Starting a business is full of risks
Starting a business is hard, really hard. In fact, according to CB Insights, 70% of startups will fail and according to this analysis of 101 failed startups, the top two reasons for failure are No Market Need (42%) and Ran out cash (29%). Both of these reasons highlight just how important it is that your company builds only what is necessary. In the early stages, the stakes are too high.
What is the goal of an MVP?
The goal of your minimum viable product (MVP) should be to prove there is product market fit while taking on the least amount of risk possible. Founders are often overly excited about their ideas and eager to start building features without proper planning. They may gloss over assumptions they are making, both about their product and their customers.
During the earliest stages of your company, it is especially important to talk to your potential customers and gain insight as to how they might use your product. At thoughtbot we achieve better product outcomes by running product design sprints. A product design sprint (or PDS) helps us quickly understand the problem and get real feedback from customers. https://thoughtbot.com/product-design-sprint/guide
Both the design sprint process and the initial build of a product should be focused on these 3 things.
- Proving product market fit (Is there a need for this product? Will you be able to monetize the product?)
- Validating high risk assumptions (Example: AirBnb - People will let strangers live in their homes and customers will be willing to stay in someone else’s house)
- Quickly getting actionable user feedback (Put a real prototype, paper or digital, in the hands of users to learn what next steps should be)
Define the problem your product solves and what makes your product unique
As a founder you need to get to the core reason why someone would use your product. There are a number of important questions you should be able to answer in order to reduce the risk of building a product without market fit.
“What problem does my product solve?”
Answering this question is the first step to understanding your customers. It is surprisingly easy to come up with solutions to problems that don’t actually exist. It’s not about what your product does, it’s about the problem it solves.
“Who is having this problem?”
This is another way of asking yourself who your target customer is. Founders can be defensive about their ideas and say things like “Anyone and everyone could use this”. Be as precise as possible because in the early stages you’re not going to be be able to build a product for everyone.
“How big of a problem is this?”
Is this the type of problem people are having daily or is it a minor inconvenience they will experience only once or twice a month? Just because your potential customers are having a problem, doesn’t mean that it is enough of a pain point for them to use your product.
“How are people solving this problem now?”
Asking this question will give you more insight into how big the problem is, but more importantly, it will start putting users at the center of your product decisions. You might find out that there is actually a way bigger problem that your product doesn’t address and it would be better to focus your efforts on solving that problem instead.
“What is your value statement?”
Your unique value proposition (UVP) should clearly explain how your company/product is uniquely equipped to solve this problem and what separates you from your competition. You have likely identified that people already have workarounds to the problem you are solving. Getting clear about why people would choose your product to solve their problem over others will help as you go out and try to sell your idea to customers and investors as well as narrow in on what features should be prioritized.
Distinguish between must-haves and nice-to-haves
As you’re answering these questions, you’ve likely also come up with a large number of ideas of what your app could do. Remember that now is the time to hone in on what your MVP needs to do.
Ask yourself: does this feature need to be included to validate your product? Does it align with your value statement? Remember that your goal is to build the absolute minimum needed to validate your product idea while taking on as little risk as possible.
Make sure you are only including features that will allow you to prove product market fit. Sure, at scale things might break down if you don’t have an efficient admin portal, but you’re not there yet, you’re still fighting to get your first set of customers. Think of software as a last resort and try to think of other ways to handle specific edge cases rather than building features. This might mean that you have to deal with customer requests manually but getting to the point where this becomes overwhelming is a good problem to have because it means you are gaining traction. Strip the feature from initial launch and put it back on your back burner and revisit it when it becomes necessary.
Learn from feedback and iterate your way to success
It’s important to remind yourself that your MVP is not the final version, nor will there ever be a final version! It will evolve over time. Software is unique to other businesses because of the speed at which you can make major changes and release new features. It’s better to release fewer features and get feedback on what to build next than it is to wait and release a more flushed out product only to realize customers don’t want it.
Instagram is a great example of successful iteration based on listening to customer feedback. It started as a location sharing app with a picture sharing feature. Fast forward to present day and they’ve created a new social media category based solely around picture sharing - what their customers really wanted.
As an entrepreneur you have to accept that there will be failures along the way. It is important to allow yourself to fail fast and fail often. The longer you take to release your product, the more risk you take on, so don’t worry too much about what your initial release looks like. Remember what LinkedIn Founder Reid Hoffman said: “If you aren’t embarrassed by the first version of your product, you shipped too late.”
thoughtbot is a team of talented designers and developers who help founders build the right product. We’ve helped hundreds of startups like Tile and SplitFit quickly validate their products and accelerate their time to market. We’d love to help you build your product too!