In the dynamic realm of tech startups, the concept of the Minimum Viable Product (MVP) has gained substantial traction. However, is it universally the most effective approach?
“When crafting an MVP, the primary objective is to identify the fundamental assumption or core element that will drive the success of the product,” explains John B. Peterson III, Partner and Head of Operations at NYC Dev Shop, a New York-based company dedicated to assisting startups in building MVPs.
So, what exactly is an MVP? Imagine you wish to develop an app for locating public restrooms in downtown Toronto. The MVP might entail a basic map displaying restrooms within a small, heavily frequented area. This serves as a litmus test to gauge the product’s demand. If it proves successful, additional features such as a cleanliness rating system or expanded coverage can be integrated, while less popular features are phased out.
This approach allows business owners to ascertain the demand for their product and provides valuable insights into its potential features, all before committing extensive resources or personnel. Essentially, it’s a strategy that can save a substantial amount of capital.
“It’s about acquiring a few users, collecting feedback, understanding user preferences, and evolving from there,” adds Peterson.
However, the MVP model does have its limitations, and there are alternative paths to success, as noted in a recent article from the Toronto Star.
Embracing the “Release Early, Release Often” Philosophy
One of the most favored alternatives is the “release early, release often” philosophy.
“This philosophy places a strong emphasis on meeting our clients’ needs,” notes Conrad Wiebe, the leader of development at Thinkbox Software in Winnipeg, which specializes in visual effects and film editing software.
Rather than a rudimentary offering going public, “release early, release often” entails testing a more comprehensive prototype among a select group of users. This tighter feedback loop between developers and potential clients is touted as a more efficient way to gather insights.
According to Eugene Fiume, a computer science professor at the University of Toronto, this approach can help address a common issue with MVPs: they often generate extensive feedback, but not all of it proves valuable.
“Iterations can be quite noisy,” he remarks. “The noise can sometimes overshadow the signal.”
Nevertheless, both philosophies aim to mitigate the risk of developing unused software, with Wiebe adding, “This risk can be a deathblow to smaller startups without a substantial existing client base.”
The choice between these models largely hinges on a company’s origin story. In the case of Thinkbox, the company began as an in-house development team for Frantic Films, a Winnipeg-based visual effects studio. This inherent customer base made “release early, release often” a natural fit.
“The software initially solved specific problems and addressed technical challenges within the company,” explains Wiebe. “As the software evolved, it garnered interest from a growing client base.”
Fine-Tuning the MVP: Concurrent Development and Flexibility
One of the challenges with the MVP model, according to Fiume, is that developers may struggle to determine why a particular feature or product isn’t gaining traction. Sometimes, the issue lies more in the company’s business model than in the software itself.
“MVP may not always address the question of whether the features align with market demands,” he asserts. He suggests that when faced with this situation, companies can find success by targeting their product to a different market or altering their payment model.
“Consider a pivot—when you have a functional system that isn’t gaining traction,” he advises. “Explore ways to redeploy the features and technology in a different context.”
Fiume identifies three primary business models for applications: ad-based, freemium, and fully-paid premium. While ad-based models are prevalent, they require a substantial audience due to the relatively low per-click payments from advertisers.
The freemium model is gaining traction, particularly for niche-function apps and online games, where companies can upsell additional features to users.
Premium apps, however, face a different landscape.
“Fully-paid apps still encounter limited demand,” notes Fiume, though he anticipates a shift in this trend in the future.
While many startups focus on the consumer market, Fiume underscores the importance of considering alternative options, such as business-to-business programs.
One notable example is Toronto-based Guardly, which transitioned from a consumer-focused personal safety application to developing enterprise solutions, including a web-based incident management system for campuses. This strategic shift allowed Guardly to expand its reach and impact, notably through its adoption by OCAD University.
Fiume also cites BlackBerry, formerly RIM, which ventured from the enterprise sector into the consumer market. While their 2005 pivot is often considered a failure, their BlackBerry 10 offering holds greater promise.
However, Fiume warns that pivoting is not without risk and may result in staff attrition.
To mitigate these challenges, Fiume advocates parallel development, where multiple features or business models are tested simultaneously.
“Multiply the MVP,” suggests Fiume. “Experiment with various approaches to identify what resonates.”
While risk avoidance is a driving force behind the MVP approach, Jonas Brandon, co-founder of Toronto-based Startup North, emphasizes that it provides a framework for mitigating risks at every development stage.
Nonetheless, Fiume contends that the entrepreneurial realm isn’t devoid of risk-taking, and significant corporations occasionally take substantial risks for substantial rewards.
He cites Amazon as an example, transitioning from a basic online store to a comprehensive e-commerce platform, a move that led to a significant increase in sales. Ultimately, no development model can completely eliminate risk in the inherently uncertain world of startups.