What is Minimum Viable Product (MVP) and Why Does it Matters? A Complete Guide
How many times have you been tasked with creating an MVP, only for it to be misconstrued as the bare minimum requirement to check off a to-do list, akin to the minimum word count needed to publish a blog post? Today, MVPs are far from being mere placeholders; they are powerful tools for gaining insights about your product and users.
Before we dive into the world of MVPs, it's essential to acknowledge the stark realities faced by startups. Statistically, up to 90% of startups face the daunting prospect of failure. These early-stage businesses grapple with numerous challenges that can lead to their demise, including:
- Misunderstood or Under-Studied Market Needs (Approximately 40%)
- Depleted Budgets (Around 30%)
- Intense Competition (About 20%)
- Marketing, Pricing, and Design Challenges (Approximately 10%)
Given these daunting statistics, it becomes imperative for startups to find effective strategies to navigate the treacherous waters of entrepreneurship. This is where the concept of the Minimum Viable Product (MVP) comes into play.
In this article, we want to demystify the concept of MVPs, exploring what they are, how they differ from Minimum Marketable Products (MMPs), their multitude of benefits, the various types available, and the steps to set up an effective MVP. Let 's go.
What is an MVP?
MVP, short for Minimum Viable Product, is more than just a buzzword; it's a strategy, a mindset, and a method that can mean the difference between thriving and struggling in today's competitive business landscape.
At its core, a Minimum Viable Product (MVP) represents a streamlined, initial version of a new product or feature.
The primary purpose of an MVP is to reduce risk while providing a platform for gathering feedback from early users during the early stages of development.
Instead of embarking on the arduous and expensive journey of creating a fully-fledged product, an MVP allows you to test the waters and validate your product's fundamental concept.
So, what exactly goes into crafting an MVP? By definition, it comprises no more than what is strictly necessary to learn something valuable. The key objectives of an MVP include:
- Rapid Learning about Perceived User Value: MVPs enable you to swiftly gauge how users perceive the value of your product or idea. It's a means of testing the initial appeal and viability of your concept.
- Testing Assumptions: MVPs serve as a vehicle for putting your assumptions to the test. They allow you to validate or refute your hypotheses about your target audience and their needs.
- Sourcing Real-World Feedback for Future Development: Through an MVP launch, you can collect tangible feedback from real users. This feedback informs the iterative development of a more comprehensive and refined product in the future.
The MVP: your product's skeletal structure
Think of an MVP as the skeletal framework of your product idea—the bare bones, the essentials that allow it to function.
But why start with such a basic iteration? The answer lies in the concept of validation.
Creating a full-fledged product involves significant resource allocation, both in terms of time and money. Starting with an MVP helps you gauge whether there's genuine interest in your concept.
It serves as a litmus test, enabling you to dip your toes in the water, assess market interest, and, most importantly, gather invaluable feedback.
However, the value of MVPs extends beyond resource conservation. It fosters a culture of adaptability within product teams.
By commencing with a minimal version, teams can pivot more readily in response to user feedback and changing market dynamics. It's a dynamic approach to product development that places a premium on learning and iteration.
An MVP is more than just a prototype; it is a released product with essential features designed to address specific consumer needs. By launching a product with limited features and resources, as we already said, businesses can save both time and money while assessing its potential in the market.
Through the analysis of user feedback, companies can determine the product's market demand, competitiveness, and its ability to meet consumer needs. This iterative approach allows businesses to reduce the number of development iterations and enhance the product continually based on real-world input.
Minimum Viable Products VS Minimum Marketable Products
Have you ever heard about the MMP? Well, it happens that clients get confused between these two terms and we firstly need to explain to you the difference. While these terms may initially appear synonymous, a closer examination reveals crucial distinctions that shape the trajectory of a product's journey.
- The MVP, or Minimum Viable Product, serves as the pioneering prototype of your product idea. It's the version you create to test and fine-tune your concept. At this stage, the MVP is all about validation, seeking to answer essential questions about user interest and feasibility. It represents the bare minimum required to gather invaluable insights, often in a raw and rudimentary form.
- The MMP, or Minimum Marketable Product, is the more refined, polished version of your product, primed and prepared for the market. Unlike the MVP, the MMP isn't just about validating your idea; it's about delivering a product that is ready for users to embrace, possibly even willing to pay for.
Key Distinctions:
- Level of Polish: The most apparent difference between the two lies in their level of polish. MVPs are intentionally basic and unrefined, focusing solely on functionality. MMPs, however, come adorned with extra touches and features that enhance user experience and aesthetics, making them market-ready.
- Purpose: MVPs are deployed for learning and validation purposes. They are instrumental in answering crucial questions about whether your idea has merit and whether it resonates with users. MMPs, conversely, are designed to be products that users can genuinely adopt and utilize in their lives.
- Market Readiness: While MVPs are far from ready for the market, MMPs are, as the name suggests, market-ready. They are equipped with all the essential features and refinements necessary to cater to user needs and expectations.
- User Willingness to Pay: An MMP often represents the point at which users may be willing to open their wallets. It offers enough value and functionality to justify a price tag, whereas MVPs are typically offered for free or in a rudimentary form as part of the testing process.
Benefits of MVP: why you should consider it for your project
As we already said, the Minimum Viable Product (MVP) framework is more than just a strategy for launching a product with limited resources; it carries a multitude of advantages that ripple throughout your organization and resonate with your users:
1. Early Feedback from Real Users
Assumptions are often the guiding light during the pre-launch phase. Teams make educated guesses about what users want or need based on market research and internal discussions. However, these assumptions can only take you so far. This is where the MVP steps in, bridging the gap between speculation and reality.
An MVP places your product idea directly into the hands of real users. Whether they embrace it with enthusiasm or express reservations, the feedback you receive is invaluable. It provides an unfiltered view of how users perceive your product, what works, and what needs improvement. This early feedback is like a compass, guiding product and engineering teams towards informed decisions about the product's future. It enables you to determine whether your concept has traction and how best to refine and expand upon it.
2. Fewer Sunk Costs
One of the most significant advantages of an MVP lies in its ability to act as a litmus test for your product's viability. If your product isn't resonating with users or isn't aligning with their needs, the response to your MVP will make this abundantly clear. This early revelation can save your teams precious time and resources that would have otherwise been invested in a product destined to fail.
Conversely, if your MVP garners positive feedback and user engagement, it becomes a beacon of clarity. It reaffirms the value of your concept, making it easier to proceed with confidence and commit resources to further development. In essence, an MVP serves as a safeguard against blindly pouring resources into an ill-fated endeavor and instead directs your efforts towards more promising ventures.
3. Lean Development
At the heart of the MVP philosophy lies the principle of lean development. An MVP is not just the most basic version of your product; it's the simplest version that still effectively communicates value to users. This approach encourages teams to focus their efforts on building out essential features and capabilities first, rather than getting lost in the complexities of a full-fledged product.
By prioritizing simplicity and functionality, MVPs help streamline development, reduce unnecessary features, and expedite time-to-market. This lean approach not only conserves resources but also allows teams to iterate rapidly based on user feedback. It fosters a culture of adaptability and continuous improvement, ensuring that the final product aligns closely with user needs and preferences.
Types of MVP
As always happens, there isn't a one-size-fits-all approach. Different scenarios call for different types of MVPs, each tailored to specific objectives and circumstances.
1. Concierge MVP
Imagine a scenario where you aim to offer an app that generates customized diet plans based on users' goals and health. With the Concierge MVP, you take a hands-on approach to validate your concept. Instead of developing a product, service, or website, you personally consult with potential users. This manual solving of customers' issues allows you to gauge real-world demand and gain a deep understanding of user needs.
While the Concierge MVP demands considerable time and dedication, it offers a wealth of insights. By directly engaging with users, you not only validate your product idea but also uncover nuances that can shape its future development.
2. Wizard of Oz MVP
The Wizard of Oz MVP shares similarities with the Concierge type but adds an element of illusion. Here, the goal is to make users believe that the released product is a fully automated service when, in reality, it relies on manual intervention behind the scenes.
This MVP involves simulating automation while performing tasks manually. It creates the illusion of a seamless user experience, giving you a sense of how users interact with your envisioned product without investing heavily in automation upfront.
3. Landing Page MVP
A Landing Page MVP revolves around creating a compelling webpage that highlights the advantages of your product or service. It serves as a digital storefront, where users can learn about your offering and, in some cases, even make a purchase or express interest through pre-orders.
This type of MVP not only allows you to gauge interest but also provides a platform to collect user data, such as email addresses. With this data, you can initiate direct conversations with potential customers, gather feedback, and track user behavior. The Landing Page MVP empowers you to analyze demand and make necessary adjustments based on user interactions.
4. Explainer Video MVP
Sometimes, the best way to convey the essence of a complex product is through an Explainer Video MVP. Videos offer a dynamic medium to showcase how your product works, what sets it apart, and how it can address users' needs effectively.
By presenting your product in action, you not only introduce users to its features but also gain insights into their engagement and interest. Explainer videos are an excellent tool for simplifying complex concepts and capturing user attention.
5. Pre-order MVP
For businesses requiring substantial investments and customer commitment, the Pre-order MVP is a strategic choice. It allows potential customers to invest in product development or pre-order the product itself. This approach serves multiple purposes: it evaluates the product's potential, measures user interest, and provides financial support for development.
By gauging the number of pre-orders or investments, business owners can make informed decisions about the product's future. It's a powerful tool to assess demand, secure funding, and validate the market before fully launching.
Some examples of MVPs
It's enlightening to explore real-world examples of businesses that leveraged this approach to achieve monumental success.
Amazon: From Garage Bookstore to E-commerce Giant
In the early 1990s, Jeff Bezos embarked on a journey that would redefine the way we shop. Armed with a vision for the burgeoning e-commerce industry, Bezos decided to start small. He chose a bookstore as the minimum viable product and ran it from his garage. Amazon, in its infancy, was a modest online bookstore, far from the expansive marketplace it is today.
However, this seemingly basic bookstore served a vital purpose. It allowed Bezos to gain invaluable customer insights and test the waters of online retail. The success of his MVP laid the foundation for Amazon's exponential growth.
With time, the demand expanded beyond books to include electronics, clothing, shoes, and a vast array of products. What began as a small bookstore on a basic webpage ultimately evolved into the third-largest enterprise in the world, all thanks to the strategic use of an MVP.
Uber: From SMS Service to Global Phenomenon
Uber, the ubiquitous ride-sharing app, didn't start as a mobile application. Founders Garret Camp and Travis Kalanick initially envisioned an MVP in the form of an iPhone-only SMS service called UberCab, launched in San Francisco. They recognized the potential for a more efficient and convenient transportation solution and began testing the user experience within the city.
Through the MVP approach, Camp and Kalanick refined their concept, gathering valuable feedback along the way. This iterative process allowed them to secure venture capital and eventually build the app we now know, serving over 19 million trips worldwide each day.
Over time, Uber expanded its scope, incorporating black cars and independent contractors as drivers, transforming itself from a cab-hailing service into a global ridesharing phenomenon. The evolution of Uber showcases how MVPs can guide a company's growth and adaptability to changing market demands.
Spotify: Streamlining the Music Industry
In 2006, the music streaming landscape was marred by limitations, low-quality libraries, high subscription prices, and unstable streaming services. Daniel Ek and Martin Lorentzon sought to disrupt this industry by using an MVP approach.
They created a landing page for Spotify, where they could test their streaming technology with beta users while generating revenue through on-page advertisements. The primary goal was to ensure fast and stable playback to convince music labels and investors of the product's quality.
Once market testing validated their concept, Spotify, along with its subsequent app, was launched to the public. It swiftly became the streaming giant we now know, revolutionizing the way we consume music.
Dropbox: A Video Sparks a Revolution
Dropbox's MVP was far from a fully-fledged product. Instead, the founding team employed a short video to explain the value customers could derive from seamlessly sharing files between devices. The response was overwhelming, with numerous users signing up for the beta.
This MVP approach validated the concept and generated significant interest, propelling Dropbox into the realm of cloud-based file storage and collaboration.
How to set up an effective MVP
It's a process that requires careful planning, a deep understanding of customer pain points, and a focused approach on measuring the impact of key features.
1. Identify the Customer Pain Points
The foundation of any MVP lies in solving a real problem that customers face. To begin, you must identify these pain points and gain a thorough understanding of your target audience. Take, for example, the early days of Uber in 2008.
Let's say you're envisioning a solution for making it easier to hail a ride late at night or in adverse weather conditions. Your first step is to delve into the minds of potential users. Engage in conversations with them to understand their preferences and expectations. Do they expect the convenience of hailing a cab with a simple tap on their phone? Are they comfortable texting a taxi driver for a ride? How do they prefer to pay for their transportation?
Market research techniques, including competitive analysis, opportunity and SWOT analysis, surveys, one-on-one interviews, and focus groups, can help you gather essential data. This research validates your understanding of customer needs and pain points, identifies the minimal set of features required to deliver value, and provides valuable testimonials for proof of concept during the investment stage.
2. Describe the Competitive Landscape
Understanding your competitive landscape is crucial, especially in a market saturated with alternatives. In today's world, ride-sharing services abound, each vying for a slice of the market. To set your service apart, consider what unique value proposition you can offer.
Create a comprehensive list of pros and cons that highlight how your solution outperforms the competition. Analyze the gaps in existing offerings and assess the monetary value of addressing these pain points for customers. By identifying your unique selling points and areas of improvement, you can position your MVP effectively in a competitive market.
3. Test the MVP for Validity
Once you have a clear understanding of customer pain points and a competitive edge, it's time to put your MVP to the test. Identify a beta group or internal testers within your team who can evaluate the basic technology. Whether it's a landing page, an SMS-based system (as in the case of early Uber), or a basic one-page app, focus on functionality and its ability to address the identified pain points.
Maintain strict deadlines during the testing phase and gather feedback from your testing team. This feedback is invaluable for ideation and refining your product before it reaches early adopters. It allows you to iron out any issues and ensure that your MVP aligns with the core objectives of addressing customer needs.
4. Get Ready to Launch
If your MVP successfully passes the testing stage, congratulations! You're on the cusp of something special. Now, it's time to prepare for launch. Research, build, test, fix, and continue the ideation process. Once you've solidified the few features you identified from the start, you can introduce the MVP to your initial customer base.
Launch marks the beginning of the Build-Measure-Learn (BML) feedback loop, where you gather user data, analyze user behavior, and make informed iterations to enhance your MVP continually.
As you embark on your MVP journey, remember that setting up an effective MVP requires careful planning, continuous learning, and a commitment to addressing customer pain points.
It's a transformative process that can shape the future of your business. If you're looking for expert guidance and support in making your MVP a reality, Acid Tango can help you in bringing your innovative ideas to life.
We offer a range of services, including professional consulting, interim management (CTO/CPO), strategic vision, knowledge transfer, and hiring assistance, all designed to help you accelerate your MVP's development in a matter of weeks.