A short essay on a new first step in the business/product development lifecycle, popularized in web3.
The year is 2001. Wikipedia has just launched, George Bush has declared a “war on terror”, Blockbusters dot street corners around the United States, and software has yet to eat the world.
This is the same year that Frank Robinson coined the term “minimum viable product” (MVP), referring to a version of a product with just enough features to be usable by early customers.
History in the making.
Cue two decades of barely functional releases driving toward ever elusive product-market fit, my favorite of which was YouTube as a dating app.
Standard order of operations: talk to a few potential customers (optional), build product, release product, talk to more customers and iterate toward product-market fit.
Building blocks.
In the 20 years since MVP was coined, hallmarked by stealth startups driving full steam toward MVP releases before going public, an internet-driven paradigm shift occurred without anyone realizing.
I’m willing to be proven wrong but I believe Kickstarter laid the blueprint for this new model in 2009. On Kickstarter a company can bootstrap and raise funds from a decentralized audience of individuals by telling the story of their business-to-be, promising early access, beta products, and other perks to contributors.
This early iteration was good but not perfect, lacking:
- A centralized location for people to discuss the vision they support and coalesce into a community.
- Tangible ownership for community participants, providing the necessary sense of vested interest for them to want to contribute.
The first issue has since been solved with the advent of group communication platforms like Telegram and Discord. These platforms provide homes for communities to discuss freely, attract new believers, contribute feedback and ideas, and refine the vision of products to come.
The second issue was solved through blockchain technology, and its ability to confer tangible ownership of digital assets — providing early community members vested interest in the future visions they support through tokens.
The Minimum Viable Community (MVC) model.
With the appropriate building blocks in place, 2022 has seen startups form by building a community around the vision of the product or service they intend to release before putting out an MVP. Early bitcoin forums were a good example of this, and the minimum viable community (MVC) therein is simply a sufficient number of engaged people to derive useful feedback from.
Startups building MVCs tell the story of what they’re going to build, share their vision with the internet, invite people to join in its inception on Discord, provide them some vested interest in the realization of the vision (tokens or otherwise), give them a platform to share ideas, listen, and then deliver.
10–20 invested contributors is all it takes to form an MVC.
Starting with a community enables businesses to: receive instant feedback on early product versions before devoting further development time, crowdsource product ideas, create an audience for future releases, and get access to a built-in customer focus group that enables fast-paced iteration.
Community-driven product development combines the speed of centralized decision-making with the customer-centric development patterns of open-source. Product market fit is a lot easier to find when the market is by your side constantly telling you (often bluntly) what it wants.
New order of operations: release product vision, build community, release product features one by one, get feedback + iterate with community, release product into community-led product-market fit.
What works vs. what rugs.
Though the community-led product creation and distribution model sounds idyllic, it’s not without drawbacks. Discounting obvious scenarios where communities are built on false product promises and charlatan visions as a means of wealth extraction (see: 2018 ICO craze + many 2021 NFTs), building a business in the public eye is not without trade-offs.
In my anecdotal experience running an NFT project turned software company, here are a few things to avoid:
- Short term dopamine chasing. A community typically wants things that please them in any given moment. Building such things provides instant accolades and gratification for founders, and temporarily assuages the “wen?” question. Oftentimes things that serve the community in the short term are not things that move the needle for the business that generates underlying value for the community in the long term (see most 2021 NFT shitcoin releases). Cultivating patience and striking a balance is key.
- Expectation debt. Businesses should not make promises or lay out firm roadmap items for their communities lightly. Doing so leaves them beholden to staying stupid courses past their logical expiry dates, incapable of pivoting relative to promises made. Reality is that startups need to be flexible enough to pivot on a dime when things aren’t working, and the best expectation to set is that you will pivot as needed to make things work.
- Gratuitous feedback seeking. The nice thing about building in public is that you have a built-in audience to get feedback from. This is also a trap. Seeking community feedback on ideas in their infancy is a good way to feel like you’re working without working, get dissuaded away from pursuing good ideas by whoever happens to be online in any given moment, and subject yourself to the madness of crowds. Seek feedback to iterate, seek crowdsourced ideas to create.
- Popularity contests. Not all good decisions are eminently popular, and not everything should be put to a vote. Make hard decisions decisively after sourcing feedback and don’t look back.
Projects I’ve seen implement this model and avoid pitfalls effectively are in no particular order: My Pet Hooligan, Yuga Labs, DeGods, and Sappy Seals. It seems to me that game development meshes perfectly with an MVC business model, but that’s an essay for another time.
What does the future look like?
While I don’t think the future necessarily includes continued JPEG sales to people expecting an arbitrage opportunity, I do think community building + incentivization through creative token drops will become mainstream.
In my time managing a business unit at Amazon Web Services I saw most of my large Silicon Valley customer accounts move toward open-source enterprise software vendors. They preferred Apache vs. alternatives because of the wealth of community-driven information, speed of development time, and ease of use that only comes with a community origin.
I believe businesses and projects that begin in search of an MVC will win for this same reason: faster time to market, faster speed of iteration, larger base of customer support/information, faster time to product-market fit.
I think most businesses that begin with an MVC will eat market-share from those whose decision-making processes stay closed and who don’t actively cultivate communities.
These days I’m spending a lot of my professional time at UTILITI advising enterprises on their web3 strategies, and their chief concern is usually how to go about engaging a web3 community.
Safe to say the mainstream is starting to pay attention.
