Creating a company from scratch is for the brave. Even if you win the hearts of investors and your brilliant business idea has been approved by dozens of friends, there are so many things that could go wrong.
According to statistics, one-third of startup owners say they’ve started their businesses with less than $5,000 and without any confidence they would turn it into a success.
To mitigate the risk of failing in your first year of founding a business, create an MVP first. In this article, we’re going into detail about what an MVP is when it comes to startups, what types you can implement, and why the MVP startup phase is important.
What is MVP for startup?
An MVP is like a seat belt. If you’re driving a car, you probably understand that you might get into an accident. But if you wear a seat belt, there’s a bigger chance you’ll survive the accident.
Metaphors aside, a minimum viable product (MVP) is an initial version of a product or service built for early adopters. Basically, it offers enough functionality to enable your users to test the product and understand the value behind it. Plus, it’s a perfect testing ground for developers and founders, demonstrating what should be improved based on user feedback.
There are three key things about MVP development that you should get right:
- Killing features go first. The most common way to fail an MVP is to throw in features that are the easiest to develop, instead of the key ones.
- Sell it even if it’s not ready. Profitability is your end goal and by enabling pre-orders you can start generating profits from the get-go.
- You should aim at converting early adopters into users – this would prove you’re on the right path to building a scalable business.
MVP startup phase: Why is it inevitable?
In the history of Shark Tank, an American reality TV series where you can present your business idea to an investor, almost 900 startup founders did their pitches and around 56 percent of those made successful deals with investors. You can find more detailed stats about ten years of Shark Tank pitches here.
If you’ve ever watched the show, you know that most of the contestants don’t have a complete product on hand. What they have, though, is a draft – an initial version of what they want to drive investments for. This is one of the good reasons why it’s important to build an MVP.
A product with the basic functionality helps you understand whether it can potentially drive profits. You can use it for pitching, collecting feedback from friends and family, or testing with early adopters.
Startup MVP vs. POC vs. Prototype: Making the right choice
A business doesn’t always start with an MVP. There are at least three alternative ways to choose from: launching a product without preliminary testing, going with a prototype, or running a POC test. Before you dive into development, make sure you understand what you are opting for or whether you need to use more than one.
In contrast to MVP, prototype is the initial version of a product that’s never released. You may use it for internal tech and security testing, in-house presentations, etc. If you’ve heard about the Theranos scheme, you know why going with a prototype can cause lots of trouble. Because the startup has never really demonstrated their blood-testing machine to anyone except for the in-house teams, they managed to fool a huge number of investors and earn $9 billion, advertising a product that never actually existed.
If you mean well and want to see how people react to your product, you need feedback. This is only possible with an MVP.
Therefore, prototyping is a good idea if you need to come up with multiple drafts or test several versions before building your MVP.
Another MVP alternative is called proof-of-concept (POC), a practicality test that is applied to a project to see how it performs. Running POCs is a useful practice if you want to test separate aspects (concepts) instead of the whole product. In developer’s language, POC is about fixing bugs as you go, enabling correct functionality from the get-go. Going back to Theranos, the startup has never run a POC. This becomes obvious if you dive into the functioning of their lab prototypes: multiple machines malfunctioned, some didn’t work at all, and it took way more blood to run a test than the company had initially intended.
Concluding the Theranos case, you might say that it’s reasonable to use as many testing techniques as you can – from prototype to MVP. While it makes sense for an innovative product like a portable lab, it’s not necessarily going to be the case for you. The goal is to fit your project into a lean methodology, so that it covers planning, MVP, and implementation. You can start drafting ideas through prototypes, develop the first version with regular POCs, and test user feedback with an MVP. Or maybe a well-crafted MVP is all it takes.
Types of MVP
There are several types of startup MVPs you can embrace, depending on your project objectives:
Concierge MVP. As the name suggests, a concierge MVP is there to assist your company in gathering specific data about your target audience to align your project with what people actually need. In this case, you usually don’t have a technical realization of your idea yet, so you do most of the work manually.
Use case: Zappos is a good example of how you can utilize this type of MVP – validating a product fit without actually developing a product. Thus, the founder of Zappos used to buy shoes from a local store whenever anyone ordered from the Zappos website, based on an agreement with the store owner.
Wizard of Oz MVP. Before you automate something, you do it manually – this is the easiest way to explain the Oz MVP. The strategy comes in handy if you want to test complicated functionality before you invest into it. Basically, you have to fake the algorithms to make users feel they're using a technically advanced product you haven’t developed yet.
Use case: Let’s say you want to build an automated platform where HRs could be matched with candidates, based on sophisticated matching algorithms. At the MVP stage, you can simply have your team do all the matching based on profile research.
Landing page MVP. In lean methodology, promoting your product through a landing page is a popular practice. This is the best option if you only need to validate an idea and don’t have a prototype yet.
Use case: As an example, Buffer gained traction by generating sign-ups on its MVP landing page. Building an MVP for a non-existent service not only helped prove the value of the Buffer idea, but also gave the startup their first client base. You can read more about Buffer’s experience here.
Piecemeal MVP. If you use third-party platforms and tools to create your MVP, it’s called piecemeal. The most common example would be using an external messaging platform for testing before you build a native one.
Use case: Groupon used an existing WordPress blog to post their deals instead of developing their own platform. This helped them maximize on marketing while investing minimum money into the service at the initial stages.
Choosing the right MVP models
Sometimes you know right from the start what MVP strategy resonates with your project. If you are starting to tap into a product/market fit, we recommend choosing low-risk MVP models like Landing page or Piecemeal MVP. In case you have a clear idea you want to validate, Concierge and Oz will make much more sense. However, in 90 percent of cases it’s about experience and a product manager’s gut feeling. The good thing is, there are many ways to “prove your gut feeling” such as analyzing successful MVP examples. Here’s a nice online course on designing and running MVP experiments you might want to check out.
Building an MVP for startups: Lessons to learn
A scalable product is a result of planning, doing, testing, and redoing. In other words, unless you have a perfect understanding of what your target audience wants, you have to collect feedback before releasing the final version. This simple idea lies at the heart of lean startup development. But as many startup owners know, the devil is in the details. What’s the right type of MVP? Where do you learn the steps to launch an MVP? How do you prioritize the features that go into an MVP? While we won’t be able to answer all your questions, here are some vital tips you can embrace right now:
Minimum means minimum
The hardest thing about MVP is killing your darlings – you have to include minimum functionality and weed out the rest.
For startup owners, it’s often too painful. This means there should be a regulated process that would allow for selecting the features that make the most sense, in a methodical and cold-blooded way. Here’s how we recommend approaching features prioritizing:
- Build your validation plan. The first rule of a successful MVP is you shouldn’t think of it as a set of features. Decide what it takes to validate your idea. Let’s say you’re building a photo-sharing app and want to test the perception of your product across specific regions. Instead of spending time on developing geolocation tracking, run an offline marketing campaign that will encourage people from those regions to test the app in their local stores, schools, or any other setting.
- Define what is MVP in startup. Once you know what it takes to validate your idea, think about the part of the validation process that should be covered by an MVP.
- Think of user stories/cases. To better understand what features you need, build several ideal scenarios for how your product should be used at this point. What do you want a user to accomplish? Is he/she likely to try the features you put in an MVP? What are the alternative ways of testing the functionality with your users? User stories will help you shape the plan step by step.
- Weed away nice-to-haves. Get rid of the features that can be validated in any alternative way or don’t have to be validated at the initial stage. Your MVP software should purely consist of must-haves.
Rethink MVP methodology if it doesn’t fit your startup
When you build an MVP, you don’t have to follow a well-trodden path. The goal of creating an initial version of a product is to see whether you can sell it in the long run. In some cases, bringing viable features into an MVP just won’t work. For instance, if the goal of a business is to sell an experience rather than a service, viability is not something to focus on.
In his Medium article on MVP practices, the author compares MVP to MDP – minimum delightful product, the concept first mentioned by Adam Berrey. According to it, you might choose quality, design, or the so-called product “gestalt” (the completeness of a product) over viability if it fits your intention. There’s a very simple explanation for that: Sometimes people buy a product only because it makes them feel delighted.
TunnelBear VPN is a good example of a product that requires MDP, rather than MVP. If you look at the reviews of the product, you’ll notice that along with the positive feedback on its secure logging and performance, there’s one thing that stands out: a fun approach. The VPN puts a bear on your Mac – an animated character that makes you fall in love with the flow.
Try an endless MVP
To prolong the effect of testing, you can actually become an MVP startup. That’s how Spotify works, using an iterative approach that combines the elements of Agile, Lean methodology, and MVP iterations. The goal is to bring improvements into the product on a regular basis, based on user feedback and trends. If you’re open to making regular adjustments to your product, this is the strategy you might opt for.
Most of the products developed at Clockwise Software adhere to this approach. We believe that constant iterations based on real user feedback help to keep the product at the top!
MVP startups practices: Best use cases
So if you’re wondering what is MVP in startup, there’s no answer to the question. Basically, the first version of your product is whatever you want to validate, be it viable functionality, mobile app design, quality, or anything else. To see the practical side of an MVP, take a look at some of the examples:
- Etsy: An eBay that targets crafted production, Etsy built a highly successful yet super simple MVP approach. Essentially, it’s built on observation. When eBay launched, the founders of Etsy did comprehensive research on what worked with the eBay audience and found one gap they could target: craft-related products. So as you see, strong research is sometimes your key resource to create a successful MVP. By the way, our team has researched the process of how to build a marketplace like Etsy. The topic is quite interesting, don’t miss it!
- Uber: If you want a more mature start, opt for a functioning product like Uber. The initial version of the Uber app cost the company around $1 million and was quite solid—a necessity in a competitive market of taxis and car-sharing services. It was used mostly by the founders' friends and colleagues, but one could also easily request access by email. Later on, UberCab, which is what it was called, was available for booking via SMS and accepted card payments. By targeting the population of San Francisco, Uber founders saw a huge demand for a high-tech ride service and got their first client base, which persuaded them to expand locally and globally.
- Twitter: The idea of Twitter came from the founders of Odeo, an online directory for audio and video. During one of its internal hackathons, they came up with the idea of an SMS-based messaging platform for the team. Odeo employees loved the solution and used it so often that they eventually decided to make the platform public. So instead of paying any cost to build an MVP app, Odeo created a working corporate asset that grew into a hugely successful social media platform.
- Pinterest: If you look into an early version of what is now known as Pinterest, you’ll hardly recognize it. Its predecessor, a platform called Tote, was targeting female users only and focused on the feature of pinning items to one handy board while shopping online. In fact, the early Pinterest had none of the features you’re used to – like integrations with multiple platforms. But as it grew, it magnified on pinning functionality, covering more target audiences and themes.
Startup owners often share the same two problems: 1) they don’t have a team to build and test an MVP; 2) they fail at prioritizing, because they feel bad about excluding product features. There’s a solution, though. If you’re looking for an expert opinion in terms of MVP application development, or if you’ve never done MVP before, we highly recommend relying on outsourced software development.