Developing a Minimum Viable Product (MVP) is a component of Lean Startup methodology. It can be incredibly valuable to entrepreneurs. Below I provide my definition of what an MVP actually is, why its so valuable, examples of MVPs used by successful companies, and how to design an effective MVP.
What
An MVP is the most efficient way to portray and deliver on your product’s value proposition. It often means delivering the value manually, or as a service first. The examples below will help you see what that means.
Why
Here are 5 benefits of developing an MVP:
a. Fast feedback. Validate demand before spending the additional time and money producing and marketing a “viable product.”
b. Better feedback. Get more focused feedback to improve the product from customers who have seen it and/or used it.
c. Experience. Helps solve the customers don’t know what they want problem by enabling them to experience the value proposition of the service.
d. Acquisition. Ability to acquire customers is probably the second most risky assumption a startup faces behind building something people want. An MVP makes it easier to test ability to close a sale.
e. Revenue. If your price is high enough, or if you have enough customers, the revenue you earn can actually be fairly significant, especially for a small bootstrapped startup.
Examples
Here are my 4 favorite MVPs used by successful companies:
a. Yipit
Yipit aggregates all the daily deals being sold by different companies. To test that this was something that people wanted, they delivered on this value proposition by doing a lot of manual work.
They first built an email capture, sign-up flow to collect preferences and a script that would send people an email with the deals that matched their preference.
Aggregating all the deals into their database and categorizing them correctly would have required building a crawler to parse the deals from HTML from various sites and write a classification algorithm.
Instead of building a crawler, the co-founders would crawl out of bed at 3 am and manually enter the deals into the database.
b. Virgin Air
Virgin Air started with just one plane flying between two locations. It delivered on it’s most core value proposition. After testing the concept and improving the offering they expanded their fleet.
c. Angellist
Angellist is a marketplace that connects startups and investors. The problem they’re solving is that it’s hard for both sides of the marketplace to find each other.
The way they solved this core problem initially, their MVP, was by making email introductions. They made email intros connecting a startup they knew looking for funding and investor they knew looking for investments.
It delivered on the core value proposition that Angellist still offers today.
d. Zappos
Zappos is an e-commerce site where people can buy shoes online. To test that value proposition, they took pictures of shoes at local stores, posted the pictures online, put them up for sale on their site, and when customers purchased the shoes, the company would by them from the stores at full price and ship them to their customers.
How
Here are 4 tips for roadmapping and developing an MVP:
a. Focus. Identify the outcomes that are most important to your customers. Strip away non-core features.
For Angellist, it’s meeting startups/investors respectively. Email intros were able to deliver that value. Scrap the features that don’t directly contribute to solving the one biggest problem your product solves.
b. Do things that don’t scale to deliver on that value proposition.
Doing things manually, while not sustainable or scalable, and in some cases not profitable (i.e. Zappos), enables you to ship and test faster. Time is money. For example, Yipit manually scraped data to avoid a whole bunch of time building out the automated product before validating that there was a need for it.
c. Don’t be a perfectionist. People don’t use products just because of the design, they use them because it solves a problem or delivers value to them in some way.
If people tell you they’re not using your product because of the design it may be because it’s not solving a real or important problem for them. Yes, bad design can hurt conversions and engagement. However if you are able to convert with bad design it’s a sign that you’ve tapped in to real demand.
d. Spend to save. MVPs aren’t used just to save money or generate revenue faster. They’re used to mitigate risk. It’s better to build one unit at a higher price per unit than to build a lot at a lower price per unit but with higher overall costs. For example, Zappos took a loss on it’s first sales. Don’t be afraid to spend a little money early to avoid wasting a lot of money later.
Have a startup idea? Trying to think of what an MVP could be? Post a comment about it below and I’ll give you some ideas…
