Monthly Archives: February 2010

Was the Tesla Roadster a MVP?

Tesla recently announced their plans to go IPO. TheĀ  desire to go public was not much of a surprise to anyone who had been paying attention, but buried in the S-1 was one thing that most people hadn’t speculated upon: Tesla is no longer going to make the only car they’ve ever made… the Tesla Roadster.

This was somewhat surprising news and while many people have been very skeptical of Tesla (myself included), they have managed to turn very little into a lot of financial support (from Daimler and the US Government) and now seek an additional $100 million in their IPO. How did they do this?

And then I thought about it. The Tesla Roadster, in prototypical lean startup fashion, was a minimum viable product (MVP). They identified a product that they thought the market was interested in. They threw an electric engine in a Lotus body and they stood back an saw if anyone would buy it. Consumers ( and investors) bought in and then Tesla said, “OK, now we have to make the real car.”

It was the equivalent of selling a barely functional web service by merely setting up a sell page with a Google Forms document.

Also in true lean startup fashion, Tesla made an iteration based on the market. Through sophisticated market research (I’m sure) they realized that they would need to expand their target market beyond aggro VCs from Atherton. Hence the move from the sporty Roadster to the Model S sedan. Well, that and the fact that the US government gave them money for the Model S, not the MVP.

Obviously, this article is somewhat tongue-in-cheek, but what Tesla has done really does validate the lean startup model. Get your product out there first, make sure it works and then make the changes that the market demands. The one caveat is that if you are an automobile or consumer electronics startup you are not lean. You have high manufacturing and material costs. You need sufficient runway to succeed.

I worked at a CE startup that launched what the customers called a “beta product,” but could adequately be described as a MVP. The result was not pretty and not because valuable data wasn’t gathered in the process, but because most consumers do not want an MVP– especially in an established space. If you are going to try an MVP in anything but a burgeoning market, you should expect a major hit on your brand and you need to have the runway to survive. As far as I can tell Tesla may have succeeded by the slimmest of margins. Time will tell.