A bunch of terms get thrown around quite a bit in matters concerning startups. And “MVP” is one of those fancy terms. Although it is thrown around quite a bit like my other favorite, “disruptive”. What I’ve seen is that most of them don’t really get either terms. We will talk about these common misunderstandings in future articles. This article is about something completely different.
When you sit down by yourself or with your co-founder(s) to plan which features will make it to your MVP, there are certain things you can do to figure out if your idea is worth pursuing. While not all ideas will lend themselves to this kind of checking, most ideas will. The logic behind this exercise is very simple: determining if your product idea really will solve a problem.
I call this Minimum Viable Potential, the other MVP. You have an itch and you assume that others will have the same problem and you are justified in putting in a couple of years to develop a product. But, there should be enough people with the same problem, so that you have a sufficiently large market to address. This is important. There are certain ways to figure out if a large enough market exists for your product idea. Because only a fraction of that market can ever be captured by you, it is on you to make sure that the market is large enough.
If a problem you intend to solve is something that lots of people are having, then they are almost certainly looking for a solution. They are looking for it on the Internet. Google AdWords has a very useful tool called the Keyword Planner which you can use to see how many searches are being made every month for a particular phrase (which is called a keyword).
One boring weekend, I made ComfyRead so that I could send articles from my iOS devices to my Kindle for later reading. A quick search on the Google AdWords Keyword Planner showed me that there were a few thousand people searching for "send to kindle" every month. It was worth the extra effort I needed to spend on polishing the app and putting up a super-simple, one-page website to go with it. I later had some very interesting learnings from this app, which I published in a Medium post. The Hacker News discussion for this article has more than a 100 comments.
One thing you have to keep in mind while using this Keyword Planner technique is this: users don’t search for products they don’t know they need. In this slide set named “Dropbox Startup Lessons Learned” by Drew Houston, Dropbox’s founder and CEO, he talks about various growth hacks they employed. Pay attention to slide #27, where he talks about measuring something that doesn’t exist. You’ll need to remember this point when employing this technique.
You get into a market that already has some established players. Even though you have some distinguishing features, unless your product is dramatically better than existing ones, it will require conveying your product advantages over existing ones to your users in the few seconds of attention span they give you. This is tougher than you can imagine. This is assuming you are able to drive traffic to your website.
You’ll spend some amount of money on online advertising, say, to bring traffic. Then, a certain percentage of those visitors will convert into your paying customers. But if the pay per click rates are high or your conversion rates are low, or both, you’ll need to see if your cost per acquisition (CPA) is less than what an average user will pay you over her lifetime as your customer. If your CPA is higher, your product’s business model isn’t viable.
Try to bring in traffic with AdWord campaigns even if you don’t really have a product. All you need are a bunch of landing pages. You can count making the user sign up for a product release announcement newsletter as a successful conversion, for example. This should give you an idea about where your CPA is likely to be on launch even before you have a single line of code written.
Don’t stop there. There are several other things you can do. You could see how well a version of your explainer video affects conversion. You can A/B test pricing to see how that affects conversion. There is no limit to the number of experiments you can do to see how accurately you can arrive at your CPA. Your startup really depends on it.