Failure to Launch
Find the Rocketship...
And put any speed on it
Throughout the process, I was fortunate enough to be in contact with Pete, one of the co-founders of SoFi, a unicorn startup that bills itself as “a modern finance company turning the very idea of banking on its head”. Now valued at over $4 billion, SoFi has been in the news for being the first company to raise over $1 billion in a single round of funding. If that doesn't impress you, they had a Super Bowl commercial.
One day while on the phone with Pete, we were discussing my business model for UpGrade. At the time I had a lot of cool ideas, cool enough in fact that Pete excitedly declared, “You’ve found your rocketship! Now you just need to put any speed on it”. I was ecstatic, but didn’t heed his words. To my defense, I truly had no idea how to get UpGrade off the ground - I was thinking far too big picture. I imagined UpGrade immediately turning into a superstar startup like SoFi, and failed to think of smaller-scale, more pragmatic vehicles to implementation. This out-of-touch mindset was one UpGrade’s key downfalls. Enter the importance of a Minimum Viable Product (MVP).
An MVP is one of the cornerstone’s of the Lean Startup methodology, a 2011 book that quickly became the holy grail for anything and everything startup. By definition, an MVP is a scaled-back version of a company’s final product, intended to test core features on initial users. An MVP can either be viewed as a company’s first “shippable” product, or more simplistically, as a validation of existing demand for the relevant product.
For instance, a beta prototype of an app that delivers clementines directly to your door could be an MVP. Additionally, a sales page where users sign up for a newsletter on clementines would be considered an MVP as well. While the first approach may sound more advisable, the second option is often times more advantageous. There’s a substantial amount of risk associated with spending copious amounts of time or money developing an elaborate product, only to throw it into the market in a sink or swim situation. By design, an MVP is low cost/risk so that if it fails, founders can easily make iterations to better satisfy the needs of the customer.
To read more about MVPs, click here!
Brother, can you spare a few mil to build a complicated financial service or software product? If the answer is yes, give me your money. I need it more than you. If the answer is no, ask yourself: what can I prove to myself and others on the cheap? If your product’s customers are college students, I’d ask: how can I get their attention and build their trust? You can build a meaningful web presence and following with patience, creativity, a cheap camera and a couple hundred bucks.
Jordan
says...
UpGrade's Take
From the beginning, I envisioned UpGrade’s initial product as our final product. I imagined a flawless user-friendly website where agreements between students and investors were facilitated and managed. Only problem was I had absolutely no idea where to embark on this lofty task. This would’ve been the perfect situation for a scaled-down MVP.
If I had the chance to do everything over again, I probably would have begun by harnessing the power of the internet/social media, simultaneously theorizing and developing our business model in the background. In terms of social media, I would have turned to Instagram with a marketing campaign accomplishing the following:
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Promoting the idea of an ISA
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Highlighting issues within the existing student loan framework
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Building a sizable following as to showcase credibility to investors
Even without revenue, having an online reputation highlights an ability to attract attention/appeal to customers. Our MVP should never have been an ISA. Instead, it should have been a project that informed individuals of other options within the student loan market, while simultaneously appealing to our target market.
Three of my friends founded Mane Crew, a subscription hair crew service, that has been successful in building a social media following before delivering their final product.
Another idea for UpGrade’s MVP would have been a Humans of New York style project where I start a website that creates a profile, along with a picture, for students currently in debt. By telling the stories of students facing issues due to debt, the grave imperfections within the student loan market would be highlighted. This would implicitly raise awareness that better options need to exist, thereby raising demand for our ISA product. If this project was sufficiently powerful, UpGrade would be in a much better position to actually incorporate. It would be easier to find potential customers given our following, which would also help gain investors’ trust in our ability to deliver on business platforms.
Both of these options are pragmatic and would help establish UpGrade's name, even if we didn't make a cent of revenue. If you're ever stuck trying to get your rocketship in gear, think small. By no means does your first product have to be the final one as well.