceptions include hardtech, biotech and moonshots). Condense what your user needs. Notice how Airbnb’s first landing page had no payments and no map view.
Stripe had no bank deals, few features, and the founders had to come to your office to do the integration:
Get customers. You just need a few people who interact with your product and get value from it (or not).
Talk to users and get feedback. Be flexible - the problem you are trying to solve and/or the way you are trying to solve it may not be valuable. That’s ok - that’s why you are building an MVP.
Learn & iterate. Continue working on the product until it actually solves a real problem in a way users value.
Launches aren’t special. Nobody remembers when Twitter, Google or Facebook first launched (except maybe Zuck). Your goal should be to attract and learn from users - quickly.
Hacks to build an MVP quickly:
Time box your spec. Your spec is the set of things you need to build before your launch. Time box it. What things should I build if I want to launch in three weeks?
Write your spec. This will allow you to see how your spec is changing every time you do it.
Cut your spec. If you cannot meet your deadline, start cutting unimportant, or even important things. The goal is to get anything out in the world. Once you do that, use momentum to keep going.
Don’t fall in love with your MVP.
An MVP however won’t help you to cross the mighty chasm. 👇
🏃 Crossing The Chasm
According to Andy Rachleff (Wealthfront, Benchmark Capital etc):
The biggest mistake I saw start-ups make was attempting to skip the early adopter stage to move directly into the early majority stage. After all, that’s by far the biggest chunk of the market and founders wanted to get big, fast. The problem is that reaching the early majority requires references. Without them they aren’t going to buy the startup’s product — no matter how compelling it is.
Crossing the chasm (by Geoffrey A. Moore) is a great book, used in all business schools for the past 30 years - that everyone forgets about 15 minutes after the lecture is done.
Not ideal, considering it offers a pretty valuable lesson.
The book in a nutshell - every technology has an adoption life cycle:
Innovators: Start-up products initially appeal to this group, people who want to try every new thing, but who are not willing to spend much.
Visionaries: Early adopters who are willing to take a chance on a new product, as long as it solves a burning problem. MVP works on them.
Pragmatists aka Early Majority: This is the biggest group, and only attainable after you cross the chasm. Key consideration - they buy only after friends or colleagues have recommended it. These guys are the “early majority”.
Late majority + Laggards: these guys only buy after a product has become the standard, or never buy (laggards).
Earlier we talked about MVPs - it is critical to understand that a whole product is required for a technology to cross the chasm. Crucially, it will need references to sell the new technology to a broad and demanding audience.
The most important lesson in the book:
Companies must first dominate a niche of early adopters and expand from a position of strength to succeed.
This is contrary to the (relatively) common perspective that companies need to address a large market from the start - Mr. Moore advises against it.
Here’s a list of successful MVPs turned products that failed to cross such chasm:
Microsoft Zune lost to iPod.
Myspace lost to Facebook.
HP’s Touchpad lost to iPad.
Pebble was eventually purchased by Fitbit.
Here’s a list of company’s that crossed the chasm following Moore’s advice:
Facebook started with students at Ivy League universities.
eBay focused first on collectibles.
LinkedIn’s initial target was execs in Silicon Valley.
Google’s early ads appealed to start-ups.
Amazon started with books.
These companies eventually added functionality to address the early majority, but not from the beginning - over time.
How do you cross it?
Here’s a how Wealthfront attacked it:
Secured a niche. They went after Facebook employees, who they thought would be more interested in the quality of their user experience than the assets under management (they had none). They were also incentivised considering traditional financial advisors typically required a minimum deposit of 1M Vs 5K in Wealthfront. Once they were in, they went after Linkedin and other Silicon Valley usual suspects.
Made a strong claim — They positioned themselves as a market leader, within their niche.
Got their references - $1 Billion under management in 2.5 Years.
Ignored the nay-sayers - Their competitors in the automated investment service market (today a fraction of Walthfront’s size) made fun of their narrow focus. Industry gurus thought the competition was much more likely to succeed because of their larger market focus. They were wrong.
💵 Recent Deals
Paack (last mile ecommerce delivery) raised $53m.
Smart Protection raised €10m.
Ladorian (adtech) raised €5m
Veridas (digital ID verification) raised €4m
Netex (edtech) raised €3m
Katoo (hospitality) raised €3m
Energy Solar Tech raised €2m
Multiverse (quantum computing) raised €1.5m.
Homyspace (hospitality) raised €1.2m
bnc10 (neobank) raised €1.1m
Assembler School raised €1m
eYard (logistics) raised €800k
Roadstr (social network) raised €760k
Lifecole (edtech) raised €600k
💭Thinking or Reading
Death by Powerpoint
This video on how to avoid death by powerpoint is definitely worth 20 minutes of your time - it’ll save you countless boring presentations. Here’s a summary:
Siddhartha by Hermann Hesse
Best book I’ve read in a while.
“I have always believed, and I still believe, that whatever good or bad fortune may come our way we can always give it meaning and transform it into something of value.”