In early 2015 the buzz around the sharing economy was heating up and I decided that there was a market to build a product in that space. Reading ‘What’s mine is yours’ by Rachel Botsman contributed to selling me on the idea.
The question that prompted the idea was simple, why should everyone that lives in an apartment complex own a vacuum cleaner ? Or anything for that matter, that is used rather infrequently. I was fully sold on the idea that access is greater than ownership. The idea for the product was to build an ad supported, hyperlocal neighborhood marketplace where users could list these products and rent, buy/sell or share them. We called it neighbourbase.com.
Long story short, it didn’t succeed for a variety of reasons. I went on to grad school, learnt a whole bunch more and I’m glad for that. But I learnt a lot through the process of trying to build Neighbourbase. The kind of lessons that you read about a lot, but only fully understand when you get your hands dirty. This post is a summary of the things I learnt, organized in no particular order of importance.
You will not build a perfect product the first time around - Don’t even try.
A good approach to building any tech product is to build a functional yet scrappy quick first iteration of the product with a minimum set of features that make it usable, give the product to users and iterate based on feedback. Most successful startups start this way, don’t believe me, check this out. Our approach based on heavy doses of naivete was to build a fully functional product, with all the features that we envisioned (This list kept growing) combined with a perfect UI and UX as our first iteration of the product.
In retrospect, this approach was problematic for two reasons. First, the initial set of user stories for any product are a set of untested assumptions about what you think the user might want. The only way to validate these assumptions in quick time at a low cost is to build a first iteration, get this in the hands of real users and test these assumptions. This will help you figure out what users like, what they don’t and what the next iteration should look like. Second, isolated from any real feedback, the list of features that you can imagine can keep growing. Soon you find yourself building things that were never in your original plan and users might never really care about or want.
Companies don’t run on air - Think about how you want to make money.
In terms of thinking of a business model, we decided that we’d have a free ad-supported tier as well as a premium tier that allowed apartment complexes to pay a monthly subscription for a private sharing network. The problem with building an ad supported website is that, you’re only attractive to advertisers when you’re at scale. In the case of a platform product this is compounded by the fact that achieving scale is tricky because you need to grow both sides of the market. Borrowers will be on the platform if there are lenders and vice versa. Advertising isn’t going to make you money from day one, so if the ad supported business model is what you’re going for, you need to make sure you have enough runway until you’re at scale
In getting people to pay for a product, you need to reduce the amount of friction in the transaction.For our premium tier, the sign up process was complicated and for a product that a user didn’t yet know could be useful, I doubt they would have taken the trouble.
Think about Data from Day 1
Any multi side platform will generate a lot of data, there is data about listings, user behaviour etc, and in thinking about your product and strategy it’s crucial to also think about ways that you want to capture this data and put it to use creatively.
We were so focused on building the perfect product that we paid little attention to these aspects of strategy. Building a product always has to have a data first strategy, there is the user interface for that the users get to see and on the back end what is equally important is smart dashboards to get a snapshot of the data that is being collected.
The next two lessons are more people specific.
People you work with may not be as excited about your idea as you are
When you come up with an idea for a product, it is going to end up that you are more excited about it that than the people you work with. I think a large part of success depends on how good you are at getting a team motivated and as excited about the idea as you are. The difference in energy, if you don’t, is palpable.
Experience matters a great deal
Finally, this was something that was humbling on a personal level and I think a significant take away for me personally. It’s easy to think you know a lot and dive right into doing things, however, there are a lot of things that you only learn through experience. Trying to build a product and start a company is an ambitious goal, the odds of success are certainly higher with some experience under your belt.