Minimizing Startup Risk: A Fresh Examination of Minimum Viable Products

The creation of a Minimum Viable Product (MVP) has long been regarded as a linchpin of entrepreneurial success. Yet, in his 2013 exposition, N. Taylor Thompson casts a critical eye on traditional MVP development practices, arguing for an innovative dichotomy: Validating and Invalidating MVPs.

While both types of MVPs serve as experimental launchpads for a fledgling business, Thompson posits that startups habitually lean towards validating MVPs. However, he argues that this selection bias may lead to entrepreneurs mistakenly pursuing unsustainable solutions.

Validating MVPs presents a rudimentary version of the final product to potential customers. Should these early adopters display interest, the entrepreneur’s business model is substantiated. However, a lack of interest doesn’t necessarily dismantle the business model, as Thompson explains with Dropbox’s early marketing ploy. Founder Drew Houston’s promotional video garnered 70,000 signups for an unbuilt product. Nevertheless, had the strategy floundered, it would have only indicated a faulty customer acquisition method rather than a fundamentally flawed business model.

Conversely, invalidating MVPs are designed as superior to the final product, albeit unsustainable in their initial format. Failure of this version hints at a doomed business model, while success isn’t definitive. Thompson references the “concierge MVP” approach, exemplified by Rent the Runway’s initial in-person dress rental service, a model they knew was unsustainable in the long run but used to test market demand.

Thompson’s pioneering viewpoint on MVPs subverts the conventional model. Despite the preponderance of validating MVPs, he proposes that startups fraught with market risk should initially explore invalidating MVPs. This strategy pinpoints whether customers are ready to pay for an enhanced product, reducing uncertainties surrounding product quality, target audience, or creative direction.

Nonetheless, validating MVPs holds their value. In scenarios where product performance hinges on scale, such as network-dependent platforms, Thompson agrees that validating MVPs is indispensable.

Thompson’s paradigm-shifting analysis reframes MVPs as a mechanism for understanding customer needs and market assumptions. It underscores that entrepreneurs should judiciously weigh the pros and cons of both MVP approaches, in line with their specific business model, market risk, and product nature.

This groundbreaking perspective could inspire a sea change in MVP development, prompting entrepreneurs to more effectively mitigate risk and better understand their potential customers. With Thompson’s guidance, startups may indeed increase their odds of early-stage success.

Source: Building a Minimum Viable Product? You’re Probably Doing it Wrong (