Understanding that your product or service will be in demand is the main condition for a successful business launch. Trends figured out how creating an MVP helps with this
An MVP (or Minimum Viable Product) is the earliest version of a product that has the minimum feature set to be presented to the public and tested by the first customers. However, such a product must demonstrate sufficient value to users.
The concept was coined in 2001 by Frank Robinson, co-founder and president of the consulting firm SyncDev. He defined MVP as the result of “synchronous development” or the simultaneous development of a product and research of the target audience.
An MVP differs from a prototype in that it is a working product that must perform the designated function in the best possible way. For example, it can be a beta version of a company’s website, the functionality of which will then be supplemented by studying the behavior of the first visitors.
How MVP is useful for business
Creating an MVP provides direct and indirect financial benefits. It allows businesses to:
- get feedback from the target audience in order to refine the product before its release to the general market;
- Get the product to market faster and make a profit even before the development process is completed;
- to convince investors of more serious funding to complete the development;
- save money on market and target audience analysis.
MVP Examples
- Uber
Garrett Camp and Travis Kalanick launched the UberCab iPhone app in 2010, which allowed commuters to rent premium cars for just XNUMX times the price of a regular taxi. The creators came up with the idea after they noticed that city taxi fares had become disproportionately high. Initially, the application worked in a limited area and with a narrow target audience, but after a year of beta testing, the creators were able to attract the first large investments.
- Airbnb
In 2008, Brian Chesky and Joe Gebbia were unable to pay for a loft apartment in San Francisco and decided to see if there was demand for renting rooms directly from the owner. They created a simple one-page website with photos of their apartment and started renting out their own loft. Young designers managed to pay off all debts. Already in 2009, their startup attracted the attention of Paul Graham and received the first investment from his Y Combinator business incubator. After that, Chesky and Gebbia traveled to New York, where they went door-to-door with clients and asked them about their rental experience. They soon realized that many tenants were put off by the poor quality images that appeared in the ads. Then the young designers rented a SLR camera and went to addresses in Manhattan and Brooklyn to photograph the apartments of landlords themselves.
- Spotify
The developers of the streaming service MVP focused on the music streaming function. As a result of closed beta testing of the Windows application, they signed contracts with major labels and were able to receive significant funding for their project.
- foursquare
The authors of the idea created an MVP with check-ins and rewards for them in the form of badges. After testing, they began to expand the capabilities of the service, adding recommendations and city guides.
- Groupon
Initially, the creators of the coupon service launched The Point, a website that brings together people who could not complete any task alone. Testing showed that the idea needed to be narrowed down. Then a customized blog was launched on the WordPress platform, where information about the possibilities of collective discounts was manually added. When subscribing to the site, its users received a mailing list with PDF files about discounts by mail.
- Wildberries
The founder of the marketplace, Tatiana Bakalchuk, first bought women’s clothing from Germany, then created a website and launched advertising for her store on the Passions.ru platform. Bakalchuk used the Otto and Quelle catalogs, which worked in our country only through agents, but were not presented online. Unlike agents who took about 15% commission, she set an agency fee of 10% and did not take an advance payment.
- dropbox
The history of file hosting began with a three-minute demo video that explained the idea and value of the future product. It received a lot of positive feedback and gained millions of views, which helped attract investors.
In 2009, Jan Koum and Brian Acton decided to create a mobile phone book that would show the status of a contact: available, busy, in a meeting, and so on. Contacts of users of this book received appropriate pop-up notifications. However, they soon began to use statuses for communication. Then the creators released a new version of WhatsApp with the function of sending messages.
Types of MVPs
There are several basic approaches to creating an MVP. Depending on this, several types of such a product are distinguished.
- The Wizard of Oz
The Wizard of Oz used tricks to pretend to be someone he really wasn’t. The same can be said about this type of MVP. The product only seems to be functional, but in fact its developer does all the work manually. This is necessary in order to test the very concept of the product and understand whether it is in demand. This is how the Zappos shoe ordering website developed. Initially, the authors of the idea did not have a warehouse or purchased consignments of goods, but there was only a website with photographs of shoes. When it began to be ordered, the developers updated the functionality of the site.
- MVP concierge
The product works on the same principle as in the case of the Wizard of Oz: initially, all work is done manually. However, customers at the same time realize that there is a person behind the product or service. Wealthfront’s financial planning and investment team initially spoke directly to clients who needed help managing their wealth, and the automated system came later. This type of MVP helps to form a product development plan and collect feedback from the target audience.
- Disjointed MVP
The purpose of this type of product is to convey to customers the value of using existing tools instead of creating a unique solution. It is used to test and implement an idea without developing unique software. This is how Groupon started working. The creators started with a WordPress site where all user interaction was via email. Only later, the service was supplemented with social functions, a full-fledged email newsletter and a mobile application.
- Single parameter product
This is a working product with a minimal set of features to test. This type of MVP allows you to form a target group, get feedback and analyze it, and also test the functionality.
Stages of creating an MVP
To create a successful product, you need a detailed plan for its development. First, you need to confirm the basic principles and methods of MVP. The team must follow them throughout the process. At the same time, you should strive to spend as little money and effort as possible.
There are several stages of testing an idea and turning it into a product.
The MVP idea is in line with the Lean Startup concept. The main purpose of creation is to test a concept or product on the market. It is on its basis that the business can make decisions about the release. Customer development author Steve Blank says that the main reason for the failure of projects that are successful in many respects is insufficient knowledge of their customers. This is confirmed by a study by CB Insights, according to which in 42% of cases the reason for the failure of a startup is the lack of market demand. Creating an MVP allows you to understand the needs of the audience in the early stages of product development and not launch a product or service that will not be popular on the market.
MVP is suitable not only for startups, but also for developing solutions in enterprises. Often the development of a new product is quite complex, and changes are associated with serious risks. The Minimum Viable concept is about small and incremental changes that are safe enough to allow features or upgrades to be implemented without inconveniencing customers.