Two university graduates decide to become entrepreneurs. They discuss their product idea with their professor. It is a SaaS product to streamline digital payments. The idea looks good. However, they don’t validate whether it’s a viable solution or not. Eventually, relying on their self-assumption results in the failure of their startup.
According to The Global Startup Ecosystem Report 2022 by Startup Genome, nine out of ten startups completely fail in the US. Of those who survive, only 1.5% produce a successful exit of $50 million or more. Even 75% of venture-backed startups also fail in the US startup ecosystem, revealed Wall Stress Journal.
There are several reasons for startup failure. However, the most prominent one is not validating product ideas through a minimum viable product (MVP). Entrepreneurs who don’t collect users’ feedback and bypass the MVP development phase are less likely to succeed.
So, what is an MVP, and how does it contribute to the startup’s growth? Let’s understand this concept with three minimum viable product examples.
What is a Minimum Viable Product (MVP)?
An MVP is the simplest version of a new product. It has minimal but core features, just enough to collect feedback from end-users. It tells you whether your product is workable or not.
For example, if you wish to build a digital payments gateway, you first need to test its viability. Instead of directly going for full-scale development, validate your product idea from your real customers. Based on users’ feedback, make improvements. Once you feel your product is ready, launch it in the market with full aggression.
MVP has several benefits. First, it allows entrepreneurs to analyse the public response to a new product idea. If validated, there is a 90% chance of success.
Secondly, MVP development enables you to define your unique selling points. It tells you how to make your product stand out. Lastly, it is a cost-effective method of collecting customers’ feedback. By spending a minimal budget, you can test the viability of your product.
Why Should You Build a Minimum Viable Product (MVP)?
Is your product idea workable or not? Only end-users can decide. An idea might seem workable to you, but customers are the real judges. They decide whether an idea has the potential to meet market demand. This is the core philosophy behind MVP development.
The concept of MVP finds its roots to the lean startup methodology. This approach shortens the development cycle by testing the viability of product ideas. By building a minimum viable product (MVP), startup owners can:
- Test the viability of their unique product ideas
- Gather feedback from potential users
- Attack early adopters with minimal spending
- Develop core features based on customers’ response
- Market their product better through validated learning
- Explore opportunities for growth and future expansion
3 Minimum Viable Product Examples
Below are examples of three popular minimum viable products that laid the foundation of multi-billion-dollar startups:
Amazon
We all are familiar with Amazon. It has a market capitalisation of $1.60 trillion and millions of customers worldwide. Amazon is the best example of minimum viable product that evolved from an online book store to an eCommerce giant.
In the early 1990s, Jeff Bezos established an online bookstore, Amazon. It was a unique idea because only a few people had access to the internet at that time. Hence, selling books online seemed to be impractical. Moreover, most customers were suspicious about online shopping.
To materialise his approach, Bezos first created an MVP. It was a simple website with a homepage, “A” logo, and a slogan, “Earth’s biggest bookstore.” In the early days, Bezos would buy books from various distributors and sell them online at a lower price. Similarly, instead of spending money on a fully functional marketplace, he listed the best books only that had a high demand.
The plan worked. Soon, Amazon started getting multiple orders. In the next two decades, Amazon made continual innovations to expand its product offerings. Today, it is the world’s biggest retailer, serving 310+ million consumers in 50+ countries.
Uber
If you are a 90s kid, you must have played GTA Vice City. It was an action-adventure game published by Rock-star Games in 2002. We’d enjoy driving a taxi, driving people to their destinations, and getting paid. This revolutionary idea was picked up by Garret Camp and Travis Kalanick, who started Uber in 2009.
Like Amazon, Uber was also launched as an MVP called Ubercab. It was an iOS app operating in San Franciso. The earlier version of Ubercab allowed passengers to connect with taxi drivers via SMS. The app provided founders with sufficient data to test market risks and analyze the potential.
Once Uber emerged as a leader in the ride-sharing market, the company started full-fledged mobile app development. New features were added, like GPS integration, flexible pricing, and customer reviews. Passengers could now track drivers’ locations in real time.
Today, Uber has a 72% share in the ride-hailing market and 131 million monthly active users. The company generated $31.8 billion in revenue by completing 64 million trips in 2022. And it all started with MVP development.
Yes, you read it right. Facebook also started as an MVP in Mark Zuckerberg’s dorm room. It didn’t become a social media giant overnight. The idea behind Facebook was to help Harvard students connect with each other and share information quickly.
The first version of Facebook was an agile minimum viable product example with a simple interface. Harvard students could create basic profiles. It allowed Mark and his team to test the app’s viability. The MVP appealed to university students. Hence, students from Stanford, Yale, and Columbia became desperate to access this app. Eventually, Facebook gradually added more advanced features and expanded the app’s reach outside universities and colleges.
Today, more than 3.03 billion users have Facebook accounts. This is almost half of the world’s population. If we combine Facebook’s (Now Meta) other products like Messenger, and WhatsApp, the number of monthly active users becomes 3.96 billion.
Final Thoughts
“Think big, start small.” This little line is the core philosophy behind MVP development. As an entrepreneur, if you wish to launch your product idea into the market, don’t go for full-scale development at an early stage.
Instead, a better approach is to build the simplest version of your product, called a minimum viable product (MVP). It has the core features only to collect users’ feedback. If the idea is approved, you can go ahead with large-scale production. Otherwise, go back, identify the loopholes, fix issues, and evaluate customers’ responses again.
The minimum viable product examples of Amazon, Uber, and Facebook give us three valuable lessons. First, never make assumptions about the success of your product ideas. Let customers decide it. Secondly, prefer iterate development, particularly when you have a limited budget.
Lastly, make data-driven decisions based on actionable insights into users’ behavior. Following these lessons can increase the chances of your success.