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Sell before you build. Is this a myth?

I decided this was very interesting question, which came up in another discuss.

Some of the entrepreneurs here say you should not write a single line of code, until you sell your product. This means you will have to walk up to your customers and collect money from them by selling nothing more but an idea.

I haven't see such thing and I believe it is not possible. You can read my arguments towards the latest posts in this discussion: http://members.founderdating.com/discuss/5925/As-an-early-stage-startup-do-you-go-after-a-single-or-multiple-target-markets

In general, my argument is that since we have such a high supply of ideas and startups, in order for a given idea to succeed, it needs to compete against a lot of other ideas. If only one of these other ideas has a product already built, that idea and startup has a huge advantage compared to the rest, which are selling only ideas. When you approach customers, they will naturally agree to pay for something already done than something still existing only on paper.

In fact, the notion of MVP is to exactly solve this problem - create something satisfying your hypothesis and put it in your customer's' hands for evaluation. Don't build the whole thing, just the core that will prove or disprove your hypothesis. This is not 'build it and they will come'. No, this is 'build your MVP, listen to customers and iterate'.

My question: Is 'sell first' a myth? Do you know of anyone who has sold to customers before MVP was built?

My experience is - MVP first, sell it and iterate.

28 Replies

Sonya Denyse DreamDevelopment.com - MWBE
0
0
Creative Strategist, Age-Friendly Enthusiast, Successful Crowdfunder, Aqua-cycling Evangelist, HuffPost Blogger
In the $100 start up, I always liked the example of the couple who started a map business. They pre sold the maps before they created them and incorporated the time to produce the map in the shipping and delivery, much like a restaurant. There was some initial buzz about the maps,which generated interest but the only product was their map which they had created as a testament to a trip they had taken.
Gary Jurman
1
0
Gary Jurman Entrepreneur
Screen Printing Industry (30 yrs)
I read an article about pretotyping where the author talked about ways to create "almost" products to test for marketing. Basically, a pretotype is a pre-protoype where you can demo the product. It looks real, but isn't. You test the market with that to see if there is any traction.
Matthew Mellor
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Matthew Mellor Advisor
CEO of Strenuus
I think it's very difficult to do as a startup. If you're a more established company with a track record, you may have some customers willing to take a chance on an idea, particularly if it's incremental to work you've already done.

But the I think the way to answer this question is to turn it around--if you were the buyer, wouldn't you want to "see the goods?"
Sam McAfee
3
0
Sam McAfee Advisor
Building Popup Incubators for Corporate Innovation Programs
Frankly, I have done or seen this about a dozen times.

We have had teams at Lean Startup Machine or Startup Weekend get checks or online payments before building anything because their idea solves a painful enough problem customers will pay in advance.

Also almost every Kickstarter campaign basically is this model already. And any preorder of a book or other media also is this model.

So yes it's possible, quite common, and you should try it. Cash is the ultimate validation metric. And the sooner you get it the more risk (time, code, cost) you have reduced.





Sidney Sclar
0
0
Sidney Sclar Entrepreneur
SID the SECURITY PRO at sidthesecuritypro.com
The question is how does one know what to build before they know what will sell?
Gary Jurman
0
0
Gary Jurman Entrepreneur
Screen Printing Industry (30 yrs)
If there is a similar product to what you are building, then ask people who own it what they love or hate about it. If there are reviews, then read a ton of them and figure it out by what customers say.

If there is nothing like it, then make something that you can demo, and work from there. Ask the people who would buy it why they want it. If they say they don't want it, then ask them what would make them want it.
Rob Gropper
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0
Rob Gropper Entrepreneur
Director at PetHero, SPC - Member at Eastside Incubator - Principal at Tuxedo Technologies Group
It is not a myth. I've done this myself with 3 out of 4 startups. Not only is it possible it is preferable. If you solve a big enough pain and you can identify those who have this pain acutely then it is not that hard to get a commitment from them. You have to ask. If they say 'no' find out why. Objections are fine - you can learn from objections. You don't learn anything by not asking. If you need to tweak your solution then this is a much better time than after you have spent months or years and scarce cash building. Commitment may be in the form of $$ or a contract or commitment of resources. If you can't get commitment from a significant % of your ideal prospects then perhaps it's time to pivot.
Ema Chuku
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Ema Chuku Entrepreneur
Designer. Product Developer. Founder @ NuPad
@Sam one would argue that on projects on Kickstarter atleast majority of them have actual products made. You may call them prototypes but they are actual products.

It's true you can sell vision before products but that is for a certain type of product and very few occasions. Very few occasions. 8 out of 10 customers are likely not going to pay for a visionary product. It is simple.

It amazes me how people complain about "time, money, etc" in creating MVP, and still hope to be asking for customers money. It's one thing to research for open-validation but if you are going to be asking for people's money, atleast devote time to produce some sort of a prototype..

Between, let's not confuse "Investors money" with actual "Customers money".


Scott McGregor
1
0
Scott McGregor Entrepreneur • Advisor
Advisor, co-founder, consultant and part time executive to Tech Start-ups. Based in Silicon Valley.
Yes, I do know someone who has sold first and then built the product. I have done that myself. I highly recommend it to my other clients. But you have asked about whether we know others, and perhaps that distance is better. I'll tell you a story relayed to me by the former CFO of Rotary Rocket, one of the predecessor Space X. The first step in getting that company funded was to speak to the prospective customers. There were 7 satellite companies who needed to put their satellites into low earth orbit. He went down and talked to them all. He got all 7 to sign contracts to purchase space on the rockets when the rocket was available, at a specified price. Of course, when you know a rocket will take ten years to develop, and cost billions, you want to be pretty sure that there will really be customers, and you want to involve those customers during the development process. What Rotary Rocket did was still building an MVP, just one that already had a builtin customer base. It is also why I try to get a customer as a partner before I build my MVPs. Some customers, some of those who will be most valuable to you are the ones who secretly want to be able to have someone to tell what they really want, but no one is giving them. That customer may provide excellent advice to help you know what they (and other prospective customer like them) need. And they will know other customers like them, and introduce you, simplifying your approach to finding next customers. They may even be a first investor. And when you do complete the MVP, you will have the first traction and a step towards proof of product-market fit.
Nickolay Kolev
0
0
Nickolay Kolev Advisor
Freelancer at Private
Thanks for participating and helping.

In terms of Kickstarted, you always have a prototype or even more than that. Kickstarter at the moment is nothing else but a store, when you can pre-sell and ask customers to fund your product scaling. So, that is not a good example and in fact is in my favour.

Then is the example with the rocket. Not cleat if they got customers actually paying them or agreed to pay, at certain price, when the rocket is ready. Now, if it is the second case, then it is obvious, if I am to secure low price for about 10 years from now, to be able to send satellites, of course I will do it. Using this promise to byu is a good way to prove to investors you may have customers and get funded. Just want to know how may actually payed for something that may or may not happen 10 years from now.

One more thing. Crowdfunding and service startups don't mash together. You can't get funded if you offer a service. I spoke to the President of crowdfunder.com and he personaly told me that if your startup offers service, than it is not a good fit for them.

I am glad to hear some people do have this experience and have do ne that. Good for you guys. For me, the majority can't dot that, especially if you offer services, not a physical product. Of all the hundreds of startup owners I have met so far, none has claimed that they sold the service or whatever they were making, before built it first. Could be 'the old way of thinking' is still the norm, I don't know. But with so many startups and such a limited access to funds (which is only to get worst next months), I will expect to see more actual products build, before being sold. I am still not convinced. Please do. :)
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