Being an early stage investor, I see a lot of MVPs. I mean a lot. The problem is that most people don’t build real MVPs, but descend into building a prototype, then beta, then an actual product and still call it an MVP. Remember an MVP is your most important Customer Development tool. It is an experiment designed to test your value proposition’s assumptions by measuring a behavior and learning from the results. MVPs should be used for a short while in order to validate your learning and then help you develop the plan for the actual product. After you have built a few MVPs and measured the results, what are the top three signs that you are done with your MVP and can start building your real product?
Sign #1 That You’re Done With Your MVP: You are getting diminishing returns on your learning
Typically when you start doing the Customer Development/MVP process, it is pretty brutal. Your ideas are shattered when they come into contact with real people. It can be long, hard, and painful at times. But when you stick with it you usually go through three stages of MVPing:
- Shattered expectations
- Hearing the same thing over and over
- Diminishing returns
Usually after your first round of MVPs, you go back to the drawing board a little and make adjustments to your Business Model Canvas and test your new assumptions. Typically you get into a zone where everyone is saying the same thing: this is good. After a while you adjust the MVP some more based on that feedback and the feedback and behavior you are measuring is only giving you a very small incremental gain. This is when it is time to stop MVPing and build an actual product.
Sign #2 That You’re Done With Your MVP: You’ve been doing customer development for a really long time
I’ve met countless startups that were working on their MVPs for months or years. Typically a single MVP should last a few hours or a day. After that time, you process the data, apply the learnings, and then make another MVP that should only last a short time as well. In a perfect world, you would only be MVPing for a month or two at most since the results of all of your MVP experiments gave you enough data to build a product.
If you have been MVPing on the same idea for over six months, you need to reevaluate what are doing. Some startups clearly have a product (see #3) and some clearly do not. If you have not seen traction in a long time and have been grinding away on the same idea for several months, it is time to ask yourself some hard questions.
Sign #3 That You’re Done With Your MVP: You are actually making money
Sometimes I’ve seen startups that are still MVPing when they are actually making money on their product or service. Typically the startup doesn’t have a clear indication of what the pricing model should be or what the right customer segment is. Once you have enough “validating revenue” (typically around $250k ARR), stop MVPing and start A/B testing and using other tools (typically sales tricks) to figure out the best pricing and customer segmentation.
As you start your next venture, think about these three tips when you start your Customer Development so you do it effectively, but don’t do it too long. Good luck!