Even though the concept of building an MVP (minimum viable product) has been around for quite some time now, we still don't encounter many first-time entrepreneurs who understand what the purpose of the MVP is. Many seem to think the goal of the MVP is simply to build the first version of a product using fewer dollars. I would argue that this is only the how but doesn't address the why.
What is an MVP?
The minimum viable product has been defined and discussed in great detail in many other places, so for our purposes here I'll only briefly share my own favorite definition of an MVP.
An MVP represents the smallest possible version of a product that can be used to validate product/market fit.
Why Start with an MVP?
The goal of the MVP is to conserve precious resources (time and money) while you find out if your idea has product/market fit. If you have $100,000 in total, it makes sense to spend a small part of that to find out if you're on the right track before you commit further resources.
Most entrepreneurs we meet place way too much value on their idea. Their confidence is a good thing overall, but the recognition that the idea might not actually play out in the way they're imagining it seems to be something that it takes time for an entrepreneur to be able to accept. The MVP is a way to counterbalance the entrepreneur's overabundance of confidence and act as a fact-based sea anchor to keep the entrepreneur from rushing headlong to an early failure.
We recently had a joint meeting with Robb Kunz from BoomStartup and a first time entrepreneur who we are both working with. Robb did a fantastic job explaining to the entrepreneur why he should conserve cash early on so that he would have resources available to pay for the inevitable changes that will come as the market responds to the MVP. I wish I could have recorded Robb's speech for inclusion here, but for those who are interested in getting great mentorship BoomStartup has launched an online accelerator for just that purpose.
What is Product/Market Fit?
I mentioned above that the goal of the MVP is to help you find out if you have product/market fit. What is product/market fit? Quite simply, it is validation from the market (your potential customers) that the product you have created (your app, SaaS product, etc.) solves a problem or meets a need in a way that they will pay you for it. No amount of surveying people, doing market research, drawing sketches of your ideas, or creating pro forma statements of how much money you will make will ever substitute for putting an actual product in front of an actual customer and watching to see if they pull their credit card from their pocket to give you money. And while you're likely to initially test your MVP with people you already know, you really haven't achieved product/market fit until you can replicate that process with a stranger.
Just be prepared for the likelihood that you'll need to iterate quite a few times before you achieve product/market fit. The sooner you start, the sooner you'll get there.