GuidesProduct developmentWhat Is a Minimum Viable Product (MVP)?

What Is a Minimum Viable Product (MVP)?

Last updated

23 March 2023

Reviewed by

Jean Kaluza

When working on a startup, the goal is to give value and help a product grow while using reasonable budgets, scarce resources, and fewer people. Unfortunately, product managers often concentrate on new feature releases and fail to optimize these resources. Understanding the minimum viable product concept can help you focus on the right actions while reducing the waste of resources such as time. 

What is a minimum viable product?

An MVP is a basic version of a new product with minimum essential features to satisfy the initial customers. The aim of building an MVP is to attract early adopters, enable faster time to market, and achieve product-market fit from the start. It allows the team to gather the maximum amount of authentic learning about customers with little effort. 

Why is a minimum viable product important?

Building an MVP helps launch a product quickly, with a small budget, and based on an established idea. Although an MVP has minimum essentials, it must be reliable, usable, and considerate of the customer needs, thus building the base for collecting user feedback to assess whether it is viable and improve it for the next duplication. After releasing the product, the follow-up involves gathering feedback to help future product development

Several statistics support the importance of building an MVP. CB Insights conducted a study on 101 unsuccessful startups. When the New York firm reviewed the frequently cited explanations of why the companies failed, it found that 29% of them failed due to running out of cash.

Similarly, a report by Startup Genome analyzing over 3,200 high-growth tech startups revealed that 74% of them failed due to premature scaling. Those startups that scaled properly experienced a 20 times faster growth rate compared to those that scaled prematurely.

These statistics highlight the significance of starting a new product development process with an MVP. This allows you to test a product or service with minimum resources and determine if it is viable before investing significant amounts of time and money. By doing so, you can avoid the pitfalls that many startups encounter and increase your chances of success.

But there are even more reasons why an MVP is crucial:

  • It offers a starting point for discussions.

  • Testing a model with few prospects and genuine users helps understand the issues that may become apparent with the product.

  • Building the actual product after dedicating time to improve and refine the idea is a motivating step toward creating a full-fledged product.

Examples of minimum viable products

Below are popular examples of an MVP:

Dropbox

The story of Dropbox's success is a prime example of how creating a minimum viable product can pay off in ways that may exceed your expectations. Drew Houston, the CEO and founder of Dropbox, opted for a unique approach in creating an MVP for his file hosting software. Rather than developing a full-fledged product, he recorded a four-minute video walking users through the application and explaining its purposes. 

To Houston's surprise, the video demo of Dropbox generated a tremendous buzz and garnered significant attention from potential users. The beta waiting list for the service, which had only 5,000 users, increased by 70,000 almost overnight.

Houston's vision for Dropbox was to create a seamless file-sharing feature that would allow users to share files across multiple devices with a single click. All one needed to do was move the file to the Dropbox folder on their desktop, and the file would automatically copy throughout all computers and devices. However, making a seamless file-sharing feature was challenging and required technical expertise and ample time for development, and creating a proper MVP would need a lot of work.

Fortunately, the video demo had several advantages, including ease of sharing across the web and the ability to pack in insider tech jokes that resonated with the community. 

The MVP gave the early adopters a taste of the file-sharing capabilities Dropbox had to offer, and they didn't want to live without it. The rest, as they say, is history. Dropbox is currently a leading provider of cloud storage and file-sharing solutions.

Facebook

Facebook may be a social media giant today, but it had a humble beginning. It started as an MVP. The development team created a simple product that allowed users to connect with their colleagues at university. After proving valuable to users, the company was encouraged to develop the MVP based on the feedback they received. 

In its early stages, Facebook already had features such as user profiles and Facebook groups. Also, it still had the iconic blue color scheme. In a month's time, half of the students at Harvard University had signed in to Facebook. From there, the MVP expanded to other schools, such as Yale and Stanford, before spreading to all universities in the US. Eventually, in September 2006, Facebook became open to the public and has grown to have billions of users across the world. 

Uber

Uber began as a minimum viable product in 2009. Its two founders, Travis Kalanick and Garret Camp, had only a small fleet and wanted to see if their ride-sharing idea had demand. The service was invitation-only for San Francisco and New York, ensuring a manageable number of users. 

The MVP focused on a single feature—booking a ride where users could specify their location in the application, and Uber would find a cab within the rider's proximity and dispatch it to that location. 

Although it maintained simplicity, the MVP allowed the founders to validate their idea and gather valuable feedback, enabling them to iterate their app. The MVP laid a solid foundation for Uber, allowing them to introduce more features such as in-app tracking and fare estimation. 

Defining your minimum viable product

After deciding to develop an MVP, you should be able to define it to present it to your team when it's ready for launch. 

Here's how you define an MVP:

Ensure your planned MVP aligns with your objectives

The first thing when developing an MVP is ensuring the product will align with the strategic goals of your team or organization. Consider these goals and whether you have the resources to achieve them, as that may determine whether it is the right time to start developing a new MVP. 

Further, reflect on the purpose of the MVP and whether that aligns with your priority. For example, if an MVP will bring new users from a new market and one of your current objectives is to pursue that market, you can consider that MVP plan. 

Identify the specific solutions you want to offer

Identify the problems you seek to solve with the product or improvements you want to include in the product. Be strategic in deciding the limited functionality to have in the MVP. You can base the decisions on factors such as user research and competitive analysis. 

Put MVP functionality into a plan of development action

Once you establish the strategic elements and limited functionality you want, translate that into action for development. Ensure the product is viable with a high-quality user experience. 

How to build a minimum viable product? 

While an MVP is a basic version of a product you intend to launch, you must ensure it features minimum essentials and is viable. Ignoring any would lead to a below-average product. 

Here are the necessary steps to build a successful MVP:

Conduct market research

Ideas may not always fit the market needs. Therefore, a business must ensure the idea fulfills the target users' needs before initiating it and starting the MVP development process. Having a solid grasp on your competition will be crucial in your performance against them and help you navigate your market. Conducting surveys with your end users can also help the business since the amount of information available influences the chances of success. 

Think about value

Establish the value proposition of a product. Ask questions, e.g., how the product benefits users and why they would buy it. Also, be clear about the essential estimations for the product. MVP implies that the product must introduce value to the people in its most basic state. Start by outlining the users and build the product depending on their needs. 

Define the user flow

An MVP must be convenient to the users. Look at the product from the user's perspective and design it in a way that would appeal to you most. 

Further, define the user flow to ensure you aren’t missing anything while keeping future products in mind. Explain the steps needed to reach the main objective. Focus on basic tasks, e.g., finding and purchasing the product. Once you lay out those procedure stages, you can define the features of each step. 

Prioritize MVP features

Prioritize all the features that your MVP will support. Ask questions such as: Is this product offering users something beneficial? If we remove this feature, could the MVP still function? What are the users' needs? Additionally, classify the remaining MVP features based on priority (high, medium, and low) and arrange them in the product backlog.

Launch your MVP

Once the business learns about the market needs and decides upon the main features, it can build an MVP. Your MVP must be engaging, suitable, and easy to use. 

Exercise 'B.M.L.'—Build, Measure, Learn

The entire process of an MVP begins with defining the scope of work, followed by the development, and finally, testing. Your company's product research department should conduct the first testing stage even before releasing the product. 

After launching the MVP, get client feedback and determine the product's acceptance in the market. You can now go over everything again. 

Common mistakes when building an MVP

When creating an MVP, some development errors might occur and cause a massive business disaster. Understanding these pitfalls can help a business avoid them. 

Common mistakes when building an MVP include:

Settling on the wrong problem

MVP's development process takes time and effort. Therefore, it’s crucial to establish whether the product is worth creating or not. If a business settles on the wrong problem, all the efforts and time will go to waste. Businesses should consider the target user, the problem the product will solve, and whether the proposed idea is an effective solution to that problem. 

Skipping the prototype phase

The prototype focuses on the 'how' part of the product and lies between the idea and the full-fledged product. Some businesses jump into the development process before defining requirements. Unfortunately, building a successful MVP without a prototype is tricky or nearly impossible. 

Targeting the wrong audience

Once a business creates an MVP prototype, it needs testing for validation. Acquire feedback and comments from the target audience. However, note that not everyone is a targeted user. End users are potential customers who can tell what is redundant or lacking in your product. After making improvements, they can again test, learn, and rate the quality. 

The process continues until you finalize the product. Involving the wrong audience in this stage will lead to irrelevant feedback. Consequently, your product will get ignored for the wrong reasons. 

Confusing between qualitative and quantitative feedback

You can collect user data through quantitative or qualitative approaches. Qualitative feedback has findings related to the quality and user-friendliness of the product's features, while quantitative feedback pinpoints the design’s usability. 

Since feedback from each approach has its role, you must strike a balance between them to get an all-rounded conclusion that can help make intelligent changes.

Inappropriate development method

Companies that jump into developing an MVP without knowing the proper method have a high chance of abandoning the project in the middle of development. 

MVP product development can follow the agile or waterfall technique. The agile technique is more efficient and gives better results. It also offers a flexible approach and focuses on incremental and repetitive development. 

Measuring success after building an MVP

You can predict the future success of a product through different approaches, including:

Sign-up

Sign-ups help gauge user interest and may also convert to revenue. 

Download rate

Checking the number of downloads can tell you the amount of interest among users. Lighter products often have more downloads. 

Word of mouth

You can track success by interviewing potential users. List the problems they currently face or expect and ask for their thoughts. If you can find and cultivate users who are excited to share your MVP with their peers, you can grow via word of mouth.

Engagement

Tracking behaviors such as clicks can help you determine the engagement your MVP may be having. Engagement enables you to measure the current and future value of a product. It also helps improve the user experience based on feedback. 

Percentage of active users

A successful product often gets many active users or users who log in consistently and use your product’s core feature(s).

Number of paying users

You can determine the average revenue per user (ARPU) and establish products that earn revenue. You get ARPU by dividing the total revenue earned in a period by the number of users in that period.

Client acquisition cost (CAC)

Client acquisition cost is the amount spent on the traction channel divided by the number of customers acquired through the channel. Knowing the cost of acquiring a paying customer helps a business remain updated on the effectiveness of its marketing efforts. If the efforts are less effective, they may require changes. 

Churn rate

Churn shows the percentage of people who stopped using the product or uninstalled it. You get it by dividing the number of churns per week/month by the number of users at the start of the week/month.

Client lifetime value (CLV)

CLV shows the amount of time a user spends on the product before terminating their app use or uninstalling it. You get it by deducting acquisition cost from the product of profit from a user and app usage duration. 

In conclusion

Building an MVP is important for any company seeking to validate a concept. It saves money and time that could have been wasted building and perfecting a product no one wants. 

Further, MVP allows the team to know the best direction for the product depending on the actual use of MVP by the customers. The customers give feedback that allows the creation of a product that focuses on their needs rather than what a business thinks would suit them.

FAQs

What are the three characteristics of an MVP?

An MVP should:

  • Have adequate value that people are willing to buy it or use it initially

  • Demonstrate adequate future importance to retain early adopters

  • Give a feedback loop to give direction to future development

What was Instagram's minimum viable product?

It began as a location-based app that offered photo editing and sharing. A few apps then had limited photo editing options but didn't have sharing capability. Facebook had sharing options but no photo editing capabilities. 

Instagram founders capitalized on photo sharing and eased the process of commenting and liking photos, and it’s now among the top social media platforms.

What are the best examples of MVP? 

There are many MVP examples, but popular ones that stand out include Dropbox, Facebook, Uber, and Airbnb.

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