It seems like an odd question, doesn’t it? But the truth is most companies that fail, fail to honestly answer this question. In an age where there’s a dozen alternatives for any given software, service, app or product, you have to know that there’s room at the table for what you want to bring. (And even when you know you’ve got something good, there are plenty of pitfalls to be wary of – which we’ll cover in this series).
In part one of this series, we’re going to be looking at everything you should do before you build your Minimum Viable Product (MVP):
Developing an MVP starts with knowing why your product should exist at all:
If your answers are yes, yes & yes, let’s drill deeper. Take the basic concept and drill down:
The OMTM is the One Metric that Matters the Most. For example:
These are appropriate for the MVP stage because they can help determine if a product is viable early on. But keep in mind that the OMTM of a business can (and should) change as the company grows and matures.
For instance, CAC might be excellent for an eCommerce company that’s just getting off the ground; but if it manages to build a loyal customer base and is still around two years later, that company would be better off tracking something like cart size or monthly recurring revenue.
With a social media app, the earliest OMTM would be something like the number of new signups per day. A year down the line, we might shift our focus to engagement or content creation percentage.
An OMTM acts as a helpful North Star at any stage. It can be particularly helpful in the early stages when there are so many variables to keep track of. Even if your product lives up to the “minimum” in MVP, there’s still a lot that goes into developing it. As a result, it can be easy to lose sight of what matters; having a single metric to navigate toward will help keep the team focused.
In fact, getting the team aligned around what matters is one of the most important parts of pre-development. Here are a few things to consider:
1. Readiness to fail fast. First, an MVP isn’t about nailing the product 100% on the first try. It’s about failing fast. This can be challenging for some people to wrap their heads around, especially if they’ve spent more time in the world of enterprise than the world of startups. The entire point of creating an MVP, though, is to create a pared down version of a product so you can quickly validate an idea without a lot of risk.
2. Commitment to small feature sets and accelerated learning. Companies often forget about the “M” in MVP. It’s important to establish early on that the MVP isn’t the place for “what ifs” and “nice to haves.” On one hand, we want to create a product as quickly as possible with minimal time and cost. At the same time, we don’t want our MVP to be half-baked; it needs to be developed enough that it still appeals to our ideal buyer persona. That’s why successful MVPs tend to be iterative, starting with a basic version of the product that’s built upon over time.
3. Total buy-in from all stakeholders. From the CEO to the intern, the entire team needs to be able to rally behind a common vision and agree on each person’s role in the MVP creation process.
At Orogamis, we’re a big fan of data-driven insights; and data is just as important before building your MVP as it is post-launch. The data at this phase may be more qualitative than quantitative, as your focus will be market and competitor research.
Market research revolves around better understanding your target customer and their needs. It can help you:
There are two ways you can gather this information: Through primary research and secondary research.
Primary market research involves first-hand accounts, and will help you segment your market and establish your user persona(s). It can involve market surveys, as well as face-to-face interviews and group discussions with customers. This can be especially helpful for finding out whether or not your product has any promise.
Even if your answer to the question we started with (“should this product exist at all?”) was yes, conducting primary research is an excellent way of further validating a product idea. It does take effort; but it may keep you from sinking too much time and effort into a product that was never going to gain any traction.
Secondary research is all the other information you can make conjectures from:
You don’t want to catch a case of analysis paralysis but you do want to have a solid understanding of your market ecosystems before developing an MVP.
At the least, you should gather enough information to:
During your market research, it’s likely you’ll begin surfacing information about your competitors. Even if you have an idea of who you’re up against, it’s a good idea to conduct a competitive set analysis.
Begin by identifying competitors that have similar offers. You can buy market reports or use review sites like G2 to find leaders within your niche. Social media can also make for an excellent business directory. LinkedIn, for example, allows you to filter by industry – so you can easily find companies that are like you.
Once you’ve identified your competition, it’s time to analyze them. When it comes to comp analysis we’re partial to the SWOT framework. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Use it to map out:
All this preliminary research will pave the way for you to begin planning and developing the MVP – which we’ll be exploring in the next installment of this series.
But there is one last thing you’re going to want to consider before diving into the world of dev: Financing.
According to CBInsights, financing is the second most common reason that startups fail. (The first is ‘no market need’. i.e., The business didn’t answer that first essential question of “should this really exist?”).
Nearly 30% of companies fail to account for the kind of monetary investment that is necessary to pave the way to a market-ready MVP. Here are three of the most critical considerations:
Good developers know their worth. If you want a great team, know that comes at a premium. Even if you’re a startup. When people hear ‘startup’ they may picture passionate entrepreneurs going at it 24/7 for peanuts, but in reality, people have bills. So, it’s important to be fair with salaries.
That being said, most startups aren’t going to be able to hand out the same size paychecks as a large corporation. Creating a great company culture can compensate for this. Of course, that may come at a cost too – annual retreats, keynote speakers, a snack bar, a uniquely furnished workspace. So, it’s important to know what you’re going to offer people ahead of time, and budget for that accordingly.
You can also be strategic about how you hire. Weighing attitude against experience, for example. Someone who is young and less experienced but smart and ambitious may be just what you need; always keep an eye open for up-and-coming talent. Just because you’re a startup doesn’t mean you can’t make great hires from the get-go!
The cost of building the MVP will not be the cost of the final product. Please don’t ever make that mistake. Always have the estimated funds for the finished product waiting in the wings – and don’t rely on post-launch revenue to fund the final product!
Yes, that’s easier said than done – because as you test the MVP you may come up with even bigger and better features than the ones you’d initially planned on. But if you take the time to map out your ultimate vision; prioritize the iterative features that will help you get there; and stick price points on each of them, you’ll have a much better estimate of what the actual product is going to cost.
As your company changes, so will your financial sources. Whatever your initial resources may be they will likely change so it’s good to have a financial plan in place. Especially when you take into account scope creep and the fact that the final product will always cost more than the MVP (as mentioned above).
If you have reason to believe you’ll need external funding after launch, start making a plan for that as early as possible…at least up through seed funding.
There is of course B and C funding, but since this is an article on MVPs, we’d be getting way ahead of ourselves. Bottom line: Start on that financial plan early!
A lot of legwork that needs to be done upfront. Don’t rush this stage if you’re serious about creating a winning MVP. Taking time with the research phase will pay dividends when it comes to the actual planning and development. The research will ensure your strategy is sound, and it will keep your development on target – which we’ll be exploring in the next installment.
Curious how we could help grow your business?
Every engagement starts with a friendly chat.