Many early-stage teams get very consistent feedback from investors when they try to raise their first institutional investment — what does your customer think? Here’s what it takes to turn a minimum viable product into your most valuable player.
Many early-stage teams get very consistent feedback from investors when they try to raise their first institutional investment — what does your customer think?
While this sounds like a really simple question, it can be really hard to answer. First, a team has to know who their customer is — finding out who wants to buy what you are making can take lots of work, and almost always involves lots of talking to people. Many fantastic founders struggle to tear themselves away from all the fun of building cool stuff, and do not prioritize making time to actually talk to potential customers.
This can be a bad idea!
Founders will have a hypothesis, and testing this hypothesis with customers helps to validate both the product/technology and the business model. Being able to quickly iterate through a design-test-feedback loop with a customer enables a team to identify where any true value or differentiation can be found, and converge quickly on an alpha version of a potential product. There are many ways for both software and hardware startups to get valuable early feedback that helps them understand whether they are solving a problem that people are willing to pay for.
Software MVPs — Eating The Dogfood
We have been watching the emergence of low-code and no-code platforms as a way for founders to prototype on the software side, and we like the way that these can provide very quick ways to get a minimal product in front of someone. For founders who are stretched many different ways or founders who have the market/product vision but lack deep experience in a part of the tech stack, the ability to prototype quickly and efficiently can be revolutionary for early-stage companies.
Some of the products you can build using these platforms and simple APIs can be really effective.
For example, just a few weeks ago I got asked by my wife if I had any ideas of how to manage COVID-19 contact tracing for an event that she was involved with the planning. While the organizers have made sure that they comply with all state and local guidelines around holding the event, they wanted to ensure that there was also a way to manage registration, COVID-19 protocol compliance, and post-event tracking if necessary. It sounded like an interesting challenge, so I (foolishly?) volunteered to try and put something together
It had been a while since I had built anything for public consumption (my GitHub repos are mostly badly documented perl and all just stuff I use myself), but once I started it was incredibly easy to bolt together a simple, lightweight, mobile experience using platforms like Airtable, Autocode, Zapier and Twilio. I had a prototype up and running very quickly, and that’s where the magic of quick iteration helped to drive my prototype to a final design.
Some of the products you can build using these platforms and simple APIs can be really effective
I initially tried using email for sending feedback to users, but experiments showed that some of these emails were being filtered by firewalls so we switched to Twilio and SMS by plugging into the Twilio API. Feedback from another beta user highlighted that a couple of additional data parameters were needed, and these were quickly added.
The rapid and efficient loop between design changes and user feedback meant that we converged on a very robust design in just a few hours, and all it cost me was a few dollars in Twilio credits.
Airtable now provides both front-end data capture and a cloud-native data backend, while Zapier acted as the glue to hold everything together.
A call out to some simple routines hosted on Autocode generated a unique QR code for every new record in my Airtable base, and this QR code can be sent to users through Twilio and used for compliance checks at the event itself.
These aren’t the only platforms or options for handling every step, I’m pretty sure that I could substitute other platforms like Replit and Integromat and manage to get a very similar result very quickly. The flexibility and speed these platforms bring through APIs are really powerful.
Scaling up to handle the small number of people expected at the event will cost less than $100, with all the expense being single-month subscriptions to the various platforms to handle the expected volume. If all I wanted to do was to show a functioning prototype the cost would be essentially zero.
While any prototype built this way may not be all that robust and will not scale well, it can be incredibly helpful when iterating on an idea.
Hardware MVPs — Still Lots of Opportunity
Where developing an MVP gets really interesting is when the hardware is involved — and here an MVP can be even more compelling to both early customers and investors.
Orbital Ventures is an active investor in multiple hardware companies, so we have been following the same phenomenon of early and rapid prototyping since it started to emerge in the hardware world.
I got the OK from Promus Ventures portfolio company Whoop to include a couple of pictures of their early product prototypes to show how bare-bones these can be. Despite the messy cabling and lack of industrial design, really fantastic products can be built using rapid hardware prototyping platforms, and these can be incredibly effective in demonstrating a vision or concept and eliciting feedback.
For Whoop, a company that helps pro sports superstars on the journey to earning Most Valuable Player awards, their early hardware MVP was in many ways their MVP!
Saying that it is still not as easy as it could be to build a full-stack hardware product, and we are definitely always excited to talk to teams that are helping to make it easier.
On top of the challenge of prototyping the product itself, there are a number of startups emerging to help with all the additional processes and complexities hardware companies face — everything from tracking hardware specifications to managing production and manufacturing. Some of these are similar to platforms like GitHub on the software side, but there are lots of additional challenges and quirks that hardware startups have to grapple with, many of which are down to the analog nature of the real world and dealing with information as you work through an atoms -> bits -> atoms loop.
Many of these hardware-focused design tools are really interesting, but we think there are still lots of opportunities to generate and capture value by making full-stack hardware prototyping as easy as it is in the software-only domain. We’re actively looking for teams and startups that are solving problems for hardware companies, and promise we will try to build something cool ourselves as we try platforms out.
Conclusion
No matter what you are building — software, hardware, or some full-stack product — building an MVP and getting feedback from the market is worth the investment. Get out there and use your customer’s input to build something awesome!
Recipients of this post are not to construe it as investment, legal, or tax advice, and it is not intended to provide the basis for any evaluation of an investment in any fund. Prospective investors should consult with their own legal, investment, tax, accounting, and other advisors to determine the potential benefits, burdens, and risks associated with making an investment in any fund.
