How do we determine which ideas are worth our valuable time? All ideas are equal until we test them. However, not all ideas can become successful businesses. Unsurprisingly, 90% of startups fail, and a lack of funds is a significant factor. But the lack of funds doesn’t happen overnight. It usually comes from the leading cause of startup failure: not fitting the product to the market.
Many first-time founders learn this lesson the hard way. We often have no one to blame but ourselves. We get emotionally attached to our ideas and find it hard to ignore the value of time, even though numerous books, podcasts, and interviews warned us about it.
So, what is a Minimum Viable Product (MVP)? Eric Ries coined and extensively discussed the term in his book, “The Lean Startup.” An MVP is the first version of a new product that allows a team to learn the most about customers with the least effort.
Why should we create an MVP? As startup founders, we often have high expectations for our products. We want all the fancy features, complete functionalities, and a thoroughly tested product for a grand launch. But when launch day comes, we realize there are features we should have included and aspects of the product that were either over or underestimated. This leads to rebuilding and reacting to the market’s needs. Founders and startups in this situation may have a great product but need help to gain market traction because they are disconnected from the market.
There are only two main reasons for creating an MVP:
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Getting feedback from customers: The primary purpose of an MVP is to see how well the product fits the market and if it appeals to the target audience. The feedback received can be used to improve the product or decide if it should be stopped.
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Getting support from stakeholders (including investors): Before seeking funding, it’s crucial to have an MVP that shows potential investors that the business or project is doable, scalable, sustainable, and viable.
MVP development follows the lean methodology of “build-measure-learn.” The aim is to provide immediate benefits while keeping costs low and using data to make future product decisions.
For a simple MVP recipe, follow these steps:
- Conduct market research: Gather primary and secondary data to understand the market need and analyze competition.
- Define the idea: Clearly communicate the idea and how it solves the target audience’s problem.
- Map the user journey(s): Define the stages customers must go through to achieve their main objective. Focus on tasks rather than features.
- Create a feature list: Note down all the necessary features for your product, prioritizing those that meet users’ needs. Categorize each feature as high, medium, or low priority to determine the scope of your MVP.
- Sprint the build phase: Begin a time-limited development sprint, focusing on the highest priority features. Ensure your MVP effectively addresses the needs of your target market and is user-friendly and engaging.
- Launch and gather feedback: After testing and resolving major issues, launch your MVP. Stay caught in continuous adjustments and delayed launch dates. Gather feedback from end-users, as this is the most valuable stage. Use the feedback to improve the product, test new versions, measure quality, and iterate until the product is finalized.
Once you have released your MVP, it is vital to evaluate its success using specific metrics:
- The number of downloads, sign-ups or purchases
- The number of active users
- The cost of acquiring customers (CAC)
- The rate at which customers churn
Determining whether to double down or pivot becomes a binary decision backed by information. Setting expectations (the goals) is key before launch. This helps remove some of the emotion and sets a benchmark without hindsight.