MVP Stage of Startup
We have our startups and know how limited budgets can be in the early days. That’s why the smartest way to start is with a Minimum Viable Product (MVP) – the most basic version of your product that helps you test your ideas and collect user feedback.
What is an MVP phase meaning?
In this article, we will discuss the Minimum Viable Product (MVP) and what is MVP startup, exploring its benefits, development process, and why it’s crucial for early-stage businesses.
A Minimum Viable Product (MVP) is the simplest version of a product that can still deliver value to users. It includes only the core features necessary to satisfy early adopters and gather valuable feedback for future improvements. The goal of an MVP is to test a business idea with minimal resources and to validate its market potential before investing in a full-scale product.
Building an MVP allows startups to reduce time and costs while preserving the possibility for iteration. By releasing a product quickly, companies can observe real-world user behavior, collect data, and make informed decisions that align development with user needs. This approach minimizes the risk of failure by ensuring that the product being developed addresses genuine market demands.
The Lean Startup methodology for MVP in startups
The Lean Startup methodology is a framework developed by Eric Ries for developing businesses and products that prioritizes efficiency, learning, and adaptability. It revolves around the Build-Measure-Learn cycle:
- 1
Build
– develop a basic version of the product with core features.
- 2
Measure
– collect data on how users interact with the MVP.
- 3
Learn
– use feedback to refine the product and strategy.
This iterative process allows startups to pivot, change direction based on feedback, or persevere if the launch MVP is received positively. The focus is on experimentation and learning, minimizing waste by avoiding unnecessary features and maximizing customer value. This methodology encourages a culture of continuous improvement, essential for startups navigating the uncertainties of product development.
Key Elements in an MVP
The MVP should fit well with our business goals. Since it has limited features, we need to get a lot done with minimal effort and quickly. A launch MVP provides targeted solutions to particular user issues. A product owner or manager will create several user stories and epics as part of an Agile development strategy to tackle these problems. However, these user stories and epics do not fully capture their vision of the product or the business. To determine which features will maximize the MVP's impact effectively, a strategic and budget-conscious approach is necessary. Here are four essential elements that can guide us:
User Research
To truly understand our market and customers, we need to engage in thorough research and communicate directly with those interested. When we start noticing patterns in customer behavior, we can create customer profiles that help us announce the release of our MVP effectively.
This is also a crucial moment to gather as much information as possible about our Total Available Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM). Estimating the market cap can validate our business model's viability. Additionally, we should study our closest competitors and understand the influence they may have on us.
Competitive Analysis
There are various ways to conduct a competitive analysis. Approaching it from multiple angles will significantly help in identifying less obvious paths, allowing us to reduce resistance. Here are a few tips:
Identify
Identify our close competitors.
Understand
Understand their market positions (types, customer segments, niche strategies).
Develop
Develop a perceptual map featuring necessary attributes (like feature sets vs. pricing).
Review
Review customer experiences on their websites if we're targeting a similar audience.
Analyze
Analyze their pricing strategies. Keeping our prices near the low end of the supply elasticity can deter new competitors. The midpoint method for elasticity can help here.
Validate
Validate and test our distribution channels.
Review
Review customer feedback and observe their social media activities. If possible, investigate their advertising approaches.
Adaptability
In the early MVP stages of defining a product and its business context, our product development team is small enough to remain quite flexible. At this stage, the risks are low, the number of stakeholders is limited, and decisions can be made quickly. It can be leveraged by using Lean development principles with continuous integration and development (CI/CD). Every new improvement can be launched to the market, utilized by customers, and the feedback we receive can lead to beneficial changes. Essentially, ongoing iterations promote advancement.
Once our team grows beyond about 9-10 individuals, we’ll need to find ways to maintain that adaptability. The management approach, previously driven by the vision of the founders, must shift towards a mission-based perspective. This is because the specialization required for lean teams cannot rely solely on the founder's vision. A clear mission statement can guide multiple teams effectively, necessitating a review of the command structure.
Runway
Starting up a new business comes with various costs. These include expenses related to implementing the user stories and epics we’ve identified for the startup MVP stage, beginning with the most critical items:
Salaries and wages
Office equipment and furnishings
Insurance, liabilities, and patent costs
Administrative, legal, and financial consulting
Technical infrastructure and associated subscriptions
Depending on the type and amount of funding available, we may not always have enough resources to sustain the business until launch day. This is a crucial factor in determining the feasibility of the entire project. Effectively managing expenses to allocate funds carefully will be vital for extending our runway, ensuring that we achieve sufficient momentum for the product to succeed.
Types of Minimum Viable Products
There are several ways to approach creating a minimum viable product (MVP). In other words, minimum and viable can be defined in various ways. Let’s explore some of the most recognized methods.
Landing Page
This is a straightforward website that outlines what the product offers and is designed to measure interest. It often features a call-to-action, like signing up for a newsletter or pre-ordering, to assess demand.
Wizard of Oz
This kind of product seems fully automated, but is actually operated manually behind the scenes. It allows for testing the product's features without the need for complex automation systems.
Concierge
With this method, the business provides the service manually rather than through automated solutions. This approach enables refinement of the service based on direct interactions with users.
Piecemeal
This version employs existing tools and services to bring a product to market, rather than building everything from the ground up. By using third-party platforms, businesses can test market interest before committing to custom development.
Single Feature
This approach concentrates on one primary feature rather than a complete product suite. It helps startups validate the most crucial part of their concept before scaling.
Email
This involves launching an email campaign targeting potential users to measure their interest and gather feedback prior to a full product launch.
Prototype
A visual or interactive representation of the product is created to showcase its features and obtain initial feedback.
What are some startup MVP examples?
If you are wondering what this would look like in practice, let’s look at some of the most popular brands that launched MVP in start-ups effectively:
Before (2004)
After
MVP (core features only)
Product
Facebook – Mark Zuckerberg first developed Facebook for the Harvard University students in the year 2004 with the aim of making it a small social networking site. It was once a small website called “TheFacebook”, which was designed to connect students with each other. The MVP helped Zuckerberg to validate the idea, as the application started on Harvard’s campus only and then reached other Ivy League schools, the majority of universities in the United States, and finally the public. Gathering people’s feedbacks and consistently updated features, Facebook gradually becomes the world’s largest social media platform with more than 3 billion users, and revolutionized people’s behavior of communicating and interacting in the digital space.
Before (2007)
After
MVP (core features only)
Product
Airbnb – this is perhaps the best-known app for short-term apartment and house rental. Today, this company appeared as the result of student’s dream, when Brian Chesky and Joe Gebbia decided to find the ways to pay the rent in San Francisco. In 2007, they established an MVP using AIR bed and this they began taking beds in their own apartment and rented out to conference attendees at cheaper rates than hotels. Confirming the existence of high demand for short-term peer-to-peer accommodations, they created the website through which hosts could offer their homes. By repeating the users’ feedback and adjusting the model, Airbnb became a multi-billion company that changed the perceptions on travelling and hosting globally.
Before (1994)
After
MVP (core features only)
Product
Amazon – in the early 1990s, Jeff Bezos saw the writing on the wall that the future of sales lay in the electronic commerce and set out to find out which markets will be most effective. He finally decided to start with a bookstore, since he thought it was the minimum viable product that he could create and bring to life from his garage. His successful bookstore resulted to the necessity of more things such as electronic goods, fashion apparels, and shoes. It was his first strategic move of employing books as the minimum viable product that helped to offer him customer insight to enter the next level of Amazon. Unbelievable as it must sound, today Amazon was a small bookstore on what could be referred to as a basic webpage at the start of the year 2000, and today it ranks the third-largest enterprise in the entire world.
Before (2009)
After
MVP (core features only)
Product
Uber – the application for finding transport – is not actually an application which began its journey in this format. Furthermore, the co-founders, Garret Camp and Travis Kalanick, the notion of an MVP to create an iPhone-only SMS service called UberCab in San Francisco. So, they first tested the user and conditioned it to the city and only when they managed to attract venture capitalists; they built the application through which they provide 19 million trips every single day. Uber has evolved through different levels of service development and expanded its operations year after year based on the information received from the customers. Uber initially started with taxis under UberCab, but during its second expansion, it shifted to black cars and independent contractors, transforming into the ride-sharing platform most people use today. This evolution happened during its app-stage, allowing Uber to refine its service model.
How your startup can benefit from an MVP
If your MVP is done through a website or application, we may gain some crucial information on behavior and demand. This valuable information becomes so important when it comes to soliciting money from investors, it improves the chances of its getting the green light.
Benefits of an MVP
Starting up a new business comes with various costs. These include expenses related to implementing the user stories and epics we’ve identified for the startup MVP stage, beginning with the most critical items:
Faster time-to-market
Early brand awareness
Lower development risks
Competitive edge through quick updates
Chance to experiment in different revenue streams
Validation of real-world performance
More effective use of resourcesrve
Focusing on an MVP has its advantages, as its primary purpose is to provide a method for committing as low an amount of funding as possible – several hundreds or even tens of thousands of dollars at most. Defining an MVP budget can help to save money, acquire critical information regarding consumer preferences, enter the market rapidly, and attract early investors if any. The feedback and funding that you receive at this stage will help you in defining the scope of the product lifecycle management that will lead to the product consumers want and need.
Several questions to ask before working on the MVP stage of a startup
It is critical to set down the basic framework first that can guarantee that work aligns with the user's and business objectives to avoid plunging directly into product development. By developing a comprehensive plan right from the beginning, one will be in a position to avoid further problems of time, money, and energy in the future.
Below, you can find some tips to consider ensuring before you start product:
A Defined Problem Statement
In order to aim the product towards the right target market and to be able to have an effective product direction, it is crucial to identify the main problem you want to solve. Statement of a problem is useful in that it assists in focusing on the objectives to be achieved.
User Research
Surveys will help you establish your target audience and their proclivity to certain behaviors, likes and issues they are likely to encounter. Understanding your user base is useful in determining how your product should look and function for the target consumers.
A Conceptual Vision
Imagine your product and envision it in action to meet the needs of the users. This will help in the development process to come up with a product that is inline with the set objectives.
Setting up
an effective MVP
The creation of an MVP in startups is about delivering the core value of a product without investing too much in the development, to enable you to understand the market response. When building a product, having a well-structured MVP helps you to accumulate key knowledge, work on improving and developing the offering and create a basis for subsequent development.
Below is how best to set up an MVP budget:
Define Success Metrics
For this purpose, decide on specific KPIs that will have to be met to define the success of the MVP, such as user conversion rates or level of engagement. These KPIs will help you evaluate if the MVP serves its purpose and will be useful in further development.
Iterate Based on Feedback
Ensure that the user feedback and interaction data is collected and assessed frequently to enhance the product. In this way, by paying attention to several requirements customers might have, improvements can be focused towards the direction of creating an MVP that is much closer to their expectations.
Maintain Simplicity
This way, the user interface must remain simple, which contributes to presenting only the most essential features of the MVP. Estimate development time MVP carefully to ensure efficiency and avoid unnecessary delays. DO NOT add many functions to the product at this stage – this might lead to confusion and unnecessary complexity on the part of a user.
Plan for Growth
Ensure your MVP stage is as simple as possible, but create the architecture so that expansion in the future is easy when implementing new features based on user feedback, among the options below, which do not represent all the possibilities. This makes it easy to develop the product as the usage grows due to changes in the user needs.
Launch and Learn
When the MVP comes out, simply observe how it is doing and be prepared to change things as soon as you hear from the audience. It is also important for checking whether the possibilities meet the real needs and adapting the product in order to better meet user requirements.
Summary
The Minimum Viable Product is important for any start-up company that wants to enter a new market sustainably and get to know its customers’ needs. To that end, Lean Startup methodology and customer development can reduce the risk of developing unsuccessful products, while getting feedback from actual customers allows the startup to refine its product to fit the market’s demands. An MVP also helps know what else can be added in the future while providing a platform for growth and development out of an idea and a concept present with the aim of being a business.
Still have some doubts?
Don’t let uncertainty hold
you back. Book a free consultation today, and let’s find the best MVP solution for your idea.
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FAQ
What are the stages of a startup?
It is worth emphasizing that the stages of a startup are divided into several phases. They are identifying the concept, concept development, developing the product, introducing the product to the market, and the final market development stage.
What does MVP stand for?
MVP stands for Minimum Viable Product. This is a basic version of a product that has enough functions to attract the initial users and fly check the hypothesis without spending too many resources. It will enable amateurs to try out their ideas, find out what consumers feel about it and even refine it before putting much effort into it.
What is MVP in startup?
MVP in startup means a product that packs just as many features as needed to attract the first buyers and gather their feedback for improvement.
What is the phase before MVP?
Before developing an MVP, startups exist in the idea or concept phase. They, at this point, define the problem they seek to solve, and start with research on the problem.
Is MVP Agile or Lean?
The term MVP is derived from the Lean strategy, which emphasizes the creation of the basic product to check the concept with minimum effort.
What is the difference between MVP and MDP?
It is understandable that the ultimate differentiation between MVP and MDP depends upon their focus. While MVP gives the simplest product including all necessary/intrinsic characteristics, MDP is about providing the product where the resulting user’s experience is a pleasure, containing necessary/background/pivotal characteristics.
Is MVP part of Scrum?
No, MVP is not a part of Scrum, but it can be used within a Scrum framework as a scope of work to target on for the first product release.