Did you know that more than 40% of startups fail because there is no market need for their goods or services? Another 17% develop products that are anything but user friendly, causing them to go out of business. One way to avoid these issues is to create a minimum viable product (MVP). This concept allows you to test your business idea with minimal resources and collect data about potential customers.
TL;DR (Too Long; Didn't Read)
A minimum viable product (MVP) is the most basic version of a product or service that has just enough features to satisfy early users. This methodology allows you to validate your business idea and collect feedback from potential customers with the least amount of effort.
What Is an MVP?
The term _"_minimum viable product" was coined by Eric Ries, the author of "The Lean Startup". Basically, it's an early version of a product that has just enough features to satisfy customers and help the development team collect user feedback with the least amount of effort. This concept allows you to gather data-driven insights and use that information to improve the product before launching it on the market. It serves as a learning tool, helping to eliminate uncertainty and guesswork.
Imagine launching a product or service only to realize that it doesn't work as expected. Perhaps your customers don't really need or want what you're offering, or maybe the product doesn't fit into your overall business strategy. You might end up investing a lot of time and money into something that doesn’t move the needle for your business. The truth is that many ideas look good on paper but not in real life.
According to CBInsights, 42% of startups fail because their products don't serve a market need. An MVP allows you to better understand your target market and validate your idea without fully developing the product. If, say, you realize that there is no market need for it, you can stop before investing more resources into something that no one wants. At the same time, you will learn what resonates with your potential customers and what doesn't.
A minimum viable product has only a basic set of features. Think of it as the absolute bare bones of a new software program, mobile app or machine. Popular companies like Dropbox, Uber, Airbnb and Zappos all used this concept in their early stages of development.
Traits of a Successful MVP
The definition of an MVP leaves room for interpretation, which may confuse small-business owners. Successful MVPs have a number of things in common, such as the ability to satisfy early customers and to enable feedback for future development. Consider the following characteristics when developing a minimum viable product:
- It's small in scale, usable, effective and cheap to produce
- It's intuitive and easy to use
- It has just enough features to satisfy early customers
- Its design meets the highest industry standards
- It delivers clear value to the user
As a startup or small business, you don't want to waste time and resources on a complex product without any results. Therefore, your MVP should be as simple as possible but still have enough features to deliver value to your target market. Test it thoroughly to make sure it is reliable and functional. Don't think of it as a product that's ready for commercial use or a means to generate profit — instead, try to see it as a prototype that showcases the core value proposition of a new product or service.
To make things easier, narrow down your audience to one customer profile who is most likely to use your product — that's your ideal customer. Your MVP should address that one person's pain points and give you enough information to determine whether the product is viable at a larger scale. This doesn't mean you should get feedback from just one person, though. What you need to do is identify several people who fit the profile, present your MVP and collect feedback.
Keep It Short and Simple
Before developing an MVP, it's necessary to define your value proposition, set the main assumptions to validate and find the shortest way to validate them. The whole point is to learn as quickly as possible so you can decide whether or not it's worth going further.
If a minimum viable product takes two years or longer to build, then it isn't an MVP. The development and launch of an MVP take significantly less time than those of a traditional product.
Also, don't expect to make money with your MVP. Its role isn't to bring you profit. At this point, it's more important to test your hypothesis and get constructive feedback with minimal resources. For example, if your business idea is to launch an app for expats, you could just set up a landing page to present your concept and share it with your target audience.
Minimum Viable Product Examples
There are different ways to develop an MVP and validate your business idea. Something as simple as a video or crowdfunding campaign can qualify as an MVP. Some common MVP examples you may want to use for your next product or service include:
- Landing pages
- Demo videos
- 3D models
- Digital prototypes
- Physical prototypes
- "Concierge" MVPs
- "Wizard of Oz" MVPs
- Piecemeal MPVs
A landing page, for instance, allows you to instantly communicate your value proposition, request user feedback and take pre-orders. It's a simple yet effective way to see how potential customers feel about the first version of a new product and whether or not they are interested in it. All you need to do is set up an online advertising campaign targeted at early adopters or send emails that direct prospects to your landing page.
Another strategy is to start a crowdfunding campaign on social media or dedicated platforms like Kickstarter or GoFundMe. Make a video showcasing your brand story, business idea and other relevant information. If you get positive feedback and pre-orders, go ahead and let your development team create the final product or a physical prototype.
Other methods, such as the "concierge" MVP, are typically used for testing apps, software or services. Groupon, for example, used the "Wizard of Oz" MVP. The platform started as a basic WordPress website where Andrew Mason, its founder, posted deals for a local pizza store. Everything was done manually with no technology involved.
Companies That Started With MVPs
Some of the most successful companies worldwide started with an MVP. Don't imagine that Buffer, Zappos or Airbnb were born overnight. Uber, for instance, initially connected drivers with iPhone users living in San Francisco. As the company grew, it began to enter new markets and developed new features for its app.
Perhaps one of the best examples of a successful MVP is Airbnb. The company was started by two men who struggled to pay rent for their apartment in San Francisco and decided to provide accommodations to those attending a conference in the city. They created a basic website, took photos of the property and posted them online.
Drew Houston, the founder of Dropbox, launched a four-minute video showcasing its product and shared it on Digg, which was one of the most popular platforms for tech enthusiasts back then. The number of signups increased from 5,000 to 75,000 within hours, which was enough to validate the idea.
Buffer started as a landing page, while Foursquare was initially an MVP with limited features. Spotify, on the other hand, started as a desktop app. In its early days, Facebook was an online platform designed to connect students. Despite their differences, these brands followed the same philosophy: They tested the riskiest assumptions first and then found a way to mitigate those risks.
Why Create an MVP?
An MVP allows you to get the feedback you need to validate your business idea and deliver the product to early adopters as quickly as possible. With this methodology, you can structure product development into small steps and gather insights with the least effort. Then, you can use those insights to understand what went well and how you can improve user experience. This process is referred to as validated learning.
Companies may choose to create a minimum viable product for different reasons. Some use this approach to test a new product or business idea before investing more time and resources. Some want to release a product to the market as soon as possible. Others develop MVPs to learn more about their customers' needs before adding new features to existing products or services.
Releasing a fully functional product right from the start can lead to large capital losses. In the worst-case scenario, you may end up filing for bankruptcy. As a startup or small business, you can't afford to take unnecessary risks. With an MVP, you can test the demand for your product or service and even secure funding for future development.
This approach may also give you a competitive advantage. If, say, your competitors are contemplating entering the market in which you're interested, you can develop an MVP to release your product in the shortest time. The first version of the product will have limited functionalities, but you can gradually add more features to it.
Building a Successful MVP
Say you're planning to launch an app that connects employers with job seekers – like Tinder for business. This kind of app would cost anywhere between $81,150 and $127,950, which is quite a lot for a small business with limited resources. You can develop a desktop version with enough features to satisfy early adopters, such as tech startups. If everything goes as planned, you can reach out to investors or obtain a small-business loan to secure funding and launch the final product.
The goal of building an MVP is to validate your product idea without spending too much time and money. First, research your potential customers to verify the market demand and define your target audience. At this point, you want to identify early adopters and determine against whom you're competing. Think about Dropbox — all it had was an idea, not an actual product.
Next, define your idea. Make sure it provides real value to its users and addresses at least one key problem. Think about its core features and what other features you may add later to increase its functionality. Create a prototype or a graphic representation of your product that can be tested by potential users. According to the lean startup methodology, the MVP comes after prototyping.
Once these steps are completed, choose an MVP format that fits your budget and appeals to your audience. For example, you may create an explanatory video that describes your product and includes a strong call to action. Determine how you will measure the success of your MVP and take it from there. Consider the feedback received from users, the number of people who watched your video, the number of signups and more.
- CBInsights: The Top 20 Reasons Startups Fail
- Lean Startup Co.: What Is an MVP?
- OpenClassrooms: Discover the 4 Types of Minimum Viable Product
- University Lab Partners: 7 Successful Minimum Viable Products That Became Billion Dollar Companies
- Altar Technologies: 3 Steps to Build a Successful Minimum Viable Product (MVP)
- MVP Workshop: Minimum Viable Product Types
- Agile Alliance: Minimum Viable Product (MVP)
- Cleveroad: How to Make Tinder App and How Much Does It Cost?