“If you are not embarrassed by the first version of your product, you’ve launched too late.”
– Reid Hoffman, Co-Founder of LinkedIn
Selling Shoes Online
Zappos is an online retailer with over 50,000 clothing items for sale and $2 billion in annual revenue. In 2009, after an unsuccessful attempt to launch a competitive product, Amazon purchased Zappos for $1.2 billion.
While it seems inevitable now that consumers would be willing to shop for clothes online, the idea wasn’t so obvious at the time of Zappos’ founding. In 1999, founder Nick Swinmurn, frustrated with his inability to find a pair of shoes he wanted at his local mall, came up with the idea of selling shoes online.
However, before the company spent thousands of dollars buying inventory, Swinmurn needed to prove that his idea of selling shoes online was viable.
Rather than investing a large chunk of seed money into inventory upfront, Swinmurn headed out to his local mall armed with a camera. He photographed pairs of shoes and posted them for sale on his website. When a customer placed an order, he would head back to the store to purchase the shoes. Zappos would then send the shoes to the customer.
Obviously, this wasn’t a viable way to run a business in the long term, as he was losing money on each purchase made. But the strategy worked perfectly as a proof of concept–the company was able to prove that consumers were willing to buy shoes online. Furthermore, they were able to learn about consumer demand and which styles sold best.
When the time came to build out their own inventory, they were armed with the confidence of a proven concept.
Minimum Viable Product
“The goal of an MVP is to test fundamental business hypotheses (or leap-of-faith assumptions) and to help entrepreneurs begin the learning process as quickly as possible.”
– Eric Ries, The Lean Startup
The strategy Zappos employed early on is a great example of a Minimum Viable Product (MVP). The company was able to cheaply test its hypotheses, gauge consumer demand, and get early feedback on its website.
At Atomic Object, we often speak with entrepreneurs in the early stages of launching a new product. These entrepreneurs often come to us with fully fleshed-out product visions, having thought years down the road and envisioned every feature that they ultimately intend to build into their product.
As consultants, it’s our job to advise them not only on how best to build their software, but also on what they should build. While it’s tempting to try to make Version One as polished and feature-rich as possible, it’s far more important to just get something out there in the world.
When in doubt, keep Zappos in mind–they launched a shoe store with no shoes.