Build An MVP for Your Tech Startup in 2021
Why do Successful Entrepreneurs suggest building an MVP for your startup?
As an entrepreneur, bringing a new product to the market always becomes risky. Many startups collapse only because of no market requirements for their product. So, If you are planning for a new entrepreneurial venture, it’s needed to test your assumptions and optimize your idea from the prospective customers. And most importantly, without spending all your thousands of dollars.
This is where MVP comes into play.
Build an MVP to validate your idea and effectively gauge customer feedback. This strategy saves time, effort, and money. It is also an extremely effective methodology to avoid failure.
A minimum viable product, or MVP, is the simplest version of a product with enough functionalities to get the attention of the early customers. It helps to collect customer’s feedback to improve the quality of the product.
The author of Lean Startup methodology, Eric Ries, who introduced the concept of the MVP, defines it as “The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least amount of effort.”
In the IT industry, MVP software development is becoming increasingly common. The idea of developing an MVP is to get user feedback as to what exactly they are expecting from the product. According to the feedback you receive, you can gain an understanding of your customers’ interests, then you can make the desired changes in the final product.
5 Famous Startups that started with an MVP
A successful start-up needs MVP. Here are some notable examples of aspiring startups who started their journey with an MVP. And now, they became famous worldwide.
Facebook continues to be the best application on the Internet. It has been developed from an MVP and was called Thefacebook initially. Their main purpose was to connect students from several American schools. And, it started with a few basic features. Sooner, the audiences around the world discovered its benefits day by day and started growing rapidly. With over 1.3 billion active monthly users nowadays, Facebook becomes unstoppable.
Long ago in 2006, Brian Chesky and Joe Gebbia in San Francisco had no money to pay their rent. So, they set up mattresses in their living rooms and opened their accommodation to fellow creatives. And, their room was easily available and less priced than any hotel in that area. Thus, the journey of Airbnb started!
It excelled by starting with just an MVP! In their MVP, there was no fully functioning site, customer support team, or options to select multiple dates, locations, or prices. They have added many new features moving on by gaining user feedback. Airbnb has now become a $31, billion-dollar giant.
UBER is the global leader in the taxi app industry today. It has revolutionized our way of traveling. Back in 2010, it started with an MVP that fit their target audience. With a basic web-based application, it provided taxi services for people in New York City as cheaply as possible. The ease and simplicity of booking a taxi made UBER popular across the globe very fast. By the time, they improved on the MVP by building more advanced features like live tracking, multiple drop-offs, calendar shortcuts, and scheduled rides, etc. Uber users are estimated to reach 539 billion by 2021.
In early 2006, there was a podcasting company, Odeo. They launched an internal-use-only, SMS-based messaging platform. The very first Twitter prototype “twttr” did not have all the features which are now in the final version. After coming onto the scene publicly in July 2006, it performed very well, so it’s user base increased rapidly. By the time, it changed itself greatly from a social network to a source of news, information, sports, politics. Also, people can make conversations with both friends and strangers.
In April 2007, Twitter became its own company. Now Twitter has become the second-most-popular social-networking tool across the globe and it’s worth more than $5 billion.
Amazon is another great story. In the beginning, this e-commerce app was an online bookstore. It all started in the 1990s and was a typical MVP startup in all meanings. They had a pretty simple website with some basic features. By the two decades, they added a comprehensive list of features to make the app more and more simple to use. Amazon has surpassed Walmart as the largest retail company in the world with over $96.145B revenue for the quarter ending September 30, 2020. A successful MVP test and continual innovations to business make Amazon what it is nowadays.
What Is The Purpose Of An MVP?
The purpose to build an MVP has huge potential. It helps to gain valuable insights before releasing a final product. It also increases efficiency, reduces procrastination, and avoids failures before committing to a large budget. Start-ups like Facebook and Airbnb have adopted this and the rest is a story!
The goal of an MVP is to quickly validate business concepts by minimizing development costs. By launching an MVP to market, a company can test the demand for their core business technology and bring core benefits for potential customers.
Benefits One Startup Business Can Incur After Developing an MVP
Eric first introduced the MVP business technology in his “The Lean Startup”. Since then, the MVP plays a lead role in agile development by helping startup businesses to make their product aligned with market needs.
Here are some reasons why startups or micro and small enterprises must go for building an MVP.
1) Budget Friendly:
By releasing an MVP, a company does not need to spend all of the money right away. Creating only the essential features and can see whether it catches the attention of the target audiences or not. And, it will be considerably cheaper than making a full-fledged product. So, you may go for an MVP which will be beneficial for the future of your startup.
2) User-Centric Development:
Building an MVP helps to find the right audiences and understand their expectations. So, you can work on solving your users’ core issues and bring the right solution for them.
3) Reduced Time:
MVP requires as little time as possible to develop your app. And, fewer hours directly translates into lower expenses. Earlier you introduce your product, it enables getting reviews from the customers. The benefits are obvious: faster you will see the profit, can make improvements on the way and release an updated version quickly.
4) Test Your Business Idea:
MVP allows you to test your business idea from the target customers. Yes, it will be good enough to receive feedback and act on them from the very beginning. And, It’s assuring you’re investing in a project that’s likely to be massively successful. This strategy may save time and money for your startup.
5) More Focused Approach:
An MVP app focuses on a particular approach. Build the core and the very basic features of a product quickly with a minimal budget – this is the goal of an MVP. It gives an opportunity to gain insights from validated learning, reduce the cost of MVP and accelerate the growth of your product.
6) Enables Market Validation:
Releasing the most valuable product in the market enables market validation. It is to test the waters – whether it is feasible for the target audience or not. With the feedback received from the early adopters, you can make the desired changes to make your product unique. And, if your product goes wrong, it will fail quicker — without any big financial loss.
4 Different Types of MVP
Let’s look at 4 different types of MVP that you can use to test your idea is profitable.
A Concierge MVP means to interact with customers one-on-one and to bring all functions of your product or service individually. The customer knows that the service is being operated by an individual to accomplish their goals. This is a viable option and no buildout is required. In this way, you can contact real customers and analyze your audience. It also generates ideas before the product-building and is a much more transparent process. When you’re not exactly sure of the solution, you may go for Concierge MVPs. Airbnb is one of the best examples to benchmark the concierge MVP process.
Wizard of Oz MVP:
Recall the movie “The Wizard of Oz”? How did the wizard turn out to be an old white guy behind the facade pulling some levers and pretending to be a big scary green head? That’s exactly the concept applied with this MVP. This looks completely functional from the outside while it’s complete reliance on human competency. The users have no idea what happens behind the scene. You can validate your product before launching development in full swing and automated with algorithms, so this experiment is more affordable and worthwhile. Zappos (the online shoe retailer) was recently acquired by Amazon for $1.2B is the best MVP example in this category.
Landing Page MVP:
A landing page is a single web page describing your product and to provide key features and advantages that constitutes to offer a unique value proposition. It helps to quickly gain a potential user base and collect trustworthy and precise insights. You can build a landing page yourself and drive people to it just by having an eye-catching “call to action” button. You can launch your final product when you receive a positive response. So, making a landing page MVP a great way to get a billion sign-ups and verify your product without spending all the budget. Buffer is (an app that allows you to queue up your social media posts/tweets) one of the best MVP landing page examples.
By collecting email addresses and email clients, you can build an Email MVP. If you already have an existing user base, you will have some data in your lap in a few days with the help of Email MVP. Then, you can proceed to build upon the rest of the product features after seeing how the users will interact with your product. This approach takes less effort than building an entire feature of the product. Kindly, keep in mind that it can come off sloppy as most people will not click on the call-to-action buttons after opening the mail. And, you might need to revisit them for their response.
6 Steps to Build an MVP Successfully
The role of an MVP lean startup is fundamental for setting up a business. It has the power to make or break your business idea. Here is a six-step guide to build your customized MVP in the proper way.
Step- 1: Market Research:
For a successful MVP development, you should begin with evaluating your business idea that fulfills the target users’ needs. So, the first step is good market research, it will help you identify if there is a need for your product in the market. Also, to find out the best solution to your future customers’ clear and definite requirements. So, you may conduct surveys to analyze your competitors and to get more information for making your business idea more successful.
Step- 2: Work on Value Addition:
It is important to check the necessity of the product with your users in mind. How will it give them a good experience from your existing competition? You should always ensure the value your product is offering to its users. First, outline them and accomplish the task based on that.
Step- 3: Define User Flow:
The next step is to define user flow where you can check how the target customers react in a simulated scenario. At this stage, you need to look at your product from the perspective of the users and design it in such a way that is convenient for users. This journey includes opening the app to reaching the desired destination like making a purchase. To map out your user flow, compare what users need, and take necessary actions to prioritize them. You can also use several tools like XMind, MURAL, and UXPin to create a user flow diagram.
Step- 4: Make a List of MVP Features:
Once the user flow is ready, write down the list of features you want to add to your MVP. Select the most basic features to test your business idea focusing on customer requirements. You don’t need to incorporate complicated frameworks and fancy designs to build an MVP for your startup.
Step- 5: Launch MVP:
If you have completed all the previous steps successfully, now it’s time to create the MVP. Keep in mind that MVP does not mean incomplete, it is meant to deliver the core value and fulfill user needs. Therefore, you need to make sure that it is easy to use, built using the right technology, and performed varied testing before delivering early adopters.
Step- 6: Feedback, Learn, Improve:
After launching the MVP in the market, it is imperative to collect feedback from your early adaptors. Then only, you can analyze and determine whether your product is accepted by the users or not. It will help you to find bugs, keep up with competitors, and to shape the new versions of the product. Likewise, this step is indispensable to continue the “Feedback, Learn, Improve” cycle to reach your goal.
5 Reasons Why Some MVPs Fail
The bitter truth is that an MVP can fail for many reasons. And knowing each of the reasons can help you minimize the risk of failure as much as possible.
1) Too Many Features:
When building your MVP app, kindly remember that it has to be with just the bare minimum features to impress early adopters and receive honest feedback from them pretty fast. If you will spend more hours on development by implementing feature after feature, it ruins the very purpose of an MVP. The quicker you finish an MVP, the means the cost is also becoming lower. You should check out what the competition is offering, implementing those features will hone your MVP app further.
2) Incompetent Team:
Choosing a competent tech team for building an MVP is one of the most important decisions you need to take. Your tech partner needs to have an in-depth understanding of how to support you at every step of the way. An experienced team of competent, highly skilled software developers can assist you not only in tech business matters but also play a significant role in the product development side. So, choosing the right team increases your chance of success undoubtedly.
3) Wrong Target Users:
After building an MVP, it is important to choose the right target users who really want your product now. At this stage, it’s time to validate your product through the potential customers. They need to stay loyal while providing useful feedback in order to provide your product with the best chance of survival and get a much better chance of success So, always pay extra attention to your target users.
4) Ignoring Customers’ Feedback:
Kindly don’t ignore the feedback of your early adaptors. Otherwise, it renders the whole process useless and may cause a shortening of the life of your MVP startup. Working on the feedback you are receiving, will make your product stand out and popular in the market.
5) Less Market Research:
Jumping directly into MVP development without doing proper market research means your product will die a slow death. This is not a way to go. Proper market research can help you get to know a lot about your target customers and having early-stage feedback. And, you can make intelligent changes in your product before wasting all your time and financial resources.
Measuring Success After Building an MVP
There are a lot of approaches in order to measure the success of an MVP.
1) User Engagement:
User engagement gauges how your product is valuable and acceptable today and helps to evaluate user experience based on the insights received.
This is one of the important metrics. The number of sign-ups shows user interest as well as the popularity of the app. And, the popularity of the app is directly proportional to earn revenue.
3) Number of Active Users:
Active users are the asset of your app. It is one of the main reasons for the success of an MVP.
4) Percentage of Paying Users:
The percentage of paying users has become a key revenue stream. But, research shows that just over 5% of app users currently spend money on in-app purchases. So, keep an eye on the paying users who bring revenue for you.
5) Customer Lifetime Value (CLV):
It basically means how much on the average time a user spends on the app before uninstalling it. CLV= (Profit from a customer x App usage duration) – Acquisition cost.
6) Client Acquisition Cost (CAC):
This metric demonstrates the cost to get a potential customer to buy a product or service. It helps you to work on your existing marketing strategies if needed. CAC = Amount of money spent on traction channel / Number of customers acquired through this channel.
In today’s business landscape, building an MVP is considered to be an essential stepping stone to a startup’s success. The strengths and weaknesses of a new product can be easily measured, and this approach will help the entrepreneurs in the long run to validate both the problem statement and the potential solution.
So, if you are ready to start a tech business, and planning to build an MVP, you will come to know better about your core business goal and underline the essential tasks and distinct features of your venture.
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