Time Value of Shipping

Shipping is a Feature is a core principle for product managers. It proposes that you’ll never be able to build a perfect product, so you need to learn how and when to ship your imperfect one, because customer use of the product is what really matters.

I’ve used this principle as a guide in my own endeavours as a PM, but I’ve always felt it lacked a tangible framework, both for managing and rationalizing the minimum viable product (MVP) to stakeholders.

The Time Value of Shipping is a framework to apply that principle. It borrows from a fundamental concept in Finance called the time value of money, which simply proposes the following:

One dollar today is worth more than one dollar tomorrow.

The reason is because prices rise with inflation over time, meaning your dollar will buy less stuff in the future.

A quick example

A basketball costs $12 today. If you earned $1 a month you’d have $12 after a year, yet you still wouldn’t be able to buy it because of inflation.

If inflation was 5%, that means the basketball would cost $12.60 (+5%) in one year, $13.23 in two, and so on.

You’d have to wait until your paycheque from month 13 to get on the court.

The product analogy

1. Buying the basketball is when you ship to your customers, usually your MVP

2. The price of the basketball is your users’ expectations of the product (at any given point in time)

3. You earn the sum of customer value that your team builds over time

Your job is to build enough value over time to afford the basketball.