What’s an MVP in Business? (Minimum Viable Product)
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Hello Future Leaders and Entrepreneurs!
Every big business you admire today started small. But here’s the secret: they didn’t launch with polished, perfect products. They launched with an MVP (Minimum Viable Product) — the simplest version of their idea that solved a core problem, and could be tested with real customers. For entrepreneurs, business students, and small business owners, understanding MVPs helps you cut through the noise of spending years chasing "perfect" and learning fast enough to actually grow. The goal is not to launch a finished product, but to learn whether your core concept has value and is worth pursuing.
This approach helps you to:
Reduce Risk: Avoid spending significant time and money on a product that nobody wants.
Accelerate Learning: Get real-world feedback on what works and what doesn't, allowing you to make informed decisions early on.
Save Resources: Use your time, budget, and energy efficiently by focusing only on the most essential features.
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Focus on Solving One Core Problem
An MVP isn’t about doing everything. It’s about doing one thing really well. Instead of trying to launch the full vision of your product, strip it down to its most essential feature. Ask yourself: What’s the one problem I can solve for my customer today?
Applicable Steps & Examples:
The "Concierge" MVP: It involves you manually performing the service that a future system would automate. A perfect example is Airbnb's very first iteration. The founders, Brian Chesky and Joe Gebbia, couldn't afford their rent. A design conference was coming to town, and they noticed all the local hotels were booked. Their idea was simple: rent out air mattresses in their own living room for a fraction of the price of a hotel. They took some photos of their apartment, created a simple website, and put up a listing. The idea worked! This validated a critical assumption: people were willing to pay to stay in a stranger's home as an alternative to a hotel. It was a manual, one-to-one service that proved the core concept before they built a complex booking platform.
The "Landing Page" MVP: is a single webpage that describes your product's value proposition and asks people to sign up for a waitlist. This simple experiment, which costs almost nothing, can prove there's an interest in your idea before you write a single line of code. Dropbox famously used a simple video on a landing page to get over 75,000 sign-ups, demonstrating massive demand.
By narrowing your focus, you reduce the initial investment of time and money from potentially years of development to just weeks or even days.
Test Your Assumptions with Real People
Business ideas are exciting, but feedback is priceless. An MVP allows you to test your assumptions in the real world. Launching something small lets you see if customers are willing to pay, use, or even care about your idea. This process of "validated learning" is the heart of the MVP concept.
Applicable Steps & Examples:
Create a "Frankenstein" MVP: You can build a functioning business process by stitching together simple, existing tools you already know. For instance, imagine a small business owner who wants to start a custom-made jewelry service. They don't need to build a complex e-commerce site. Instead, they could:
Use a free online form (like Google Forms) for customers to submit their custom order requests.
Manage these orders and track progress on a simple spreadsheet or a shared online document.
Communicate with customers about their order status using email.
Accept payments through a digital payment link (like PayPal or Venmo).
This approach allows you to deliver a real service and get customer feedback without spending money on a custom platform. It proves that the demand for your service is real and that your process works, all before you invest in building a more sophisticated website.
Launch with a Beta Program: Instead of a full public launch, you can release your product to a small, select group of early users. Think about Google's Gmail, which launched as an invitation-only service in 2004. They didn't open it up to the public right away. Instead, they carefully controlled access, allowing a limited number of people to try it out and give feedback. This helped them build a robust, reliable service and create a sense of exclusivity and high demand before the global launch. This strategy is perfect for getting real-world insights and making sure your product is ready for a larger audience.
Don’t wait until it's perfect—test now and learn quickly.
Measure What Matters
The goal of an MVP isn’t only about sales, it’s about learning what works and what doesn't. By tracking the right data, you can make smart decisions and build a product people truly want.
Instead of tracking everything, focus on a few meaningful metrics that give you a clear picture of success, not just numbers that look impressive.
Customer Acquisition Cost (CAC): This metric tells you how much it costs to get a one new customer. This isn’t just about ad spending, it’s the total investment of time and money you use to get ONE new customerr.
Why it matters: By understanding your CAC, you can quickly see if your business is sustainable. If it costs you $50 to get a new customer, but your product only generates a $10 sale from that customer, you have a problem. Your MVP should aim to find the most cost-effective way to attract customers, allowing you to pivot on your marketing and sales strategies until they are profitable.
User Retention Rate: This measures returning customers coming back after a week, a month, or longer. A high retention rate means people are finding so much value in your core offering that they keep coming back.
Why it matters: This is arguably the most important metric for an MVP because it directly proves whether you're solving a real problem. If your MVP gets a lot of initial sign-ups, but customers never return after the first week, it's a huge red flag. It tells you that your product might be "nice to have," but it's not fixing their problem. A good retention rate signals you've achieved product-market fit, which means you have a product that satisfies a strong market need. It's the ultimate proof that your idea has legs and it could run.
Net Promoter Score (NPS): This simple survey measures customer loyalty by asking one question: "On a scale of 0-10, how likely are you to recommend our product to a friend?" Your customers are then categorized into three groups:
Promoters (9-10): Enthusiastic customers who will actively recommend your product.
Passives (7-8): Satisfied but not enthusiastic.
Detractors (0-6): Unhappy customers who can hurt your brand.
Why it matters: A high NPS means your customers are so happy that they will do your marketing for you through word-of-mouth, which can reduce your CAC over time. By speaking with your Detractors, you can also quickly identify the biggest flaws in your MVP and prioritize what to fix first.
Before you launch your MVP, decide on one core metric you will focus on. Is it user sign-ups? Repeat purchases? The time a user spends on your platform? Choose one, set a clear goal for it (e.g., "30% user retention after one month"), and let that number guide your decisions. If you hit the goal, you know you're on the right track. If you don't, you know it's time to test a new approach.
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Keep Costs Low and Creativity High
One of the biggest lessons you can learn launching an MVP is learning how to be resourceful. Use no-code tools, social media polls, or pre-orders to test ideas without breaking your budget. Entrepreneurs often think they need huge investments to start. In reality, the MVP mindset forces you to find creative, low-cost ways to prove your concept.
Applicable Steps & Examples:
Leverage Existing Tools: You don’t need to be a developer or spend a lot of money to build a powerful MVP. Instead of building a complex, custom platform, you can use existing, user-friendly tools to get your business off the ground.
For example, imagine you want to start a personal training service. You could use a free online form (like one from Google) to allow clients to sign up, a simple spreadsheet to manage their schedules and track their progress, and a digital payment link to get paid.
This approach, which requires no special coding knowledge, allows you to create a functional business process in a fraction of the time and cost. It helps you prove your concept and learn what your clients really need before you invest in building a more advanced app or website.
The "Wizard of Oz" MVP: This is where the product appears automated to the user, but a human is doing the work behind the scenes. Airbnb started this way. Early on, the founders were the ones going to their hosts' apartments to take professional photos, personally managing listings, and communicating with guests. This allowed them to understand the user experience and what was needed for a scalable platform, without having to build a complex system from day one.
That discipline pays off whether you’re building an app or opening your first coffee cart.
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MVP is the Beginning, Not the End
An MVP is not your final product, it’s the starting point. Once you launch, the real work begins, and start improving based on feedback. Every tweak gets you closer to product-market fit. This mindset is crucial for scaling.
Applicable Steps & Examples:
Embrace the Build-Measure-Learn Loop: The MVP process is a continuous loop. You build your MVP, measure customer behavior and feedback, and learn from the results. This learning then informs what you build next. This is a scientific, data-driven approach to business.
Don't Fear the Pivot: The greatest strength of an MVP is that it allows you to "fail fast." If your data shows your initial idea isn't working, an MVP gives you the freedom to "pivot." Change your business strategy or product. This is far better than investing millions into a product no one wants. Instagram, for instance, started as a check-in app called Burbn before pivoting to focus on its most popular feature: photo sharing.
The faster you test and adjust, the quicker you'll find what truly resonates and will have a much higher chance of success.
Be The MVP.
The biggest mistake new entrepreneurs make is waiting for "perfect." The truth is, perfect never comes, but progress does. The Minimum Viable Product lets you take that crucial first step. It shifts your focus from a grand vision to a concrete action: solving a single problem by launching small, measuring what truly matters, and learning from every piece of feedback, you build a business on a foundation of facts, not assumptions.
An MVP isn’t your final product; it’s a strategic experiment that allows you to fail safely and learn quickly. Whether you’re a student with a big idea, a small business owner trying to scale, or a first-time founder dreaming big, don’t wait. Start small, start now, and let your MVP be the launchpad for something greater.
-Thank you for Reading!
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How to Apply These Lessons in 3 Easy Steps
As a student or budding entrepreneur, you are both the marketer and the salesperson. Your first goal isn't just to sell a product—it's to sell yourself, your ideas, and your brand.
Step 1: Focus on One Core Problem
Don’t try to solve a dozen problems at once. Instead, identify a single, clear problem and create the most basic solution for it. For example, if you want to create a social network for book lovers, your MVP could be a simple online form where people can share one book recommendation and why they love it. This helps you validate if there's interest in the core idea before building a complex platform.
Step 2: Choose Your Core Metric
Before you launch your MVP, decide on one key metric you will focus on to measure success. Is it the number of new user sign-ups? How many people make a second purchase? The number of social media shares? Pick a single, measurable goal (e.g., "achieve 30% user retention after one month"), and let that number guide your decisions. If you hit the goal, you know you're on the right track. If you don't, you know it's time to test a new approach.
Step 3: Talk to Your Detractors
A great way to learn is by listening to those who aren’t satisfied. When you get feedback that isn't positive, don't ignore it. Instead, treat it as a valuable opportunity. Ask your detractors what they disliked, what they expected, and what would make them happy. This feedback is a goldmine for your next iteration and can help you avoid costly mistakes.
Let's simplify the concepts:
Sarah started her business from her kitchen, creating custom, multicolored crayons by melting down old, broken ones. She started with just one set of dinosaur-shaped crayons, which she showed to a few friends and neighbors to see if they would buy them (Step 1). She priced each set to make a $5 profit (Step 2) and used her personal Instagram account to post photos of the crayons, which generated her first few sales (Step 3 & 4). After packaging each set in a simple, hand-decorated paper bag with a handwritten thank-you note (Step 5), she used her profits to create a second product line: car-shaped crayons in a new color palette (Step 6).
Today, "The Crayon Lab" is a full-time business that sells thousands of unique crayon sets online and in local craft stores. Sarah is living proof that following these six steps works.