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Minimum Viable Audience

January 15, 2013

I’m a big fan of components of the Lean Startup – especially the minimum viable product.  Too many startups are pushing features out the door, without knowing if it’s truly going to add value to the bottom line.

One of the biggest problems, in my opinion, with the whole Lean Startup methodology is related to customer development without considering the scability component.  The problem with “getting out of the building” is scaling.

According to the Startup Genome project, the biggest challenge startups have in every stage is ‘Customer Acquisition’.



Solve the problem beforehand

What would be the point of building a startup that everyone loves just to eventually find out, it’s challenging to reach your audience or the economics of reaching your audience doesn’t make sense?  You’ll be high on the excitement of talking to customers, getting feedback, and building a product that when you come back to reality you’ll realize you’re on a sinking ship.

Scold me if you must, but I personally think a mediocre product that can attract a large audience has a better chance of survival than a better product that can’t attract a small audience.  That’s why sometimes you’ll come across a website and say “100,000 people pay for this!?!?! I could build a better product in my sleep.”  Better product or not, you won’t always be able to attract that same level of customers.

Typically in the discovery stage of a startup, I like to think about customer segments, repeatable distribution and discovery engines.  This typically means understanding marketing before a product is even built (no mockups, no prototypes).  It’s a fundamentally important step that I believe a lot of startups miss.

An example

With our first startup, for the customer development phase we could have easily spent our time talking to any of our friends that owned a BlackBerry smartphone to get their feedback to improve the product.  Our audience size could have been 100 local individuals.  Eventually, we would have launched our product to these 100 individuals and converted some of them.

However, we took a different approach.  Our team spent time looking to see where the BlackBerry enthusiasts hung out and we discovered a site called  One forum post on CrackBerry attracted over 2,000 emails to our waiting list.   We asked the editors, if they would write about us in our pre-launch phase, which in turn generated an additional 8,000 emails on our waiting list.

At this stage, we had attracted 10,000 emails with only a promise of building the product.  Those 10,000 emails enabled us to generate large amounts of revenue on our launch day and it gave us a large audience to do our customer development with.  Interviewing 10,000 users in the customer development phase would have been impossible, so it lead us to take a more data driven approach, which in my opinion is the best type of customer development.

Enter the minimum viable audience

Before you go out and spend time and energy building a product, spend time ensuring there is demand for it.  One advantage that brick and mortar companies have is being in the right location automatically generates an audience.  Online companies can easily get lost in the noise.

To insure demand in your product, build a “coming soon” page showcasing the product you want to build, understand the customer segment and learn how to attract that customer.  Reverse engineer what your expectations of the business are based on your own goals.  If you’re looking to start a business that can do $10,000 a month in sales and the product’s price tag was $100, you’d need to sell 100 copies a month.  If your site converts at 2%, you’d need roughly 5,000 visitors a month or 164 visitors per day.  This becomes your minimum viable audience target.

By understanding what’s required to market to your customer segments, you’ll discover a lot of critical business data such as cost of acquisition and how repeatable your user acquisition method is beforehand.  If your cost of acquisition is too high, your business may fail even if you build the entire product.  If you exhaust all of your user acquisition methods and you’ve hit a ceiling, you may run into issues scaling down the road.

As always there are expectations to this…

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