How to build an MVP that raises money for your startup
What Is MVP? MVP meaning
Minimum viable product or MVP, — product with sufficient number of functions in order to attract clients and test the product’s idea at an early stage. MVP may help the team to get clients’ reviews as soon as possible to iterate and improve the product.
Since the agile methodology is based on the testing and iteration of the products using user’s data, MVP plays the key role in this type of methodologies.
MVP is a product’s starting point. It has a basic amount of vital functions that provide answers to 3 main questions:
- Is there a need for this product?
- Does this product meet the need?
- Can it be monetized?
Is MVP a raw, unfinished product?
Does the creation of a MVP mean to release a raw, incomplete product on the market? Will the user’s impression be spoiled by incomplete functionality?
Is MVP a perfectionist's nightmare?
Actually MVP is a complete working product. The point is that before building it, its main functions should be defined and priorities must be set. The main hypotheses have also to be tested and in no case should the hastily created product be presented. The basic functionality must work properly and be appealing.
How important is MVP development for a startup?
A good deal of discussion took place about MVP, but what exactly is the benefit and why not make a complete product right away.
- The opportunity of testing hypotheses. During product’s creation we put some hypotheses forward and predict certain user’s behaviour. However, our assumptions may not correspond to reality with all probability. Therefore, having disproved them at the initial stage, the team will be able to make changes and improvements.
- Saving money on the development. Cross-platform environments are frequently used for the creation of startups. Consequently, one code works on diverse platforms. This saves time and money on the development. One more crucial point is that on rapid disproof of hypothesis, less rework will be needed and unnecessary functionality will not be created.
- The opportunity of getting fast feedback. Users and investors will be able to see the main functions and provide their opinion on them. The product’s team will have the opportunity to understand whether this product in this form is competitive on the market and solve concerns of the target audience.
- The opportunity of demonstrating the complete product to investors. No matter how appealing presentations are, the complete product markets the best. Having an MVP makes it much easier to find investments.
What is the MVP stage in a startup?
The startups are commonly created by people without a high level of technical knowledge. They may be experts in their own field and be aware of the market needs, but lack understanding of creating the product. They need a Step-by-Step Guide to Build a Minimum Viable Product. They should have a basic understanding of what a MVP should include.
Minimum Viable Product key points:
- Market research
The first MVP phase — Market research. Determination of whether the similar products exist, what their quality and positioning are. Do you have enough resources to enter the market with this product under the given conditions? At this stage, it is possible to figure out how great the need is in your product.
- Define your target audience
Who exactly and under what circumstances will use your product? What are their needs, requirements and wishes? The clearer the target audience is defined and the narrower its segment is, the easier the user's behaviour may be predicted. The design, way and channels of communication depend on the target audience as well.
- Outline the product’s main characteristics
This includes defining MVP’s core functions, which will be offered by your product or service. In this case, less is better, when it comes to minimum viable product. It is crucial to focus on main features, which will meet the target market needs and demonstrate the product’s advantages compared to competitors.
- Determine the goals
It is significant to determine, before the development, what precisely should be included in MVP and what would be good to include; what hypotheses have to be tested; what kind of reviews are required and what number of them will be considered valid; what will be regarded as success. Writing down everything in numbers is preferable in order for metrics not to be abstract.
- Create and launch a MVP
This stage includes actual product development: team searching, creation of technical specifications, basic testing and checking the main hypotheses. This stage is technically the most difficult. This is the moment of focusing on functions, which are a priority and will be included in the first iteration, while the rest may wait until the next version. The processes are essential to be established in a way that allows to create MVP in the shortest possible time with minimal costs. The launch of the product may occur in diverse ways, but the main aim is to collect the maximum amount of feedback and test the necessary hypotheses.
- Feedback analysis
Having launched a minimum viable product, it is time to analyse feedback and data. It will help to understand what works and what does not. It is crucial to remember that a minimum viable product will have flaws and there will be areas that need improvement. Meanwhile, received feedback and data will help to determine how to improve your product or service.
How long should it take to build an MVP?
The needed time for MVP creation definitely depends on the product's complexity, the available funds, the size and competence of the team. However, there is a theory that it is desirable to organise the process so that it takes up to 3 months. The clear frameworks will help to distinguish the most essential functionality and not to waste time on unnecessary things. It is also not worth rushing and launching unfinished products to the market.
Are MVPs only for startups?
The common misconception in the industry is to think that MVP is exclusively for startups. In fact, companies with famous products may also use MVP, although the application is a bit different. A lot of unicorn companies started precisely from MVP and having become famous continue following the same concept during releasing certain products.
What does MVP stand for in business?
The concept of MVP’s meaning in business is currently a well-established concept. Initially, it became popular among IT companies, but now this approach can be easily applied to other industries as well.
Food establishments that open only with a basic menu and then supplement it are becoming more and more popular. The lines of clothing in the fashion industry are also limited to several new models and eventually the collections are replenished. That is, the usage of the MVP concept has expanded far beyond the boundaries of technology companies.
Here are a few industries where the MVP strategy is actively used:
Healthcare and Biote chnology: With the emergence of technologies in these fields and the rapid development of pharmaceuticals, the MVP approach has taken a significant place. By initially launching minimum viable versions of these innovations, companies can obtain feedback from medical professionals and patients, allowing for quick adjustments and improvements.
Retail Trade: In retail, the MVP model has been employed to introduce new product lines or innovative retail experiences. Launching with a limited product assortment or opening a small-scale experimental store allows them to assess customer preferences, adjust offerings, and optimize the overall shopping experience.
Automotive Industry and Transportation: By introducing pilot programs for new features or services in selected markets, they can collect data on user acceptance, usability, and performance, refining their products before full-scale release.
Hospitality and Tourism: MVPs have found a place in the hospitality sector, where hotels and travel agencies often test new amenities or services in specific locations or during certain periods. This approach helps understand guest preferences and market demand, ensuring that final offerings align with customer expectations.
Education: With the advent of e-learning, especially in recent years, the MVP strategy is increasingly used in the education sector to create and improve educational platforms, online courses, and educational programs. Launching a basic version allows educators and developers to receive feedback from students and instructors, leading to iterative improvements that meet educational needs.
Legal and Professional Services: Even in more traditional sectors like legal and professional services, firms are applying MVP concepts. Offering limited yet targeted legal or consultancy services allows these firms to understand client demands and refine their offerings to meet market requirements.
Environmental Conservation: Well-known companies in environmental sectors have embraced the MVP concept to launch and refine green technologies, eco-friendly products, and environmental solutions. These initiatives can be introduced in specific communities or markets to gather feedback on usability and environmental impact.
Here are a few famous companies that started their successful path by launching Minimum Viable Products (MVPs). Here are a couple of examples:
1. Airbnb: The founders of Airbnb started with a simple website that allowed people to rent an air mattress in their living room, providing a cost-effective alternative for travelers. It began as a basic platform, and over time, they expanded to what is now a global hospitality service offering various accommodations.
2. Dropbox: The cloud-based file hosting service initially introduced a simple video demonstrating the product's functionality. They used the video to assess interest and collect emails from potential users before actually developing the full application. This MVP approach helped validate the need for their service before investing heavily in development.
3. Instagram: The first version of Instagram was a simple photo-sharing app focused on providing users a platform to share square-shaped photos with filters. Over time, they iterated and incorporated additional features based on user feedback and market demands, ultimately becoming one of the most popular social media platforms worldwide.
4. Uber: Uber started with a basic app that connected riders with drivers in San Francisco. The initial version facilitated basic ride-hailing services, and through continuous feedback, Uber expanded its services globally, offering various ride options and additional features.
5. Zappos: The online shoe and clothing retailer Zappos began with a straightforward website that displayed pictures of shoes from local stores. Once an order was placed, they bought the product from the store and shipped it to the customer. This basic setup validated the demand for an online shoe retail platform.
Our Embrox company provides MVP development. We have extensive experience in the creation of startups and, therefore, we have a clear understanding of how to set priorities and establish communication regardless of whether the customer has technical knowledge or not. Additionally, we have an engineering department that deals with the creation of physical prototypes of devices. This is the perfect way in order to demonstrate the product to investors and receive first feedback from users.