MVP for Startups: Why Building an MVP Is a Great Idea

Startup launch and development is a complex process that requires time, efforts, and investment. Success depends on various factors that include a business plan, the number of users, product quality, proposed value, experience in different fields, team cohesion, and promotion. Since it’s difficult to make everything right, no wonder that many companies fail.

In accordance with the Small Business Administration Office of Advocacy study, only four out of five (79.8%) small firms that were founded in 2016 survived until 2017. It also reports that about 50% of all companies operate 5 years or longer and nearly 33,3% live 10 years or more.

Based on their research, CB Insights revealed 9 main reasons for startup failure:

  1. No market need (42%). Even if you have created a great system that ensures an amazing user experience, it doesn’t mean that it will be in demand
  2. Lack of capital (29%). It’s difficult to achieve success without money, so startups look for investors to raise funds. To this end, they need to showcase a business plan and prototype/proof-of-concept of the future service.
  3. Not the right team (23%). When launching a startup, hire specialists in different areas, for instance, in engineering, finance, marketing, business development, etc.
  4. Get outcompeted (19%). High competition is one of the principal reasons for the company’s failure. When the market is full of similar applications, it’s quite difficult to stand out from them.
  5. Cost issues (18%). Many businesses say it’s very challenging to set up the price that will allow covering expenditures but will be low enough to attract customers.
  6. User unfriendly solution (17%). Customers don’t like when the user interface is flooded with multiple unnecessary elements, or a page load speed is low (exceeds 3 seconds), or the design is too complex or flashy… Thus, when developing a website or application, ensure the seamless user experience and intuitiveness so that people can use your product even without thinking
  7. Product without a business model (17%). Launching a company without a business model is like stumbling through the darkness. A project/startup development plan will help you raise capital.
  8. Poor marketing or lack of it (14%). People won’t learn about a new service without marketing. The main tasks are to define the target audience, find channels to interact with it and promote the product.
  9. Ignoring customer feedback (14%). Not listening to users is one of the biggest mistakes that a small business can make. When you blindly implement the functionality for months, chances to comply with customer needs are much lower.

Therefore, when building an app or website, it’s very important to conduct market research, analyze competitors, define the target audience, and discover user problems. This will help you fill a niche and generate profit. Though it sounds rather challenging, MVP development offers the best way to design a user-tailored solution.

What is the minimum viable product?

Simply put, an MVP is a software solution with minimum functionality, which is generally intended to address one customer’s problem. You start the project from adding the core 1-2 features and then gradually extend it according to user feedback.

The MVP development approach is based on the principle “Build—Measure—Learn”. First, you create a digital product. Then, test it on the early users and see what they say. Measuring their reaction through comments, reviews, forums, polls, surveys, or emails, you find out their needs and implement changes to satisfy them.

Making an MVP, you receive the following advantages:

  1. Quickly get a website or application with minimum functionality. In our custom mobile and web development company , our team can build an MVP within 3 months
  2. Reduce costs due to the fast development process.
  3. Check the project concept by collecting customer feedback.
  4. Analyzing user reaction, you get a crystal understanding of how to tailor the app/website to their needs and preferences.
  5. Implementing only the key functionality, you don’t spend time and money on adding plenty of unnecessary functions. They may seem cool to you but not desired by your customers for some reason. For instance, the provided functionality doesn’t allow solving the top-priority issues or they have already had the same features in other applications. That’s why research matters.

Therefore, MVP development enables companies to reduce software-related costs, save time, and avoid negative feedback. Knowing the expectations of your audience, you make the product that fully matches and even surpasses them.

When does a startup need MVP development?

Although MVP offers plenty of benefits, its creation generally requires a strong client’s involvement. Participating in the development process, the customer can test a prototype, watch demos, approve each iteration, and discuss various issues with an IT service vendor. Surely, this way suits different project objectives but there are cases when you do need to use it. Take a look at the complete checklist below.

Choose the MVP development approach when:

  1. You want to сheck the project concept in action or test several ideas and choose the best one to launch a startup.
  2. You aim to attract investors and raise capital. To gain their confidence in your bright future, the team needs to present an MVP as a part of a business plan.
  3. There is little time or money for app/website development, so you just can’t afford to overwhelm the system with multiple features.
  4. You want to engage early users for testing the service as a part of a marketing campaign. When knowing their opinions, it’s much easier to make a great product, receive positive feedback, and earn a profit.
  5. You have several issues that can be resolved with a small working solution. If a company has to manage numerous reports, you can create a mobile reporting app for collecting and storing them in one place. In this case, document sharing, uploading, and downloading functionality will be enough.

Choosing MVP development, you not only save time and cut software development costs but also raise chances for success. Feel free to start building a large-scale application if you have a clear understanding of what problems must be solved and what features will enable you to make it.

This is mainly about meeting internal business-specific needs, when your goal is, for example, optimize document management, automate sales and marketing processes, or improve enterprise resource planning . When knowing the situation from within and without, it’s much easier to define the app tasks and functions. In other cases, MVP is the best way to implement a software project.

World-famous companies that began with MVP

Many world-renowned products—Dropbox, Uber, Buffer, Twitter, Facebook, Linkedin, Instagram, Pinterest, Airbnb, Amazon, Foursquare, Zappos, etc.—started their way with MVP. Before establishing “The everything store”, Bezos and team provided service to order books directly from the distributor. This was the birth of Amazon.

The initial Uber version had only two features—connecting drivers with customers and carrying out payments. This simplicity allowed Uber to attract investment and gradually create a multi-billion dollar company with a support system around the world. Now, let’s go deeper and consider how Dropbox was transformed from a startup into a large successful company.

An example with Dropbox

Dropbox is a global software provider for storing files in the cloud, synchronizing them across all devices, and sharing photos and videos. The organization also delivers personal cloud and client software. Established in 2007 by Drew Houston and Arash Ferdowsi, Dropbox emerged as a simple tool to synchronize user files on all computers.

On a long bus ride, Drew Houston forgot to take his USB flash drive and began making the first version of Dropbox right on that trip. First, he designed a prototype. Although it wasn’t ready for a public release, the idea was to check if others encountered a file sync problem.

To validate this hypothesis, Drew created a short video demonstrating MVP in action and explaining its functionality. This enabled to increase the number of users waiting for beta testing from 5,000 to 75,000 overnight. With gained knowledge that many people really needed a solution to store and access their files, he developed it.

After building an MVP, engineers gradually extended a new product. In April 2012, Dropbox implemented a new feature to give users the ability to easily upload photos and videos on the cloud. They were also provided with 3 GB extra space to store them.

In November 2014, the company entered into a partnership with Microsoft to let Office customers access Dropbox from iOS and Android smartphones as well as edit their files in Dropbox. This update also allowed linking Dropbox accounts directly to the Word, Excel, and PowerPoint iPad applications.

In 2015, Dropbox improved data security by adding two-factor authentication. In 2016, it released a mobile app version—available on iOS and Android platforms—for its document-editing software solution.

Founded 12,5 years ago as a small startup, now the organization employs over 2,300 specialists and serves millions of users worldwide (from 100 million users in 2012 to 500 million in 2016). Currently, Dropbox offers rich functionality across all devices from desktop to mobile.

How to build an MVP

MVP contains minimum functionality, which is required to address user issues. As a founder, you need to specify the target audience, the problem a digital product will address, and what will make it unique. Ask yourself: “What challenges does my system resolve?” “Who is having them?” “How will it stand out from competitors?”. This will help avoid the risk of launching a service that doesn’t fit the market.

For instance, if you want to build a new car-sharing mobile app, you can integrate car search in one city and payments. This will be the first version. Later, you can include other functions, say, add other cities or even countries, connect more vehicles and search filters, enable verification of the driver’s license, provide payments via PayPal, Stripe, and so on. The key thing is to develop the base and then listen to customers to scale it accordingly.

However, the number of these features is often very large, so you need to prioritize them. To this end, our experts collect customer feedback using polls, surveys, emails, reviews, and comments. We also use A/B testing, analyze competitors to determine their strong and weak sides, and hold beta testing to engage the early users.

Furthermore, we apply various prioritization practices such as User Stories, User Scenarios, Kano, MoSCoW, Value vs Cost :

  1. User Scenarios & User Stories . Simply put, User Scenarios show why consumers will use the service, as well as the context behind. In User Stories, we define the app goals, customers (who they are), how they will interact with the product, where to find them, what devices they have, etc. As a result, our team prepares a list of the most critical features.
  2. Employing Kano methodology, we measure the level of customer satisfaction—indifferent, dissatisfied, or happy— with app features. The Kano model defines 3 main components of the quality profile that affect customer satisfaction: expected, basic, and attractive (admirable).
  3. MoSCoW allows classifying tasks and requirements by the following groups depending on their priority: Must have, Should have, Could have, Would have. To make this categorization, our Arateg experts collect user feedback, consider the level of feature complexity, the risk of not meeting deadlines, and other factors.
  4. Value vs Cost is a technique that aims at prioritizing features based on two parameters—value and development cost. Functions that have received the best ratios will have the highest priority. As it’s challenging to calculate the value, we measure user reaction, gather opinions of focus groups, and take into account the most critical specifications for our client.

Creating a list of features and categorizing them according to this scheme, our specialists understand what things should be done in the current release and what can just be ignored or transferred to the future versions.

If you have questions about building MVP for startups or want to create a product, drop us a message . Our team will contact you within 24 hours and help resolve all technical issues. Describe your project to receive time estimation and our recommendations on its implementation

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