Beyond MVPs: The Livable House

Around 10 years ago, the startup world was obsessed with the concept of an MVP, or Minimum Viable Product. An MVP is an early version of a product that has just enough capability to be usable by early adopters who can provide feedback.

Popularized by Steve Blank and later Eric Ries, every tech startup was focused on coming up with the simplest thing they could ship— maybe a clickable prototype, a quick video like Dropbox, or a product that had humans secretly handling tasks behind the scenes (a la Wizard of Oz).

From 2010-2015, we created over 50 MVPs for different ideas—everything from youth sports apps, to a storage service, a fintech app, a vertical CRM, BI tools for auto dealers, & clinical trials tracking. I’ve gotten my mileage out of the concept, but it’s not going to cut it outside of the earliest days.

When I switched to working in an established company building enterprise software, mentions of MVPs were laughed out of the room. Every company has to innovate and build new products, but to muster enough resources and political support at an established business, you’ll have to think beyond the MVP to something that can build legitimate traction with customers.

Where do you start?

When you talk to a lot of customers, you’ll probably come up with hundreds of different feature ideas. You might even run a prioritization exercise like RICE to sort them out. But ultimately, you’re going to have to come up with an initial scope targeted at a specific kind of customer.

Enter the springboard to better products…

The “Livable House”

People will move into a Livable House. It probably has the basics—electricity, running water, insulation. It’s not the biggest house. It doesn’t have everything you want. But it can improve over time. For now, it serves a distinct limited purpose.

The important thing is that the Livable House serves a real problem for a specific customer in a somewhat differentiated way.

So how do we decide what to include in the Livable House? What we can do is package up different combinations of features, or product capabilities, and determine how many customers will buy/use each combination. It’s a bit like a demand curve analysis, except instead of comparing price and quantity demanded, you’re looking at value against the number of customers who will buy something.

We’ll use a silly, but relatable example of creating a basic office. To simplify this model, let’s say you’re charging the same amount of money for your entire product, and so each package generates the same revenue per customer. Instead of cost, let’s use time to build.

When you’re building a product roadmap and making a significant investment, you have to see beyond the Livable House. Our example here is “The Full Picture,” an office with work and social areas. You’ll need to develop a larger grasp of the market potential, the customer needs, and a complete solution that is truly differentiated. Knowing this end state allows you to reverse engineer the starting point, your Livable House.

The important thing is, you need to find the smallest possible thing that you can deliver, that customers will genuinely buy/use, that builds a foundation towards your desired end state, that minimizes rework and backtracking or paints you into a corner, and gives you momentum to continue investment. Let’s consider the options:

• Option A, The Game Room, might be tempting because it only takes 6 months before you can get customers on board. However, it has lower demand because it’s used only 40% of the time.
• Option B, The Conference Space, is quicker to build (7 months) than Option C, and it provides more value than the Game Room, but it has one big problem- it only has 1 main room, and it will be challenging to split this into 2 rooms later while people are using it.
• Option C, The Office Behind Lobby, is closer to your target end state, but it takes an additional 50% longer than Option A to deliver to customers. It provides more value to customers, since they can use it 80% of the time.

There’s no obvious right answer.

It’s a matter of trade-offs and gauging how long your stakeholders are willing to wait for the right product. And perhaps most importantly, you have to find something special to include in each phase of your product. Your customers don’t want to buy something that is purely foundational (e.g. just a room with electricity, water, and heat). It should serve a purpose, solve a problem, and include something novel and thoughtful that sets the tone for what’s to come.

You can put together different packages, create prototypes or designs, and survey or test with your customers to gather this potential demand, then have your engineers estimate the effort required to build each solution.

The Imitation Illusion

Here’s a common scenario: when your executives see the competition innovating and they ask you to build a competitive product, you might think it’s simply a matter of following your competitor’s playbook and adding your own twist.

It’s tempting to believe that if you know the end state of a product, you could recreate or copy it in another situation.

If you could travel back to 2004, could you rebuild Facebook?

If you could travel back to 2009, could you rebuild Uber?

Most of the time, you can see the end state, but not the journey to get there. And if you try to mimic the end state, you’re likely to run out of resources or support before you get there. The art of building a great product roadmap is in finding these useful intermediate states on your way to a superior product.

You want to pick the right Livable House.

But that’s not the end. You’ve chosen the scope for your Livable House. You’ve built it and delivered it to customers. They’re happy with your product, but they’re looking for more. Now you want to continue on your journey to your ideal end state.

The next challenge might be even harder, which is to find the right path that allows you to enhance your product towards your end state. But you risk being stranded along the way with a partial solution with too many loose ends.

I call this challenge “The Lily Pad Problem.”