Lean startup devotees are familiar with the mantra, "measure, measure, measure." The key to efficiency is getting something out and data back in as soon as possible. Then companies can filter out insights to determine if they’re on the right road without too long a wait or too much of a resource commitment.
Obviously, the potential savings in cost and time from earlier insights and measurement are a major upside in the long-term success of the startup. A downside, however, is possible exposure to state consumer laws. So how might a "minimum viable product" snare your business with unknown legalese? Let's dig into how the law might be a block to validating your business.
When is Product Validation actually Product Deception?
To protect consumers, governments often have laws in place that ban misleading business practices. The United States calls these Deceptive Trade Practice laws.
As examples, some laws won't allow businesses to:
1. advertise products with no intent to sell them as advertised
2. advertise products with no intent to supply a reasonable amount to satisfy public demand
3. fail to disclose information about products which, had it been known, would have dissuaded someone from purchasing.
As startups often offer products under a pre-sale offering that may not come to fruition, be very careful about collecting revenues from your customers before you're able to offer the product you advertise.
What’s This Got to Do With Measurement?
In order to measure interest early, some startups will create a website advertising a product or service. Below is a Shopify landing page, for a product that actually exists.
Sometimes, however, the product or service is in its beginning stages of development, and at other times development hasn't started because the group isn't sure the idea is worth pursuing yet.
But if there's an advertising website up before development starts, does that pose a problem with the consumer laws we mentioned? Especially if a company is leaning toward abandoning the idea altogether? Would that fall under "no intent to supply?"
What to Do, What to Do
Of course, the answer is it depends on the facts involved. I raise the question to show how easy it might be to get on the wrong side of these laws, even where there isn't any malicious intent. It’s easy because these laws are broadly written on purpose, which can prove tricky for well-meaning businesses.
Managing the trickiness comes down to knowledge and awareness. Take time to think about where advertising sites are introduced and what they contain. Where a locales law could be a problem look into manual things you can do, like isolating where the site is advertised geographically. Carefully review statements, promises or guarantees made. And understand this: by accepting money or entering into complete transactions with consumers increases exposure.
What Else Can I Do
Where exposure might be high, you could brainstorm alternative ways to get insight without jeopardizing the organization. You could be clear about where development is and your reasons for advertising. Or as The Innovator’s Method suggests, create a "Minimum Awesome Product" instead -- a sort of lo-fi prototype that still meets all the necessary promises made to your customers. That way there’s no mistake that the product or service isn’t complete and insights are typically gathered in more of a test environment.
At the end of the day, what’s most important is to avoid behavior that could be seen as deceitful or misleading. Don’t be afraid to go after insights, embrace insights. Just do so with awareness and thoughtfulness.