The Lean Startup - Eric Ries [40]
As they met potential customers in those settings, they would interview them the way any good market researcher would, but at the end of each interview they would attempt to make a sale. They’d describe the benefits of FotT, name a weekly subscription fee, and invite the customer to sign up. Most times they were rejected. After all, most people are not early adopters and will not sign up for a new service sight unseen. But eventually someone did.
That one early adopter got the concierge treatment. Instead of interacting with the FotT product via impersonal software, she got a personal visit each week from the CEO of the company. He and the VP of product would review what was on sale at her preferred grocery store and carefully select recipes on the basis of her preferences, going so far as to learn her favorite recipes for items she regularly cooked for her family. Each week they would hand her—in person—a prepared packet containing a shopping list and relevant recipes, solicit her feedback, and make changes as necessary. Most important, each week they would collect a check for $9.95.
Talk about inefficient! Measured according to traditional criteria, this is a terrible system, entirely nonscalable and a complete waste of time. The CEO and VP of product, instead of building their business, are engaged in the drudgery of solving just one customer’s problem. Instead of marketing themselves to millions, they sold themselves to one. Worst of all, their efforts didn’t appear to be leading to anything tangible. They had no product, no meaningful revenue, no databases of recipes, not even a lasting organization.
However, viewed through the lens of the Lean Startup, they were making monumental progress. Each week they were learning more and more about what was required to make their product a success. After a few weeks they were ready for another customer. Each customer they brought on made it easier to get the next one, because FotT could focus on the same grocery store, getting to know its products and the kinds of people who shopped there well. Each new customer got the concierge treatment: personal in-home visits, the works. But after a few more customers, the overhead of serving them one-on-one started to increase.
Only at the point where the founders were too busy to bring on additional customers did Manuel and his team start to invest in automation in the form of product development. Each iteration of their minimum viable product allowed them to save a little more time and serve a few more customers: delivering the recipes and shopping list via e-mail instead of via an in-home visit, starting to parse lists of what was on sale automatically via software instead of by hand, even eventually taking credit card payments online instead of a handwritten check.
Before long, they had built a substantial service offering, first in the Austin area and eventually nationwide. But along the way, their product development team was always focused on scaling something that was working rather than trying to invent something that might work in the future. As a result, their development efforts involved far less waste than is typical for a venture of this kind.
It is important to contrast this with the case of a small business, in which it is routine to see the CEO, founder, president, and owner serving customers directly, one at a time. In a concierge MVP, this personalized service is not the product but a learning activity designed to test the leap-of-faith assumptions in the company’s growth model. In fact, a common outcome of a concierge MVP is to invalidate the company’s proposed growth model, making it clear that a different approach is needed. This can happen even if the initial MVP is profitable for the company. Without a formal growth model, many companies get caught in the trap of being satisfied with