What Is Your Minimum Viable Market?
Eric Ries is often cited for his belief in developing the “Minimum Viable Product” in order to get to market as fast as possible, test some theories on whether it solves the core problem you’re aiming at, and iterate from there. We did that with Ramamia and truly believe in it. There’s a problem beyond the Minimum Viable Product and it’s often overlooked by most entrepreneurs and that’s asking What is the Minimum Viable Market? In Short: What is the smallest sector/niche of your TAM (total addressable market) that you can launch to and completely dominate in order to test your hypotheses about the minimum viable product?
Don’t Spray and Pray
Too many entrepreneurs go with the whole spray and pray approach to launching their product. How many times have you heard an entrepreneur say “We just need 1% of a 10 billion dollar market, we’ll be multi-millionaires”. This often ends in a grim fate for the startup taking that approach out of the gate. Your goal is to be a lean startup that can out maneuver big companies… not act like them! Lean startups can only do so much and need to focus their energy on establishing a beachhead. Instead of going for 1% of a multi-billion dollar multi-national market, I say why not go for 66% of a very small market to start with? Paul Buchheit said it best: “Find 100 happy users and then you’re ready to launch.” It’s a lot easier to do that in a small market that you can target in on with laser focus.
We have opened up Thefacebook for popular consumption at Harvard University
Remember those days when Facebook was TheFacebook and it was just a Mark Zuckerberg Production? Here’s an article from the Harvard Crimson when Facebook was a new born. Zuck didn’t go out and launch the site to every school nationwide, add in tons of features (he had a Min. Viable Product), and allow everyone in the world to register. He tested it in a minimum viable market of one university: Harvard University. Facebook gained 66% market share in 2 weeks and started to build buzz. It also let them focus in on where to expand to next. How much market share do you think thefacebook would have gained if they didn’t go after a minimum viable market? Probably about <1% of the entire college market. Find the Harvard University for your startup. It can be a city, certain portion of the market you’re going after, a trial customer, or even a small niche.
Chill, You Can Still Think Big Long Term
I’m not advocating that your minimum viable market is ALL you should go after. All I’m saying is that you should start out in a small portion of your total addressable market that you can dominate. By starting out in your minimum viable market you can do a lot of great things that matter when resources are low, you are living on ramen, and need to get steady growth somewhere:
- The users are more likely to be passionate since they are all close to each other either digitally and/or physically.
- You can really look at statistics and figure out what went wrong without screwing up with your entire market. It’s okay to screw up at one university. Do it with the entire college system and you’re in for a headache/support requests you can’t handle.
- You won’t feel overwhelmed.
- You can find out where you need to iterate with your minimum viable product.
- Scaling probably won’t be an issue. Imagine if Thefacebook hit it big at first with 100k users instead of 4,300? That would have been hard on a simple dedicated box from a boutique hosting firm. 2004 didn’t have Amazon Web Services either.
- Getting press will be easier. You can go after publications in that niche and not get the door shut in your face. Think Harvard Crimson vs. Wired.
What are some other examples of companies that started with a minimum viable market? (Ill add in some that are left in the comments section):
- Craigs List
- Daily Candy
- Foursquare
- Weblogs Inc.
- Gawker
- TutsPlus
- WooThemes (they’re going after drupal, magento,etc. themes soon)