Success through validation— Netflix, Product Hunt etc.
Came across an interesting article by one of the most revered startup investors in India, Mr.Shekhar Kirani and just couldn’t help but try out his suggestion with some companies I have admired for a while. The first question that came to mind while analyzing these companies was “how did they validate their core idea”?
‘Lean Startup’ by Eric Ries explains how every company starts with risky assumptions that could potentially make or break a business and how MVPs (Minimum Viable Product) are a great way to validate these assumptions. To answer the earlier question that came up, all I had to do was find out the assumptions made by the companies and the MVPs they used to validate those assumptions.
Netflix
I use this service almost everyday to wind down from a long day’s work and it almost never disappoints with the plethora of content it offers. Netflix really has come a long way to reach this point, from being a company that delivers CD/DVDs to people who have subscribed to their rental service, to being an internet giant it is today.
Reed Hastings and his co-founder zeroed in on this idea after seeing the success that companies like Amazon enjoyed riding the internet wave and they started off with few risky assumptions as mentioned below:
- People are frustrated with late return fees in the current movie CD/DVD rental business
- CD/DVDs will be delivered to people’s homes without any damage
- People like the convenience of being able to select the movies online and receive them right at their doorsteps
Smooth delivery was one of Netflix’s riskiest assumptions since their whole business model revolved around that initially and hence, they started with testing it out first within a few blocks. When the delivery arrived in one piece, the founders decided to officially launch in 1997 with a simple website that just lists out the titles they had and had a registration form for people to enter their details and rent out the title of their choice. Soon after, it became quite evident that the market validated the idea since the numbers reached 300,000 users by the year 2000 and then went on to grow to 4.2 million by 2005. (Source)
The real breakthrough however, occurred when Netflix had started investing 1 to 2 percent of their revenue in downloading content, recognizing the growth of the internet early on. This as Reed Hastings had mentioned during a CNBC interview, reduced their mailing cost significantly which allowed them to distribute their content at a massive scale as we see it today.
Product Hunt
The reason I like Product Hunt a lot is because of Ryan Hoover’s meticulous approach towards building a vibrant community of product enthusiasts. It is not only a place where you can showcase what you have built but also a great place to receive valuable feedback from early adopters. Even great companies like Invision, Snapchat, Slack etc. use the platform to introduce new features or products to gain early traction.
You can say that Product Hunt is an embodiment of Ryan Hoover’s interests, since he is constantly on the lookout for exciting products himself and writes a lot about them. It was this interest that led him to launch a platform that will help product enthusiasts like himself to learn about great products or even showcase some of their own.
Linkydink was the platform that was used to create a ‘mailing list’ MVP to test out the following assumptions:
- People would be interested in joining a community which enables them to learn about new products that are curated.
- People would recommend new and exciting products that they come across, to the community
You can take a look at the links given below to learn more about the results from the MVP and how the actual MVP worked:
Since then, Product Hunt has been acquired by AngelList and has gone through many iterations based on constant user feedback which has made it “the” platform where you can find products that are hidden gems.
Other notable MVPs you can refer are that of Uber, Dropbox & Airbnb which are given in this link — MVP case studies
Curious to learn if there are any other interesting examples you have come across or if you would like to add any other points to the above.
