Day 105 in MIT Sloan Fellows Class 2023, Digital Product Management 2 - "WEBVAN & Mom Test"
WEBVAN STORY
Webvan is a company that tried to realize last-mile delivery in the dot-com-bubble era.
It developed a lot of warehouses and invested in ITs and operations.
Today, we enjoy the service from InstaCart, and basically Webvan tried to do the same thing. What was wrong with its strategy?
Why it failed?
There were multiple reasons.
- No experienced operators
- Required technology was not mature at that time
- Tried to develop too many things at the same time
- Willingness to pay for delivery was low, so unit of economics was bad.
However, the biggest failure is too big initial investment for warehouses and IT.
It means it could not get feedback until pretty rate.
To avoid such a situation, you need to test your hypothesis in the early period.
How to verify your hypothesis(BLAC)
Know Your Customers’ “Jobs to Be Done”
How to Write a Compelling Value Proposition | Underscore VC
The process of customer discovery is as follows.
- Generate customer hypothesis
- Find "the" right customer
- Verify or reject hypothesis
Hypothesis should be this format.
I believe [customer segment] experience [problem] when [doing tasks] because [of constraints].
There are couple of business idea examples in each matrix.
- Blatant and Aspirational: Analytics tool, Planner, enhancement tools
- Latent but Critical: Security tool
This matrix is always based on customer segment and nothing is static.(If time changed, position would change)
The output would be verified hypothesis and customer persona.
Mom test - good questions/bad questions
Mother is the worst person whom you will ask questions about your customer because she seriously loves you.
This book illustrates what kind of questions are truly valuable for validating your product's customer.
Good
- Why do you bother?
- What is the implication of that? (Dig!)
- Talk me through the last time that happened ( Like yesterday! Make them leave from aspirational "lie"+ Be specific)
- What else have you tried?
- How are you dealing with it now?
- Where does the money come from? (Especially B2B, it's must-question)
- Who else should I talk to?
Bad
- Do you think it's a good idea?
- Would you buy a product which did X?
- How much would you pay for X?
Solution Hypothesis
Two things you need to validate.
- Your solution is truly differentiated?
- Your business model, GTM strategy is valid?
Dropbox case
Dropbox is a differentiated product with all three benefits(Share, backup, collaboration) and its speed. As GTM, they chose individuals as a primary customer.
Dropbox chose individual customers, but conversely, Box chose business customers.
There are massive pros/cons to this choice, but the most significant one is the balance between customization and standardization. B2B tends to reflect company's specific request and tend to be highly customizable solution. Then, you need to rely on field sales GTM. However, Dropbox standardized its solution and adopted Product Led Growth GTM.
