MVP: How Not to Fail Big
What is an MVP and why do budding entrepreneurs need it?
So, my dear founder, your idea has crystallized in your mind, clearer than ever before, the whitepaper is penned, and the landing page is already drawing in the first users. What next? Enter the MVP, my friend. A Minimum Viable Product is what can save you from a catastrophic financial failure should the market fail to appreciate your burgeoning product. If you haven't included this in your plan, I strongly advise you to reconsider.
A Minimal Viable Product (MVP) is a test version of a product, service, or application with the minimal set of features (sometimes even just one) that still provides value to the end consumer.
An MVP is created to test hypotheses and check the viability of the intended product, assessing its value and demand in the market.
The outcomes of testing a minimal viable product and feedback from the target audience help determine whether it's worth further developing the project, what changes should be made to the strategy, and what should remain as initially conceived.
The usefulness of developing an MVP is proven by examples of companies that are now giants. For instance, Amazon started as a simple online bookstore. Jeff Bezos, the founder, built his startup on the idea that people would buy books online if the process was convenient and straightforward. In 1994, Amazon launched with just one core offering—book sales—allowing users to appreciate the convenience and simplicity of online purchasing. Today, Amazon is a global retailer with billions in revenue, having expanded its offerings to an almost infinite list of products and services.
Daniel Ek and Martin Lorentzon launched a small service with a single function—streaming music—in 2006. Today, their product, Spotify, is valued at $21 billion, collaborates with major recording studios, and boasts an active audience of 50 million people.
In 2008, when renting a hotel or accommodation during travel was a significant issue, two enthusiasts approached the problem unconventionally and rented out their apartment through a simple ad. Essentially, this was also an MVP, testing the core function. The experiment showed that the product would have demand, and today Airbnb is one of the largest platforms for finding short-term rental accommodations.
An MVP is the first step toward understanding how deeply an idea can resonate with consumers' hearts and minds and the beginning of the journey to create something truly great. If you no longer have questions about why you need an MVP, let's move on to the specifics. There are many different approaches to creating a minimal viable product, but in practice, some are more commonly used than others. Next, we'll talk about the most popular ones.
The Three Heads of the MVP Dragon
MVP Imitator
Recall the scene from the popular comedy "The Interview," where a display of product-filled supermarket shelves impresses the main character? This approach involves simulating the presence of functionality that, in reality, is not technically implemented. The MVP is aimed at testing a hypothesis, proving the viability of the chosen business development model.
Originally, this approach had many critics, questioning how one could test anything if there's nothing there? Nick Swinmurn, the founder of the online shoe store Zappos, which hit a valuation of $2 billion in 2015, proved the method's validity.
He created a website and posted photos of various shoe models. Upon receiving an order, he would purchase the required pair from a store and send it to the customer. This way, he tested the viability of selling shoes online without initially spending money on warehouse rent or product stock, merely simulating their presence.
MVP Puppeteer
This methodology is more suited for online services whose end goal is to automate the solution of the target audience's problems. In the initial stages of product implementation, the service is provided manually.
For instance, let's say we want to create a service for personal financial accounting and planning. To test whether this idea will be in demand, we first create several financial plans for clients manually using Excel. This allows us to understand who is willing to pay and how much, which features need to be implemented first, and so on. Often, a concierge MVP helps generate new ideas that subsequently make the final product better.
This model was used by Chuck Templeton in the late '90s—the founder of an online service for booking restaurants, tickets, and much more. He didn't immediately invest hundreds of thousands of dollars into the technical implementation of the service but instead manually booked restaurant tables for people. This way, he tested the viability of the idea, understood who was willing to pay how much and for what, and got to know the target audience.
MVP Frankenstein
The piecemeal MVP method is used when an idea can be tested and implemented without developing unique software. Instead, ready-made tools are assembled, combined into one system, and presented in a unified interface.
If all companies began with the development of unique solutions, which could cost hundreds of thousands of dollars, many cool projects would never see the light of day. Typically, this is a step taken after launch, receiving feedback, and initial results.
Look at the popular group-buying service Groupon. It once started as a simple WordPress site where all user interactions were conducted via email. Only after receiving initial feedback and financial results were social features, a comprehensive email campaign, automation, and a mobile app developed.
The Art of Crafting an MVP
Begin developing your MVP in the early stages of your product's development. An idea may seem brilliant only in your mind (yes, that's the harsh reality), so why immediately invest a significant amount of money in development when you have the option to test with minimal expenses and precise verification? After releasing a Minimum Viable Product, you'll determine the demand and understand whether you're moving in the right direction with your project or not.
But the coolest aspect of the MVP is gathering valuable information from the first users. It's the end consumer who will tell you about the project's correct implementation. Use the collected data for planning further updates and identifying the most critical goals: which features to implement as a priority.
First and foremost, you and your team must find answers to the following four questions:
How can we minimize resource expenditure?
Remember, the MVP should consume the least amount of time and effort. Work with your team to figure out how to spend little money while still conducting effective testing of the business idea. Typically, discussing this question helps select features to implement in the early stages of product development.
How should we interact with users?
One of the main goals of creating an MVP is to test hypotheses, determine demand, and assess the product's popularity. Feedback from the product's first users aids in this. To not miss any crucial information, plan all channels of interaction with your target audience in advance: reviews, surveys, direct interviews, etc.
How can we make the product's first sales?
The first sales will provide funds to begin development and show whether the concept developed is of interest to anyone. A good option is to organize fundraising (pre-sales) on a crowdfunding platform or an ICO (if you have a blockchain startup).
How will we promote the product?
Plan your advertising campaign and the channels you'll use from the start. Main tools include pay-per-click advertising. Next, explore social networks—Facebook, X, LinkedIn, and Instagram. Create official pages, launch targeting. By the way, branded communities are one of the feedback collection channels. Develop a compelling landing page: describe the product, its features, benefits for the client, and offer users a choice between paid and free versions of the product. After discussing these issues, you should know through which channels you will promote and how much money you will spend.
Try to engage the most skilled IT experts you can afford to examine your idea and testing options from various angles. Be sure to create a mind map reflecting the main thoughts, ideas, and decisions made. After answering these questions, you can confidently move on to the next flow:
First Stage: Identifying the Problem Solved by the MVP
After establishing the core principles of the MVP, answer the question, "What problem does the product solve?" Describe its value in a few sentences. Firstly, it's beneficial for you and your team, and secondly, it will later aid in creating a unique selling proposition, landing page, and advertising campaign.
For example, consider a service for personal financial planning. It addresses the problem of "uncontrolled spending, helps organize the budget, and set long-term goals."
Second Stage: Finding the Target Audience
A common mistake among new product managers and entrepreneurs is believing their project solves a problem for a broad audience (everyone). This approach significantly increases the likelihood of failure. Focus on a specific target audience.
Create a customer profile who is sure to buy the product. Describe their gender, age, social status, income level, needs, habits, the technology they use, common problems, and leisure preferences.
Don't rush this stage! It's better to spend a few hours forming a target audience profile than to later "drain" the entire advertising budget and achieve minimal conversion. And remember the problem solved by the MVP (determined in the first stage).
Example with a service for creating financial plans for individuals:
Age 25-35;
Male; Earning $5,000 - $10,000 per month;
Aiming to pay off debts, save money, improve their quality of life;
Uses desktop and smartphones;
Experiences a shortage of salary by the end of the month.
Having drafted a rough profile helps navigate and understand who the product is being sold to. This information will later assist in organizing the advertising campaign.
Third Stage: Identifying Main Competitors
Don't assume your product (idea) is unique and nowhere else to be found. Even if you haven't directly encountered it, that doesn't guarantee uniqueness. The "multiple discovery" hypothesis suggests that all research and inventions are made independently by several scientists at once.
This hypothesis is exemplified by the development of the radio. In Russia, Alexander Popov is credited with its invention, while in Italy, the honors go to Guglielmo Marconi. Both began working on their ideas in 1894, but Popov presented his invention in March 1896 (without patenting it), while Marconi filed for a patent in June 1896. There are also several other scientists in different countries who claim to be the "creator of Radio."
Similar to the MVP story, you must spend considerable time but try to find competitors. If your idea turns out to be unique, great, but if not, then address the following:
Gather as much information as possible about the main competitors. Analyze the three largest market players: study their development history, review their products, learn about their competitive advantages, and assess your ability to offer something better.
Determine the market shares of the main competitors. Examine the companies from all sides, identify their strategies, sales volumes, calculate profitability, etc. This will help you understand their success and how you can outperform them in competition (and importantly, how much resources this will require).
Study primary sources of information. Anything competitors publish about their activities are primary data sources. Therefore, review their official websites, presentations, white papers, annual reports, marketing materials, etc. This will help deconstruct competitors' activities and inspire new product development ideas.
Explore secondary sources of information. News, videos, reviews, interviews, ratings, etc., are secondary sources of information. They are published by media, independent industry websites, and many others. Gathering information from secondary sources will help you understand the industry deeper and learn the "rules of the game." However, remember that not all sources provide accurate information.
Attend industry events. Your competitors present their products or services at conferences, exhibitions, and any other suitable platforms. To gather maximum information and ask questions, attend such events. Most are free, so you'll only need to invest your time.
Special analytical tools like Similar Web, Ahrefs, Quantcast, App Annie, AppFollow, and others can assist in gathering information. Collect data on competitors' popularity, monthly traffic, target audience interests, geographical location of clients, etc.
For convenience, we recommend compiling a summary table with all gathered information. This will make it easier to navigate large data sets and make decisions.
Fourth Stage: Conducting a SWOT Analysis
A SWOT analysis consists of a table with four blocks:
Strengths;
Weaknesses;
Opportunities;
Threats.
Again, it's best to conduct it collectively or, at the very least, with key team members. It's crucial to objectively assess each item and not be afraid to acknowledge weaknesses.
The goal of a SWOT analysis is to identify strengths and opportunities to focus efforts on minimizing the negative impacts of weaknesses and threats. The conclusions drawn will help choose a strategy for development and market positioning.
Fifth Stage: Creating a User Journey Map
A quick blitz to determine the product's convenience: if you don't understand what to do with your service (product, service, etc.), the consumer definitely won't be able to figure it out!
To avoid such misunderstandings, at the fifth stage of creating a minimum viable product, create a user journey map—what a user does when interacting with the product. You need to understand the audience's requirements for content, design, and interface.
Remember to adjust the user journey map (user flow) after receiving feedback from the first customers. They will tell you what's good and what's bad or inconvenient. Based on this, adjust the map so the end consumer gets what they want.
For example, for a financial planning service, we made such a map:
Selecting the planning period;
Adding assets, liabilities, income, and expenses;
Financial plan analytics;
Setting goals and tracking progress.
After initial testing, several people wrote to support over two months: "We had financial plans in Excel, and it took us a couple of hours to transfer all the data to your service." What do we do? Correct! We add a function to export existing financial plans from Excel.
Sixth Stage: Compiling a List of Product Features and Determining What Goes into the MVP
In the previous stage, you identified the main user interactions with the product; now, describe specific functions for each. For convenience, create a special map: interactions and functions for each. Then, for each interaction, a list of functions is determined. Here, logic and user stories will help. In the first case, think independently or with your team about what is needed to facilitate a particular interaction.
But as you remember, our vision is often distorted, whereas real users provide objective information based on experience. User stories describe various actions by people, based on which necessary functions are determined.
Next, you need to define the MVP functionality, or in other words—plan the scope of the minimum viable product. Start by identifying a few key functions without which the project cannot exist; it would be pointless. This is the skeleton or the least viable version of the product.
The skeleton is like a house without finishing—it's somewhat livable but not quite comfortable. Therefore, in most cases, the MVP is supplemented with various "utilities." For this, it is necessary to determine essential and non-essential functions: what is needed now, and what can be refined later as the project develops.
Again, it's better to classify functions collectively. Discussions, debates, and reasoning will lead to determining the optimal scope of the minimum viable product. On the map, highlight the skeleton and additional functions within the MVP for easier planning.
Seventh Stage: Choose a Management and Development Method
You are ready to start work: the idea, tasks, goals, and MVP scope have been defined. Now, choose a management model to achieve maximum efficiency and meet development deadlines. Several options are possible:
Lean.
Scrum.
Kanban.
Extreme Programming (XP).
This stage is one of the most important. You can come up with a great idea, develop a quality concept, assemble a team of top-notch specialists, but if you choose the wrong management model, forget about achieving success. Therefore, think carefully about which system to work with in the context of implementing a particular product.
Eighth Stage: Conduct Testing
Test the MVP in short iterations: alpha and beta testing. Alpha is the internal stage: finish development, use the product within the team for a few days. If everything is okay, launch beta testing—the external stage, give access to the project to the first users. Duration: 7-14 days.
After the first beta, gather feedback, visit statistics, behavior analytics, and analyze the entire data set. This way, you'll know what needs refinement, what can be removed, and what, on the contrary, needs to be added urgently.
Several "development-alpha-beta" iterations will help reach the optimal first version of the product, which can be released to the market for mass use and continue to be refined.
After going through 8 stages, you'll have a solid minimum viable product that will eventually evolve into the first version of a full-fledged project. And don't be afraid to make adjustments: skip some stages, add your own, etc. This sequence of steps is not a strict rule but rather an example or template upon which you can build something unique and your own.
The Most Common Mistakes When Creating an MVP
Now you know how to create your MVP. But there's another point: beginners (forgivably, by the way) often make mistakes when planning their first minimum viable products. By the second or third attempt, having gained experience, they work faster and more efficiently.
But why learn from your own mistakes when you can learn from others'? Why not use their experience to avoid pitfalls on your path? So, let's talk about the most common mistakes made by novice product managers and entrepreneurs.
Striving for Perfection
Lock up your perfectionist because it will play a cruel joke on you during the MVP development process! Remember, the task of a minimum viable product is to give users a basic understanding of the product; it inherently cannot and should not be perfect.
You're testing a hypothesis! Believe me, a small MVP is enough to determine the potential of an idea. If it's great, even poor design, interface, and minimal speed won't spoil the product's demand. Only start investing resources in usability and aesthetics after confirming this hypothesis.
Sloppy Work
If the MVP doesn't have to be perfect, it doesn't mean it can be carelessly made. Some product managers swing from one extreme to another, ending up with something incomprehensible.
A minimum viable product should be simple yet quality. For instance, if you're creating a service, at least purchase a second-level domain; don't leave it on a subdomain of some free builder.
Lack of Feedback
Some novices get so caught up in development that they forget about the primary goal—collecting feedback. Even at the planning stage, it's essential to define key metrics that will indicate the project's success, such as download or purchase numbers, new user counts, customer retention rates, etc.
"Empty" Promises
When "eyes sparkle," there's a feeling of being able to move mountains! And it's in those moments that leaders start announcing cool and extraordinary features. Of course, this is great from a marketing perspective, but if you fail to deliver on promises, users will start abandoning the project.
Always make decisions about new announcements with a "cool" head. Objectively assess what you can and cannot do.
Ignoring Analysis and Analytics
Being enthralled by your own idea often clouds judgment, and the whole team stops paying attention to objective facts: poor metrics, negative reviews, etc. They start to think that users just don't understand yet, but when the final product version is ready, then they will appreciate it.
No, they won't. Objectivity is always important in this business. Listen to feedback from real users, adjust the project's work according to the desires of the end consumers, or else all this hustle is pointless.
Conclusion
I believe this article has covered everything necessary to understand what an MVP is and why it is crucial for you, my dear founder, at the initial stage. It's not wise to repeat the mistakes others have made in the past—better to leverage their experiences and accumulated knowledge. I wish you the best of luck! And look forward to our next encounter!
Free technical consultation for developing a MVP
Book a quick sync up with our CTO if you need a helping hand or visit our website:
Last updated
