5 Dangerous MVP Pitfalls That Have Left Startup Owners Grasping at Straws

Legend has it that:

Archimedes, a Greek scientist, stepped into his bath and had an ‘aha’ moment. “Eureka! Eureka!” he exclaimed before running down the street to share his newfound discovery (naked!), sure that he had found something truly remarkable.

There have probably been billions of ‘eureka’ moments since then. You’ve perhaps even had a few yourself. If you’ve come up with different ideas you truly believed were going to make a difference, and make you crazy rich, you’re not alone. These two things, however, are contingent upon creating a product or service that excites people (a lot of people!) enough for them to part with money because it solves a serious pain point for them. Most people approach this by endeavor by throwing all they’ve got at an idea only to fall agonizingly short in the end and become another lesson in the long list of startup failure examples. If only there were a crystal ball to advise them whether or not to proceed. However, this is not la la land, this is the real world, where we learn mostly by doing and experimenting.

Speaking of learning and experimenting, there’s no better way to learn about an idea than by building something your target audience can engage with. In short, by building a minimum viable product (MVP) so you can obtain validation and learn more about your ideas and assumptions. What is it about building an MVP that trips people up? If there is a way to validate ideas, how come we still have so many startup failures today? Simple! They are not doing it right. While the startup failure rate of 9 in 10 has been contested, there’s no arguing that the numbers are pretty high — high enough to cast fear into prospective startup founders.

But fear not! In this article, you’ll learn how to avoid the common MVP pitfalls and build products that end-users actually need and would pay for.

What is an MVP?

Eric Ries, the author of The Lean Startup describes it as creating a product of only enough core features to indicate the direction of what the creators are trying to do. He added that this product “allows you to ship a product that resonates with early adopters, some of whom will pay you money or give you feedback.” The idea of MVP is to minimize the time it takes to complete the loop from ‘Building’ to ‘Learning’.

That said, most startup founders find it hard to balance the ‘minimum’ and the ‘viable.’ Hence, the many MVP pitfalls you’ll see below.

Pitfall #1: Thinking product, not processes

Ironic, isn’t it?

After all, the term says minimum viable product. So, you keep chopping and chopping till you have a stripped down version of your idea. The challenge in this is that you’ll rarely learn anything from your first iteration, or even the next, if you follow the same tactics.

The onset of this pitfall is premised on the belief that an MVP must always be a product. In terms of the end goal, think of MVP as a process rather than a product, per se. A process meant to quickly test your hypothesis and assumptions.

One of the biggest assumptions you can make is to believe you have a ready-market out there. In fact, this accounts for 42% of startup failures according to a post-mortem report on over 100 failed startups conducted by CB Insights.

Bottom line:
Think in terms of process and eliminating your riskiest assumptions through small experiments. These experiments can be as simple as having a conversation with your target audience or creating a landing page to gauge interest.

Pitfall #2: Focusing on the wrong metrics

Metrics like revenue and number of customers are important. However, with regard to MVPs, you need to process them in context.

For example, how many customers are responsible for the revenue? What is the cost of acquiring each customer (customer acquisition cost)? How valuable are the customers you’re getting, otherwise known as customer lifetime value(CLV)? In its present form, what is the total available market for your product?

These are the sorts of questions your MVP process should seek to answer. If you can get answers to these questions, you’ll be able to dig beneath the surface and learn from the data.

Imagine spending $50 on marketing in a month and getting 100 customers that spent $10 dollars each within the same period. That’s a customer acquisition cost of $0.5 per customer. Now, considering that they spent $10, that means on each customer you make a profit of $9.5.

This is an investor’s dream. What you’ve learned is that if you manage to scale the business to a mainstream audience, you’ll make a killing even with other expenses included. Now, let’s say the 100 customers only spent $1 each, that means a profit of only $0.5. If this were the case, then the the revenue against the cost of acquiring each customer is alarming.

This would perhaps lead you to ask questions like: How can we reduce the marketing budget and still acquire more customers? Are we targeting the right channels? Are our products well priced? Getting to this point is also progress.

Bottom Line:
Avoid getting giddy with vanity metrics; beyond the numbers, what you learn matters most.

Learn about three other pitfalls in the full article on MLSDev blog.