Minimum Viable Product or MVP is a concept that allows you to test the market by launching your product with minimum features possible. WhatsApp did not have blue tick marks on each message when it was launched, neither did its have Stickers, nor stories. It was a simple messenger that sent message from one phone to another. That’s it! That is all what your MVP must do, and it should do this 1 job very well so that people take notice.
“If you are not embarrassed of the first version of your product, you are probably too late to market”
– Reid Hoffman, Founder of Linkedin
But what are the benefits of launching a Minimum Viable Product that you might be embarrassed off?
1.) Helps you to test crucial business concepts early on before you spend all the time and money of the world
As start up founders all of us are dreamers, and most of us are philosophers. We have our own concept of how the world should work. We do not believe in the status co and we want to change the world the way we think it should be.
Having said that, we can’t be delusional. Having a dream and being delusional are completely different things. So, it is always important that we test our concepts in the real market.
Before we decide to raise millions of dollar and spend it on marketing, it is very important that we test the basic hypothesis of our business.
Minimum Viable Product helps us to get the proof from market that yes, the demand for the product / service exists and we can go ahead and build a company on top of it.
2.) Helps you to get off the ground with No/Low Capital
To build a minimum viable product, you don’t need a lot of capital. You don’t need to make pitch decks and meet with investors. Save some money or borrow from friends and you are ready to go.
Plus, having no money in some cases can be a good thing. It makes you frugal and creative. Think about this
“If there were unlimited resources of everyone on this planet, why to do new things?”
Building an MVP without a lot of money forces you to be creative. You come up with great ways to test your hypothesis.
“A business having frugality as a core ethos, will always have a great chance to win the war because there will be less wastage”
3.) Allows you to make affordable mistakes
When you launch your business or launch a new product, your are bound to make some mistakes. This is the universal law! All of us make mistakes. All of us have blindspots!
Working on an MVP ensures that we make mistakes that don’t cost us a lot of time and money. It ensures that we can recover and come back to the shore! Minimum Viable Product is the perfect way to test the waters.
You are not only able to test market but also able to test relationships. Relationships with your employees, you’re vendors, your CA, your bank and even relationship with your family members. If you are a first time entrepreneur, your family most probably won’t be prepared for your plunge. So you discover a lot of such things.
Working frugally on a MVP ensures that you don’t have a lot of stakes riding on the product so you have much lower pressure and you are able to work really well. You are able to make mistakes cheaply, reflect on them and learn in the process so that you become a better entrepreneur.
4.) Shows Potential Investors your idea’s potential
I being the Founder and CEO of my company, I have to make a lot of pitches to potential clients. A few years ago while I was pitching for my services to a client, he told to me:
“ Sumit! Don’t tell me what you can do for me, show me what you can do.”
I can never forget this. I have released that people will trust in your ability to deliver if they see your work. Same is true for investors. You will have a much higher probability of getting the right investors, if you have successfully built a minimum viable product and have some users using your platform. You have figured out the gap in the market, you have potentially solved and their is customer validation for the same. The only thing that is missing from the equation from your startup becoming a hit, is the VC’s capital. You take the receipt to the VC and they will be more than happy to help you scale the MVP that you have worked into a billion dollar business.
I was recently reading about Eventbrite. Eventbrite is platform were people can discover live events that are happening near their location. It started in 2007 and today it is a billion dollar company. However, things were not always this way. The team started in 2007 and they spent a few months to make a MVP and test the market. Around September – October 2008, they were ready to raise money for the company. Well guess what? The world was in the mids of global economic crisis. People did not want to give money and no-one did.
However, the founders of Eventbrite played it smart. They went into each VC’s office and shared the company plan for the next 1 year. They told the VC’s that if the team is able to meet the business targets in next 1 year, without their money, VC’s can consider to invest else not invest at all. Everyone agreed to it. Around September 2009, the team was able to meet the business objectives and they raised money from Sequoia Capital.
So, show the world what magic you can create!