A startup is always short of resources. In such a scenario it has to focus on creating the best possible product in the least amount of money. A big obstacle in creating a product that customers love is the lack of knowledge about the real needs of the customers. Thus we need a way to reach out to real customers in the market as early as possible so that we can get knowledge about them. In the age of the internet, we cannot wait for months or years just for the first version of the product to come out in the market before we start getting feedback from the customers. In this situation, a concept called Minimum Viable Product (MVP) comes to our rescue.
Eric Ries in his book ‘The Lean Startup’ introduced the concept of Minimum Viable Product (MVP). According to Eric Ries:
The minimum viable product is that version of a new product that allows a team to collect the maximum amount of validated learning about customers with the least effort.
As per Eric Ries, a startup is building a product under uncertainty. A startup needs to learn about customer adoption as soon as possible in order to reduce uncertainty for the startup. The minimum viable product provides a mechanism for reaching out to customers early.
As per Eric Ries, the minimum viable product can be updated through the Build -> Measure -> Learn feedback loop. Minimum viable product (MVP) forms the starting point for taking the product to market. The aim of MVP is not to earn revenue. The aim is to learn as much as possible about the product’s adoption risks. Thus MVPs are more about earning knowledge than earning money.
I personally believe that we can also take inspiration from nature in understanding the minimum viable products. Human beings are born as full human beings even though they are missing many of the features expected in an average adult. Similarly, our products can be shared in the market in a complete way but lacking many of the features required for a full-fledged product. We can add features based on customer feedback and usage data.
The early evangelists who buy the MVP buy it because they feel something is better than nothing. They have a pressing problem and are usually happy even with a makeshift or an incomplete solution. Going by Indian terminology we can even say that MVP is a ‘jugaad product’.
I would like to give you an example of an MVP in real life. Say if you want to start a startup like Uber. You do not need to start big and have an app on day 1. In fact, the starting process can be quite simple and small. You can just rent a registered taxi vehicle for 2-3 months and start with 1 cab which you yourself can drive. To get customers without any publicity or app you can just go to a small residential area like a group housing society or small colony. Most residential areas have a Resident Welfare Association (RWA) which has a WhatsApp group these days. You just need to get some way of sharing your number in such a group. People can just message you on WhatsApp or another popular messaging service in the local community and you can be available between specific times in that community on just a message or phone call.
This way you will interact with the customers directly and learn about the nuances of running an on-demand cab business yourself. Unlike customer interaction techniques used by big corporates like focused research groups or questionnaires, you are getting feedback from customers directly in real-world situations.
You can hire more drivers and cabs as the demand grows. You can create an app once you start getting a large number of customers and you need to expand geographically. Thus MVP helps in learning about customer and real world problems at a fast pace with low expenses. Companies like Google and Paytm also use minimum viable products a lot. I have personally seen the concept being used at Paytm multiple times. Thus I would recommend all startups to start with a minimum viable product and build the product iteratively.
This is an extract from Saurabh Jain's book - Startup Canvas, available on Amazon