1: Before becoming Zappos‘s founder, Nick Swinmurn was frustrated. He couldn’t find an online site with a terrific selection of shoes.

So, “he envisioned a new and superior retail experience,” writes Eric Ries in The Lean Startup.

One option would be to raise money to build “his complete vision with warehouses, distribution partners, and the promise of significant sales.”

Instead, he ran an experiment.  

He asked “local shoe stores if he could take pictures of their inventory. In exchange for permission to take the pictures, he would post the pictures online and come back to buy the shoes at full price if a customer bought them online.”

Nick thought customers were willing to buy shoes online. He wanted to learn if there was sufficient demand for a superior online shopping experience for shoes.

“Zappos’ initial experiment provided a clear, quantifiable outcome: either a sufficient number of customers would buy the shoes or they would not. It also put the company in a position to observe, interact with, and learn from real customers and partners.”

2: Nick built what is known as a “minimum viable product” or MVP. “The minimum viable product lacks many features that may prove essential later on,” Eric writes. The key is getting “in front of potential customers to gauge their reactions.”

The Lean Startup method is very different from traditional market research. “If Zappos had relied on existing market research or conducted a survey, it could have asked what customers thought they wanted. By building a product instead, albeit a simple one, the company learned much more: 

A: It had more accurate data about customer demand because it was observing real customer behavior, not asking hypothetical questions. 

B: It put itself in a position to interact with real customers and learn about their needs.

C: It allowed itself to be surprised when customers behaved in unexpected ways, revealing information Zappos might not have known to ask about.” 

The entrepreneur should not ask: Can this product be built?

“In the modern economy, almost any product that can be imagined can be built. The more pertinent questions are “Should this product be built?” and “Can we build a sustainable business around this set of products and services?” Eric suggests.

3: Answering these questions requires us to use the scientific method to break down a business plan into its core components and then teach each area empirically. “In the Lean Startup model, every product, every feature, every marketing campaign—everything a startup does—is understood to be an experiment designed to achieve validated learning.” 

The opposite approach Eric describes as the “just do it” school of entrepreneurship.  

“Unfortunately, if the plan is to see what happens, a team is guaranteed to succeed—at seeing what happens—but won’t necessarily gain validated learning. This is one of the most important lessons of the scientific method: if you cannot fail, you cannot learn.”

More tomorrow.


Reflection: How might I use the concept of a “minimal viable product” to test a new product or service?

Action: Discuss with my team.

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