How to Scale Big with Your MVP
Are you or a friend working for a VC-backed startup that wants to go big quickly? Has the last round of funding set your company leaders maniacally onto the 5–10X growth track? This article can help you understand how to get there and avoid some of the pitfalls along the way.
The Story of Webvan: a cautionary tale…
“Everybody Wants to Rule the World” plays while teams of engineers and salespeople shoot Nerf guns at each other. That’s the typical image of the internet heyday of the late 1990s. In addition to fun, there was a huge pressure for the companies like Webvan to go big quickly with their exciting home grocery delivery service. So, why did this become a colossal failure resulting in bankruptcy? More importantly, what can we do differently today to avoid similar outcomes?
Webvan was backed by top VC firms, had an investment of almost $400 million and a top notch leadership team…so, what went wrong? Peter Relan, founding head of technology of Webvan from 1998–2000, eloquently tells us that there were three main issues:
- Focused on the wrong target market
- Complex and costly infrastructure model
- Expanded too fast — only possible because they had so much money!
I encapsulate these issues under the theme of trying to scale without a solid foundation.
Mistakes to avoid (or fix!)
Webvan is an extreme example — however, I am seeing the same theme of scaling without a solid foundation replay today as I consult with early and mid-stage companies. Taking lots of funding often changes the focus of companies to make back investment capital at 5–10X by expanding as quickly as possible after establishing a ‘Minimum Viable Product’ or MVP, a notion popularized by the Lean Startup.
An MVP is that product which has just those features and no more that allows you to ship a product that early adopters see and, at least some of whom resonate with, pay you money for, and start to give you feedback on
This is a great idea, but how do we know what is really ‘minimum’ and ‘viable’? Once it works for a few people, how do we get it to work for a large set of people?
Some specific examples of product issues that cause scaling an MVP to fail like Webvan did include:
- basic sign up flows not working (‘But we have QA!’)
- plain text passwords being stored and emailed (‘Is that a big deal?’)
- all metrics being focused on sales and investors but none on actual user product usage (‘Yes, we need more product investment…’)
- not interacting with real users (‘It’s difficult to arrange time with them and anyway we have no competition.’)
3 Recommendations to create a solid foundation
If you are in the state of attempting to scale without a solid foundation, all is not lost. Some of the best practices for how to handle this stage of development:
1. Double down on user experience
- You have all heard the terms ‘customer-centric’ and ‘user-first’ to describe companies and products. You want to ensure that you follow similar approaches for a scalable, long term business.
- You need to understand what your users want and launch updates (either MVPs or next step versions) that make your product even more critical to your users. If your MVP fails, you won’t be sure whether it was a bad idea vs. poorly executed unless you test it with real people (ie, perhaps it wasn’t ‘minimum’ or ‘viable’ because your user sign up flow is failing to properly accept email addresses! Or perhaps everyone is coming in via mobile and your submit button isn’t appearing properly in Safari!).
- Beyond these simple ‘it doesn’t work’ errors, you also want to ensure that your users are getting real value. For example, if you are creating an analytics product, are your users getting information that enable them to make better decisions? The graph can look cool but make sure it is providing valuable, actionable data.
Bottom line: Talk to your users, watch them use your products, go through the flows yourself to ensure you are providing value and avoid simple mistakes!
2. Define some KPIs (key performance indicators) — beyond just dollars, but look at those too!
- Rather than looking solely at your checkbook and your ability to get someone to fork over large sums of money, you should also look at usage or what I often call engagement metrics. Your engagement metrics are a leading indicator for future returns.
- If you have current customers but they aren’t using your product, that is a clear indication that they are not getting value from your product. When it comes time for an annual contract renewal, or the purchase of their next item off of your e-commerce site, if your customer isn’t there they aren’t going to buy. So, even if your sales team sold a number of annual contracts, at renewal time you might find your foundation is mush if you aren’t tracking engagement.
- Many people are collecting a ton of metrics (‘We have Google Analytics!’), but the key to evoking power from these metrics is to define what you want to track and why, define goals for each metric, and review them on a regular basis to help inform continuous improvements. Be advised as well — you can get mislead by very little data. If you only have a handful users, some of which may be spammers and bots, you don’t have enough data to come to good conclusions. To avoid over-response to a small data set, you want to combine metrics-based tracking with the user experience and user interviews recommendation mentioned above.
Bottom line: People optimize for what is measured, so make sure that you choose your metrics and targets carefully in a way that helps align the team to create the best possible outcomes for your business.
3. Invest in product development/product management
- Product Management lives at the intersection of business, technology and design. Sometimes when people hear ‘user-centric’ or design, they think the business/monetary needs will get ignored. Or that pie-in-the-sky designs are going to be passed onto developers that will cost a fortune and not add to the bottom line. The truth is we need to balance user needs (reflected in ‘design’), with making money (ie, business), and it needs to be something we can build today (with today’s technology).
- Product managers are responsible for defining and managing the product roadmap, working with all cross-functional groups to ensure alignment of plans and execution, and be experts on the market as well as your specific product. They are synthesizers of strategy and execution. They are responsible for what is live today as well as what the cross-functional teams are focused on building, marketing, and selling for tomorrow’s future business.
- For early stage companies, you can get a product consultant in to help guide your product roadmap, define your metrics, help understand user research, and build out your team. In the long term, you will want to have a person in-house owning the day-to-day needs of the product.
Bottom line: Great product managers balance user needs and business needs while working with the technology, sales and marketing teams to make the product vision a reality.
While there are many important aspects to building a successful company, having a user-centric mindset intermingled with real data will help you develop a strong foundation leading you to longterm success.
If you would like a free short consultation with a Product Management Consultant on the state of your product and some more customized recommendations for how to accelerate to the next level, write to: firstname.lastname@example.org
Jocelyn Miller is a businesswoman and entrepreneur with a deep love of product. She has worked at Amazon, Google and as Director of Product Management at Zazzle. Over the course of 10 years she has innovated in the areas of search, personalization, commerce, ads, and customized goods. She currently works as a consultant where she helps companies from the startup stage to large businesses catapult their product, people and processes to the next level.
She also teaches a number of topics to Fortune 500 companies in partnership with General Assembly. These topics include Product Management, User Experience, Rapid Prototyping, Big Data, Personalization, Managing Stakeholders, Metrics/Analytics, Roadmapping and Planning. She has recently expanded that work to large-scale organization change projects.
Ms. Miller holds a degree in Computer Science and Cognitive Science from Dartmouth College as well as Fashion Design and Interior Design certificates from Parsons School of Design. She has hosted Hiring Panel discussions at the CTO School, been a speaker at multiple women in technology events, and has partnered with Cornell Tech in critique sessions with their technology and business students. She also runs a Women Success Strategies Group.