Learning from the Concierge MVP

Res Extensa #33 :: Doing things that don’t scale and speedrunning the idea maze

In his canonical text for product managers The Lean Startup, Eric Ries tells the story of a company called "Food on the Table". They had an idea to create meal plans for you based on foods you enjoy, then connect to local groceries to help you find the best deal on ingredients. But they didn't go straight to building functional software to show-and-tell with people. They would approach prospective users at local stores and run an experiment:

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 Food on the Table, 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 Food on the Table 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.

On the surface this approach sounds insane. How can you build a viable company out of this? Well the first answer to that question is that in this stage company viability isn’t what’s being tested for. They were testing idea viability, not company viability Food on the Table was looking for a job to be done.

With this kind of experiment, the user gets the full experience of the proposed product (the same end result), but without using software directly. Ries calls this a “concierge MVP”

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— instead of giving them a product to use themselves, you walk a customer through the full experience from pain to solution through manually performing each step for them behind the scenes. Asking for the list of foods they enjoy, searching grocery store prices by hand, building them a list of meals, getting their buy-in, delivering the groceries with printed recipes. The soup-to-nuts product experience without any tools built. But that’s okay: customers buy results, not software.

Finding the value

Startups are learning machines, and great product people are divining rods for customer pain signals, capturing feedback, and iterating at light speed. The faster you learn, the faster you navigate the idea maze and find product-market fit. In order to test the viability of an idea, you don’t need complicated, rigid prototypes. You need the willingness to turn the crank by hand to see if the customer even truly needs the type of solution you have in mind.

Product guru Marty Cagan talks about the 4 dimensions to understand when building a product:

• Value — Is it valuable to your customer?

• Feasibility — Can we build it?

• Usability — Can the user figure out how to use it?

• Viability — Can we find a go-to-market fit that supports a profitable business?

The concierge MVP is all about testing for value — for finding something that treats customer pain. It doesn’t matter if a thing can be built, has a gorgeous interface, and a well-manicured pricing model if your medicine doesn’t ease a pain.

The remaining 3 are downstream of locking in on the job to be done. With small iterations, adding new user, and incorporating your learnings, you can do less expensive iterations that you’ll be more confident in.

The idea is to make sure you know something is working before you invest too much in the go-to-market stages. Investments in scale only make sense when you have evidence that anyone wants what you've got (product-market fit!). Back to the story of Food on the Table, their concierge MVP allowed them to move into design and software development of pieces they knew had demand:

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.

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.

People (especially engineers and MBA business-builders) preoccupy themselves with concerns about scaling. It’s partially because they see that as the fun part, but more generously it is important to consider. A slick product customers love when they use it is nothing if it requires infeasible costs to build, has weak distribution, or no path to profitability. But your first step is staying laser-focused on that "product customers love" piece.

Velocity and agency

When testing a yet-to-be-proven idea in the market, you need 2 things: the agency to go get answers, and the velocity to run the OODA loop over and over until you find product-market fit.

The best builders don’t wait around passively, casually doing internet research or asking their friends about their ideas. They build a primitive thing, go set it up by hand for a possible user, and follow up relentlessly looking for signals of what’s working and not. This combination of agency to go find answers and the speed of working through the loop grants startups an edge others don’t have — especially those BigCo competitors you might be worried about.

Y Combinator founder and Silicon Valley legend Paul Graham became well known for his mantra: “Do things that don't scale”. In that article he references Stripe, which personified the idea. Instead of waiting around for a “scalable” way to onboard new users, they just hit the street:

At YC we use the term "Collison installation" for the technique they invented. More diffident founders ask "Will you try our beta?" and if the answer is yes, they say "Great, we'll send you a link." But the Collison brothers weren't going to wait. When anyone agreed to try Stripe they'd say "Right then, give me your laptop" and set them up on the spot.

Compared to the example of Food on the Table, this is a slightly different flavor of the same idea. Stripe built a crude credit card processing script that took some programming to wire into your product, so they “concierged” their way to working out the kinks.

In the same piece, PG hits on agency: startups succeed because founders have the grit to get out in the world and make their ideas happen:

Actually startups take off because the founders make them take off. There may be a handful that just grew by themselves, but usually it takes some sort of push to get them going. A good metaphor would be the cranks that car engines had before they got electric starters. Once the engine was going, it would keep going, but there was a separate and laborious process to get it going.

The concierge MVP isn't only useful for building new products. You can use the same principles in any situation where you’re probing for the specifics of a job to be done. Even in a bigger company, take the same idea and apply it to setting up health insurance plans for your company, working with internal stakeholders on usage reporting, or in helping the finance team serve the right data to board members and management. Swap out the "user" for your employees, your management team, or your CFO, and you have a new target audience with their own "jobs" and pain points.

The lesson here is: don't be afraid test your assumptions with phone calls, elbow grease, and sneakernets. If there's still no solid treatment for a customer pain (even with a hacked-together, totally manual version), then you know your idea needs work well before you move into automating, scaling, and building complex processes.

1. “Minimum viable product”, for those unfamiliar with product manager-speak.