Hearth — A Case Study on Building Product
Who we are
Dignified is a digital products lab where we build companies, both as an agency for others and for our own enjoyment. If you’d ever like to chat about what we do and how we might help your organization, please reach out goodday@wearedignified.com
Hearth is one of our own product / business concepts that got pretty far before we shelved it, I hope you’ll find this case study helpful as you go out and build your own products.
TL;DR
Hearth is a product we wanted to build to help solve the home ownership challenge many are facing today through the application of blockchain and a marketplace concept connecting real estate investors with home buyers. We decided to stop working on it after going through product validation, including an application to Y Combinator. Read on for the details on our process and what we learned and feel free to steal this idea ;)
So, what’s Hearth?
Hearth is a product aimed at trying to solve the problem of “millennials can’t buy homes”. With increasing housing costs in major urban centres (where most jobs are) paired with a much low increase in average household income you get a pretty gnarly problem of new entrants to the workforce being priced out of the market entirely.
The solution seemed simple at first, create a marketplace of sorts that connected potential home buyers with private lenders — put the lending on a blockchain to facilitate via it’s various perks (immutable, transparent, auditable, etc.) and then return value to private lenders via their ownership % of the home asset until the home buyer could either buy them out or sells the house. We dubbed it ‘fractional home ownership’.
Super easy, right? 😉
Product Discovery and Validation Framework
At Dignified, we put every idea through a discovery and validation framework to make sure we know enough before we get to work on building, otherwise there’s a lot of wasted effort. There’s always more to do but this loose framework helps us stay on track, it looks like this:
As you can see we run a few things at the same time divided up by business, tech, and design activities. At the earliest stages, we spend most of our time on the business side making sure there’s a viable market and sufficient demand for a product before going too deeply into tech or design. Now, there’s an incredible amount of work beyond ship it and inside each of the three phases but this framework helps guides us.
Hearth through the framework, what we learned
Hearth made it to the demand generation part of Phase 2 before we decided to shelve it. It’s an idea with merit, that’s why when we did our research we found so many other companies trying to solve this problem, some with significant capital raised already. Which lead to these realizations for the business:
- Changing the customer mindset of ‘home ownership’ is really, really hard
- Convincing lenders to put money into this model will be very difficult due to an inability in the early stage to estimate returns on their capital. Ex: why put $100K into a facility that may not even beat a basic stock portfolio mix?
- Blockchain use is still early
- Some competitors are far ahead in validating their products using a very similar approach we had planned, differentiation became more opaque
Applying to Y Combinator
Knowing these challenges we felt we would require venture investment to really tackle such large obstacles which lead us to apply to Y Combinator’s Summer 2018 batch, you can see our application here if of interest. (I’ve only edited out our personal contact details otherwise it’s the exact same)
Shelving it
Finally we decided to put the idea away for now, likely forever for our team, and start working towards other problem spaces. Why? This part is always difficult as it’s a mixture of data, founder conversation, and a bit of instinct — overall we felt we are likely not the right team for this market problem. At least not today.
So to anyone reading this, steal this idea!
And again if you’d ever like to chat about what we do and how Dignified might help your organization, please reach out goodday@wearedignified.com
