The Lean, Agile Way to Build Your First Product

So far in this series

on launching a startup, you’ve learned how to come up with ideas for your

startup, how to test out those ideas and select the best one, and how to recruit

a team of founders.

Now it’s time to start

building your first product.

We’ll explore the

latest theoretical approaches, like agile development, minimum viable product

(MVP), and lean startup principles. But don’t worry—it will also be a very

practical tutorial, in which you learn how to put these theories into practice,

and see examples of how it’s been done in the real world by successful

companies like Dropbox.

By the end, you’ll

have a solid understanding of successful approaches to product development, and

will be ready to start building your first product the smart way: in small

increments, with constant customer feedback to ensure you’re always on the

right track.

These methods are best

suited to online, software-based startups, so that’s what we’ll focus on in

this tutorial, but the basic principles can also apply to other types of startup.

1. Use Agile Product Development

We live in changing

times. Technology is changing, customer preferences are changing, and ideas can

go from being viable to non-starters (and vice versa) within a year or two.

In this context, you

need a fast, agile way of building products. But the traditional rules of

product development were devised in a very different era, and can hold you back

if you try to apply them today.

In the traditional

product development model, you’d start by thoroughly researching your idea and

scoping out your proposed solution, you’d come up with a comprehensive set of

specifications, you’d build the complete product from start to finish, and then

you’d launch it and start gaining customer feedback.

That made sense in a

time when the cost of manufacturing physical products was high, and the ability

to get continuous customer feedback was low.

The risk, though, is

that you spend so long designing and building your product that it’s obsolete

before it hits the market. And because customer feedback only comes in right at

the end, you might simply end up building something that meets all the

specifications but isn’t what people want.

Today, there’s a

better way.

Put the Customer First

With agile product development, you don’t try

to design the product from scratch and deliver the finished version to

customers.

Instead, you break the

project down into small pieces. You start small, gathering potential customers

using the methods described in the previous tutorial, and giving them access to

valuable, working pieces of software as you develop it. You start satisfying

your customers, and you use their feedback to help you design the next

component in a way that is most useful to them.

If your final product

is a comprehensive software package that helps people manage all their

different social media profiles, for example, you might start by releasing a

small piece that lets people figure out which Twitter users to unfollow.

You already have a

general idea of how the whole package will look, and you can communicate this

vision to your customers, but giving them something to use right away

accomplishes two things:

• It keeps
  
  them happy while they wait for the final product.


• It gives
  
  you valuable feedback on the design and features of your product, so that you
  
  can avoid wasting time building things that people don’t like or want.

Embrace Change

The customer feedback

may mean that the design of your product keeps changing throughout the

development phase.

This sounds like a

disadvantage, but as long as you’re willing to embrace changing requirements,

it’s a big advantage. It may take longer at first to change your plans and do

something you hadn’t planned to do, but in the long run it’s much quicker than

building a finished product, finding out people don’t like it, and going back

to change it.

The emphasis of the

agile methodology is on continuous development. So instead of pushing to

complete everything by a certain deadline, your goal is to keep releasing

useful software on a regular schedule—say, one incremental improvement every

month.

2. Produce a Minimum Viable Product

Your goal in this

first stage of product development is not to produce a perfect product.

It may sound

surprising to say this: after all, most industries are so competitive, and you

might think your product has to be the best it can possibly be in order to

stand out.

But in fact you want

to do the minimum amount of work—not because you’re lazy or cheap, but

because the most important part of launching a startup is learning from your

customers, and doing it quickly.

Producing a minimum

viable product (MVP) is the fastest way to start a conversation with customers,

and begin learning about what they want, how they want it, and how you can most

effectively solve their problems.

How MVP Works: A Case Study

One example of a

business that made good use of the MVP approach is the popular file-sharing and

cloud-storage company, Dropbox.

Today, it’s a $10 billion

company, but back in 2007 it was just an idea. People were struggling to share

large files online, and Drew Houston thought he had a simple solution.

But the problem was

that he needed significant investment in order to build a testable product, and

it was hard to convince venture capitalists and others to invest without a

testable product. He was caught in a classic Catch-22 situation.

The way he escaped

from this stalemate was by producing a simple demo video, showing how Dropbox would

work and explaining the painful problem it was meant to solve.

As a bonus to promote

shareability, he included a few inside jokes that would appeal to his target

audience of keen techies. The video was shared thousands of times, and drove

Dropbox’s waiting list from 5,000 to 75,000 people overnight.

A demo video is about

as minimal as a product can get. It wasn’t even working software at that stage,

and yet it achieved the goal of any MVP—it showed there was interest in the

product, and it started a conversation that helped Dropbox develop its product

in a way that was most valuable to its customers. In this case, it also helped

provide the funding that would take Dropbox from idea to multi-billion-dollar

company.

Your MVP could take

many different forms. It could be a scaled-down version of your final product,

or a demo, or something else. The main requirement is that it lets people see

how your product works and start talking about it, which helps you both

generate customer interest and guide the development of the product as you

progress through subsequent iterations.

3. Embrace the Lean Startup

Principles

You learned in Step 1

to keep working through successive iterations of product development, using

customer feedback to guide you all the time.

But how exactly do you

do that? In this step, we’ll look at some of the key principles of operating a lean startup, and show you how

to apply them to your business.

Being lean is not

about saving money; it’s about avoiding wasted effort. In this highly

competitive, fast-changing environment, you can’t afford to waste time and

energy, especially if you’re working by yourself or with a small team. The goal

is to make effective use of all your time and resources.

Build, Measure, Learn

Once you’ve started

building your first product and releasing it to your customers, you need to

start learning and adapting.

The “Build, Measure,

Learn” mantra can help you get your product right. We’ve covered the building methodology,

but what about measuring? This is where it gets tricky, because there are so

many things you can measure, using everything from free services like Google Analytics to more comprehensive

and costly products like Ontraport, and with

all this information at your fingertips, it’s easy to track the wrong things.

A lot of the metrics

you see quoted by startups are just “vanity

metrics,” for example. It’s great if you see increased traffic to your

website, or have thousands of followers on social media, but the metrics that

should matter to you are not the ones that make you feel good, but the ones

that help you make decisions.

The exact things to

measure will depend on your business, but think about things that give you

insight into what your customers want. Conduct A/B

split tests on all the key pages on your website, and also within the

product itself. Find out what people value, what type of wording appeals to

them, what configuration of the page is most likely to make them take the

action you want.

You can also look at

“cohorts,” or groups of customers that signed up at a similar time. See what

percentage of the customers who signed up in a particular week went on to take

an action, like buying from you or requesting more information. Track how that

percentage changes with different cohorts over time, and how it’s affected by

the products you offer and how you offer them.

When you’ve gained

some smart measurements of your product’s effectiveness, you can supplement that

with good old-fashioned customer contact. Ask them what they thought, use

surveys, interact on social media, and start to build up a comprehensive

picture of how your product is working.

Then when you’re

working on the next iteration, you can incorporate everything you’ve learned

from your customers, and change it up as necessary.

4. Keep the Clarity Through Each

Iteration

One of the risks in

the approach we’ve looked at in this tutorial is lack of clarity. In

traditional product development, you and your team all had their marching

orders, and worked methodically through each phase until the final product was

ready for release. With agile development, on the other hand, you might find

yourself changing course every few weeks.

So if you’re following

this approach, it requires a little extra effort to make sure everyone stays on

track and is clear about what they’re doing and why they’re doing it.

Asana co-founder Justin

Rosenstein says that ideally you should be able to walk up to any of your employees or

co-workers and get clear, positive answers to the following questions:

• What are you working on right now?


• Are you confident that it’s the most important
  
  thing you could be doing?


• Do you know who is waiting on you?


• Do you know to whom you can go for support?


• Do you know how your work fits into the
  
  overarching product we’re trying to accomplish?


• Do you know why that product matters?

In practice, however,

it rarely turns out like that. People routinely get side-tracked into less

important tasks, or mired in bureaucracy, or swamped by email, or waste time

trying to track down information.

To overcome this, you

need to work hard to ensure everyone working in your startup has:

• Clarity of
  
  purpose.


• Clarity of
  
  plan.


• Clarity of
  
  responsibility.

Clarity of Purpose

This means remembering why you’re working on

something in the first place—the larger reason or purpose behind your

company’s existence, and the importance of each individual piece. Regularly remind

yourself and your staff of the benefits customers will enjoy, and how the

product you’re working on will make their lives better.

Clarity of Plan

This is about execution. Decide on a way to get

organized, and stick to it. Web-based tools are great for collaboration within

a team, especially because they make it easy to update the plan—something

you’ll be doing quite often. It could be something as simple as a spreadsheet

on Google Docs, or you might want to investigate a specialized project

management tool like Trello

or Basecamp.

Whatever you go for, make sure all the tasks are captured, and you can easily

keep track of what everyone’s doing and the expected timeline.

Clarity of Responsibility

This means being very clear about who’s doing what.

Even if several different people are working on building a particular part of your

product, there must always be a single person with ultimate responsibility.

Otherwise it’s easy to end up either in the situation where something is left

undone because everyone thought someone else was doing it, or else in a

position where people are duplicating effort.

Building your first

product can often become overwhelming, but if you get the organizational

structure right from the beginning, and focus on maintaining clarity in those

three key areas throughout the development phase, you’ll be in a better

position to stay on top of things and avoid last-minute panics.

Next Steps

So now you know how to

build your first product in a smart, agile way that involves less upfront

investment of time and energy, and involves the customer at every stage. You’ve

seen how to use the MVP concept to start learning from your customers, and how

to keep learning and developing at every stage of product development. You’ve

also got some tips on keeping a clear focus throughout all the customer-led

changes of direction.

What’s next? Well, although

product development is an iterative process, you’ll still want to have an

official launch. It’s a great way to generate buzz for your startup, and to

signal to the world that you’re ready to open up to a larger market.

So in the final

tutorial in this series on launching

a startup, you’re going to get some ideas and examples of outside-the-box

launch events, and see how to use email marketing and social media to ensure

that you have the largest possible base of engaged customers by the time you

get to the official Day One of your new startup.

Resources

Graphic Credit: Beaker designed by Edward Boatman from the Noun Project.

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