Many startup founders struggle with raising funds for their ideas.
Venture and angel capital companies are the usual go-to source for funding. However, these venture companies generally only fund companies and ideas with some level of traction.
So, how do you gain traction for your startup idea without spending thousands of dollars and several months locked away in your garage building out your product? The answer is an MVP.
What is an MVP?
The acronym MVP stands for Minimum Viable Product. Frank Robinsonfirst introducedthe concept in 2001 before Eric Ries later popularized it.
According to Eric Ries, “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 effort.”
Here is a video of Eric Reis himself discussing the concept of building an MVP:
In a nutshell, building an MVP for startups means you create the most basic version of your startup idea as quickly as possible. This way, you can test your assumptions and optimize your idea for product/market fit based on user feedback from your early adopters.
How to Create your MVP
1) Identify What Your Problem Is
Before creating your MVP, you need to take a long, hard look at your business premise.
Hone in on what your product actually does — what problem does it solve? This is simple but it will inform every decision you make going forward. This will include identifying your target audience. Who are they and what’s their motivation for choosing your product?
The social automation tool Buffer nailed this when it created its MVP, a basic landing page that explained what Buffer did.
Potential customers were given the option to sign up for updates, giving Buffer the chance to conduct some valuable audience research.
Potential customers revealed their motivations for subscribing and what they wanted to see from the final product. This insight helped turn Buffer into the successful product it is today.
Another part of figuring out how to build an MPV will involve checking out your competition. Seeing what they do better (and worse) will help you develop your own USP.
2) Outline Your User Flow
Your user flow is the route that your customer will take with your business. For example, Uber’s user flow is to let customers hire cars to take them places. It sounds very paint-by-numbers, but it’s an important aspect of building your MVP.
Break it down into stages to outline how your customers reach your intended goal. Take, for example, the music streaming service Spotify. Their customers first need to find their desired band or artist. They then need to play it, curate it, discover new music, and so on.
Identifying even the most obvious steps helped Spotify create an end product that delivers an impeccable user experience.
When you outline your user flow, go granular. Fleshing out your user flow at this stage will help you identify areas for improvement further down the line.
3) Break it Down to its Core Features
You’ve got your USP and the problem it solves. Now you need to break down the features that it comprises.
Delineate between the ones that are nice to have and those that are absolutely essential. The former can be looked into at a later date, but for now, of course, you’re striving for the minimum viable product.
Once you’ve identified the essential features your product requires, prioritize them. Your key feature is the one that will be of most use or interest to your customer, and one that solves the problem you established earlier.
At this stage, you’ll need to get ruthless. Be honest with yourself. Your fondness for a particular feature might blind you to its necessity. Getting a second pair of eyes can help you determine whether it’s an absolute priority or not.
You might find allocating each feature to the stages of your user flow a useful method at this stage. For example, Spotify’s playlist creation feature is part of its music curation stage, and is a crucial aspect of its product. A free organizational tool like Mindmup or Trello can help you visualize this.
Next Steps After Developing an MVP
Once you build out your MVP, the next step is to test it for functionality and acceptance by driving traffic to it. The goal is to successfully transition from your MVP to a Minimum Marketable Product (MMP) as quickly as possible.
When I launched this website, I wanted to validate fast if the initial idea I had of interviewing failed startup founders interested entrepreneurs. So I build the site and launch it in only 3 weeks (working on it during my free time).
But I wouldn't have been able to validate anything if I didn’t bring traffic to the site. What I did was to submit the website to Product Hunt. It ended up in position #1 and brought a lot of traffic to the site. This way, I understood that people wanted me to continue with the site.
Listed below are 9 simple ways you can quickly test your product ideas without spending a ton of money while you can still get actionable feedback from your early adopters.
Use Facebook Ads. The more you spend, the more people you will reach. For every $65 you invest in ads, you will receive 100 clicks (in general!).
A quicker version of the above is to simply buy an existing website within your niche that already experiences steady levels of traffic. You can then test your MVP on a ready-made market that is directly (or even tangentially) related to your business niche.
Recording a video demonstrating the basics of your MVP. You will learn more about the perceived value of your idea.
Ask for feedback from people who have seen your MVP. Try as much as possible to drive traffic to your product’s landing page. Traffic can either be paid (as discussed above) or organic. Organic traffic comes from blog posts (SEO), social media, and from industry-specific websites (Product Hunt, Hacker News, etc).
Starting a blog will give potential customers a chance to see what happens behind the scenes and get to know some of the people working on the product. This return will cause you to gain a loyal following who are not only interested in what you do but your product as well.
Releasing a form or survey to the public will tell them a little bit about your product and give them a chance to sign up to the idea. This will give you a clear idea about how many people are going to like this idea, and more importantly, spend money on your product.
Run split tests on everything. Test your audience, test your marketing materials, and test your explainer videos. Do whatever it takes to ensure the results you are getting are accurate.
Test validity of your ideas by running a crowdfunding campaign. Platforms like Kickstarter and Indiegogo are perfect examples. Think of something cool you can offer to anyone who contributes to your product’s MVP.
Pre-order pages are a great way to see if people will actually pay for your startup idea. You can set this up by creating a landing page with an explainer video talking about the product and its benefits and a buy button. Next, you send paid traffic to your pre-order page to get instant feedback from website visitors.
How to Get Qualified Traffic for your MVP
If your MVP isn’t getting seen and by customers, then it won’t deliver results. It’s all very well creating an MVP with great features, but unless people are engaging with it, you won’t make the right decisions at the next stage of the process.
Start with your potential customers. Identify where they are active most and create an ad strategy for those platforms. While social media is used by virtually everyone, some networks play host to different demographics. For example, if your target market is females aged 20-30, then a Pinterest ad campaign would best serve you.
It’s also worth gamifying your target market research in order to encourage more customers to engage. Offer vouchers or discounts in return for detailed feedback, with better feedback receiving greater rewards.
Optimize your landing page to find potential customers through search. This will mean playing the long game as it can take months for search engine crawlers to rank your site. But combined with other traffic streams, this will give you the breathing space you need to thoroughly research your target market.
Benefits of Building an MVP
Entrepreneurs can expect several benefits when they build an MVP for startups to test their product idea. Outlined below are the three top benefits of MVP development.
Benefit #1: Low Risk With Very High ROI
One of the benefits of learning how to build an MVP is that they are often low-risk. However, the results could be exponential. Companies like Uber and Dropbox grew their companies into what they are today by creating MVPs to test their ideas. Take a cue from this: release an MVP and only add features your users request.
Benefit #2: An MVP Saves You Time and Money
The time and money you would have otherwise spent on product development and marketing can be saved and reinvested into customer development. This ensures you come out with a better product, thus increasing your chances of success.
Ana Santos learned this the hard way when she launched Onepagetrip. Designed to help travelers plan and share travel itineraries, the app had a lot of time and energy poured into it. Unfortunately, that time and energy went into something that hadn’t been market-tested and, as a result, lost her time and money.
Divvy, BILL’s spend and expense management solution, is one of the easiest and most efficient ways to manage your company spend.
Benefit #3: Opportunity to Acquire “Early Adopter” Customers
For your MVP to pick up steam, you will need to target the right people. As the image below illustrates, the early adopters (or influencers) are the ones who you should target with your MVP. These people will most likely be passionate about your product and be more likely to provide feedback and promote to others within the niche.
Challenges When Building an MVP
Entrepreneurs face several challenges when building MVPs for startup ideas they have. It is important to discuss these challenges so that you can learn to avoid them when you decide to build yours. Listed below are three of the most common challenges startup founders face when creating their MVP.
Challenge #1: Ignorance of the Difference Between MVP, Proof of Concept, and Prototype
While all three of these strategies are used to validate ideas, each of them serves a slightly different purpose.
Proof of concept is a way to check if your startup idea can be applied to real-world scenarios before spending time or money to build it out. Meanwhile, a prototype is a working simulation of your product – based on your proof of concept mockups – that is usually discarded after testing.
The most significant difference between an MVP and a prototype is that the MVP is the first version of your actual product idea (albeit with limited features), while a prototype is just the first draft of your proof of concept, and is usually discarded after testing.
Challenge #2: Failure to Identify the Right Audience for the MVP
Another challenge many startups face when learning how to build an MVP is identifying product/market fit. Just because an idea seems cool in theory does not mean it will be successful in practice. This is something that Shaked and Gilad discovered when they launched theirrestaurant research mobile app, Botnim.
Aimed at health-conscious, time-strapped consumers, Botnim was designed to help people find restaurants based on the nutritional value of each dish.
Their initial market research involved speaking to restaurant owners and diners and asking their opinion on the app. However, this was not sufficient: they said that people who ate at restaurants generally aren’t overly bothered about what they eat, and the people that tend, doesn't tend to eat out as often. They failed to recognize and drill down into their target audience, resulting in an MVP that fell flat.
If you want users for your MVP, you need to constantly test your target audiences. You need to research your audience’s preference when it comes to product development.
Chances are the first set of people you launch your MVP to will not be responsive to your ideas. The trick is to look for passionate people within that niche. Then show them your product and use their feedback to make the product better.
Challenge #3: Choosing an Incompatible Project Management Methodology
Another challenge many startups face due to cost and skill set is collaborating with others on building the MVP. For tech startups who require software creation as part of their MVP development, the two most popular project management methodologies are Waterfall and Agile.
The Waterfall management model consists of a strictly defined sequence of software development. These developmental phases include planning, design, implementation, testing, production, and support. It is impossible to proceed to the next phase without fully completing the previous ones.
The Agile model is the opposite of Waterfall. As the name implies, this model thrives on agility. This means changes can be made instantly based on feedback. Constant iterations will speed up product development.
Problems can arise if the development process is outsourced on platforms like Upwork or Clutch. Not because the quality is bad, but because you need your development team to constantly be available for iterations.
The Fake Door MVP
A fake door MVP is used to answer the question if people are willing to buy the product by bringing traffic to a landing page that includes the features and benefits of the product and a see if a purchase was made.
This is mainly down by what is known as crowdfunding platform such as Kickstarter, Gofundme, Indiegogo etc.
When doing so you want to add a button to see if people want particular features that you offer. The main piece of information that helps you know if people want your product is the ratio of people who showed interest vs the number of people who were exposed to it. Though validation and invalidation can happen based on how the information is perceived and what the company does next based on that information.
Though in the end with the fake door MVP would be good to see how potential customers perceive your product, evaluating small features you may want to include, and keeping you from developing features or products your consumer wants without spending too much money.
Minimum Viable Product Examples
You’ve seen the benefits of MVPs, but maybe you’re not convinced. You’re confident in your idea and you just know that it’s going to be popular. But there are plenty of real-life examples startups who eschewed MVPs, only to see their business crash and burn.
The idea was simple: create an online private gym locator and membership management hub. Tom’s impetus from the idea came from his cousin, a gym owner who said that he would definitely try such an idea.
This spurred Tom onto investing time and money in the idea. Unfortunately, a relative’s passing interest will never make up for a strong MVP, and Tom’s idea fell flat.
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We can also learn from Tom Hunt’s AskTina, a live video app for blogs. While Tom did create an MVP, he did not put enough work into the market research stage. He conducted interviews with customers to identify their needs, problems, and desires, but simply not enough of them.
As a result, they spent time and money creating a product that their customers didn’t want. It’s an example of how simply creating an MVP isn’t enough — it needs to be well-researched and watertight.
Another example are Airbnb founders, Brian Chesky and Joe Gebbia.
Brian and Joe’s idea was one that decentralized the hospitality industry to its very core. Allowing a homeowner to make an extra revenue stream by renting out a room in their apartment/ house or having their entire place rented out.
The idea was built when Brian and Joe could not afford to pay their rent. Out of desperation, they realized a design conference was happening in their city of San Francisco and decided to rent a room in their apartment for cheap to attendees of the event coming in that couldn’t find a hotel. Brian and Joe took pictures of their apartment and put it up on a website and soon after they had three customers.
They used the concierge MVP or minimum viable experience to gain information that concluded their idea was good enough from the three attendees who had booked their apartment. So with their initial assumptions verified they made air bed and breakfast that later came to be Airbnb.
Back in 2010 Uber started as a simplified interface only used by the founders Travis Kalanick, Garrett Camp, and their friends. Their MVP was simply to connect iPhone users in San Francisco with vehicle services that were as cheap as possible, faster to acquire, while knowing the cost before entering the vehicle.
The service was first tested in new york using only three cars but the official launch was in San Francisco later that year. Uber used the rate and comment feature that can be accessed through the iPhone store to gather information from customers on how they could make it better.
The founders found true successes once they were able to move to other large cities like New York, Berlin, and Paris even with the opposition they faced from members of the taxis industry and their supporters.
Books and Courses on MVP’s
Do you want to keep reading or take a course about MVP. Here are the main 5 resources:
Building an MVP for startups is important if you want to launch a product quickly without spending too much money while gaining feedback before the final product is sent out to the public.
What is an MVP?
Techniques used by startups and developers in which a new product is launched with just enough features that are core to the product.
How to Build an MVP?
Identify the problem you are trying to fix.
Create a prototype that is the truest version of the product or service.
Showcase the product or service features.
Find and test your audience.
Get validation of your idea from the market your are in.
Have an integration plan for the information you gathered from your first version of your product and use it to make the next iteration of product or service better.
What’s After an MVP?
After developing your MVP the next step is to test it for functionality and acceptance by driving traffic to it. The goal is to successfully transition from your MVP to a Minimum Marketable Product as quickly as possible.
What is The Key Component of an MVP?
The key component of an MVP is getting traffic to your product to understand if the pure version is liked and to adjust for the features that are not liked. Without that you cannot continue in the process of developing an MVP.
Your startup idea could be the next Facebook… or it might be the next New Coke. The best solution is to keep testing your ideas until you see the one that sticks.
Building an MVP for startups is a widely accepted option when it comes to testing a product idea as quickly as possible. Once you create your MVP, driving traffic to it and asking for feedback is the next logical step.
Based on the feedback you receive, you can make your product even better. Once you are able to prove to early adopters and influencers that your product really packs a mean punch, they will help you evangelize and acquire more users.
Divvy, BILL’s spend and expense management solution, is one of the easiest and most efficient ways to manage your company spend.