How Groupon Built an MVP Without Tech and Validated an Idea in a Month

· 4 min read
How Groupon Built an MVP Without Tech and Validated an Idea in a Month

In 2010, Groupon, a marketplace that offers its users deals with local merchants, had 700 copycat sites. Do you know the names of any of Groupon’s copycats? I don’t. Because it’s not the technology that made the company successful, it was their approach to building a business.

Groupon began as a result of the frustration that founder Andrew Mason had when he tried to cancel a cell phone contract and got charged with a $200 cancellation fee. His goal: to build a platform for digital activism to fight such unfairness. Groupon was just one of the ways he’d monetize the platform — by offering people the opportunity of collective buying.

How it started

Andrew didn’t experience outright success with Groupon. He first experimented with a platform called The Point. (Make sure to read or listen to his interview on Mixergy for details.) The Point started with a 500-person mailing list, and all subscribers worked in the same office building where Andrew was working at the time. In the beginning, the whole business was conducted through that mailing list. The first deal offered two-for-one pizza slices at a restaurant located in the very same building. Really, it was that simple.

This is what all of those hundreds of copycats were missing. It took Andrew 10 months to perfect The Point, but it took only about a month for him to launch Groupon.

Can you build a viable product to validate an idea in a month? If you want something perfect, polished and automated, then no, you can’t. But you can hack things together and make it work. Groupon started as a WordPress blog that sold T-shirts, and the only way to buy a T-shirt was by sending an email. The coupons were generated in FileMaker, a MacOS desktop app, and were sent to a mailing list via the script running on a local machine — no fancy Ruby-on-Rails backend and no JavaScript engineers involved whatsoever. It wasn’t perfect, even for 2007. The more sophisticated product was built as a way to catch up with the demand, not something to generate the demand.

Groupon used their original platform, The Point, and an audience that was within arm’s reach as a launching point. How can you validate your idea for a product if you’re starting from a clean slate? A lot of resources encourage you to reach out to your network — to ask your friends and co-workers and all that — but that’s not always possible. What if no one in your network or friend circle is in your target market?

A simple solution

There’s a simple solution: create a pre-launch landing page.

If you already defined the audience you’re trying to help and the problem you think they’re facing, testing your assumption with a simple pre-launch landing page is a great choice. As an example, I’m building a time tracker app for development teams, so my audience consists of development team managers; their problem is getting things done on time. Before building an app, though, I want to make sure that people really have this problem, and that it’s not just me struggling with managing the development process.

I could test my assumption by creating a pre-launch page for the app itself. But then, in order to deliver on my promise, I’d have to spend months actually building the app. If I found that only a fraction of the people who signed up for the waitlist were going to pay me for a time tracker, I’d be in trouble.

Instead, I want to do something that takes much less effort — offer consulting services to people who have this problem. I wanted to charge app users $10/month for a subscription fee, and using that as a reference point, I decided that offering consulting for $50 sounded reasonable to me. After all, if people don’t feel that this problem is urgent and important enough to pay me the price of a tank of gas to solve it, then they won’t pay me $100/year for a subscription.

But these are just assumptions. To test them, I can create a pre-launch landing page offering people consultation services and ask them to sign up for a waitlist if they’re interested.

In this case, consulting is just an example. Your product can be a short e-book or a workshop. The idea is to offer something that won’t take months to create but will help people with the problem you’re trying to solve.

There’s more to it

Just creating a landing page, however, isn’t enough, just like it’s not enough to create a blog and write posts. You need to drive traffic to your page. Get it in front of people’s eyeballs.

The easiest way to do this is to pay a platform like Facebook, Google, Twitter, or LinkedIn to show ads. Unfortunately, ads are expensive — especially in the beginning when you don’t know how to target your audience, what messages they respond to and what creative works best. This is something you have to learn through experimentation, which will cost you some money. But the earlier you start experimenting, the sooner you’ll get the results. In my opinion, it’s better to spend money on ads to learn about your market than spend money to build a product you can’t market at all.

Alternatively, you can try to get some organic traffic. You can do this for free, but you’ll have to spend a lot of time on this. One of the easiest ways I know to create organic traffic is to start a blog, write for it, and then promote it through guest posting and participation in online communities where your target audience hangs out. Guest posting exposes you to more and more people and builds backlinks for SEO, while participating in communities works as a research and distribution channel at the same time. (Just don’t piss people off with shameless self-promotion.)

Originally published on Medium