MVP Mindset – Part 2: Case Studies
The Entrepreneur ToolKit provides resources for validating, building, and iterating products, including the popular step-by-step Guide to Early Product Development. This article is the second in the Minimum Viable Product (MVP) ToolKit series. Click here for the previous article, MVP Mindset Reduces Risk and Inefficiency.
Successful companies do not build products for themselves; they build products for their customers.* There is no better way to create products that people want to buy than gaining early feedback from beta customers through the minimum viable product (MVP) methodology.
Depending on the industry and customer segments served, various market forces will affect what a startup can accomplish with a minimum (least amount of effort and features) viable (it must be useful to the customer) product. Every company comes up with a different list. There are things a company can control, and things you can’t.
The following case studies from Rev1 companies using the MVP methodology, offer examples in three different industries—software, materials, and life science—to identify the solution features most valued by potential customers.
Case Study 1: E-commerce Distribution Software Company
Problem: Online store owners need a way to include more and diverse products in their stores without requiring the store owner to carry inventory. A drop-ship solution (where the online store passes the sales order to a third-party supplier who then ships the order to the customer) would be ideal.
Solution: The solution allows store owners to access a large array of supplier drop-shipped items and include them in their online stores. Customers can check out with company-supplied and store controlled items seamlessly; The solution takes care of paying the suppliers for the store owner.
Challenge: There are many different online commerce platforms to choose from. Which platform to support first? The startup, which markets to both store owners and product suppliers, had to have a way to manage products, orders, and payments from the start. Since this is a brand new option for online store owners, what type of business model would work best for the startup and its customers?
Mitigation Strategy: The company focused on one online commerce platform, Shopify, to get their software working. They chose one supplier to build for. They interviewed shop owners and the supplier to make sure that what they were building was minimally necessary and build the business model around supporting that one supplier and getting their products into the overall market place.
Key Takeaway: Know your market; have expertise in what you are building. After market validation, stick to what the customer is asking for, not on all the things that you could build. You prove there is a problem to solve by going out and getting a customer.
Case Study 2: Materials Company
Problem: Current restaurant cleaning products fail to effectively remove fatty deposit and are environmentally harmful.
Solution: The company developed a plant-derived, all-natural, and food-grade surface-cleaner that is applicable to all restaurant cleaning situations based on technology licensed from The Ohio State University (OSU).
Challenge: The materials startup faced the dual challenge of product development and supply chain management. The company needed to develop an effective cleaner using ingredients that did not require regulatory oversight and removes fatty deposits. The supply chain solution needed to include manufacturing and distribution with contractual agreements that were startup-friendly.
Mitigation Strategy: The company worked with OSU to create a solution using an OSU-patented surfactant. They engineered a supply chain based on contracts that were consistent with a manageable volume. They segmented their serviceable obtainable market (SOM), with first phase targeting 40 Central Ohio locations for direct-to-restaurant sales and a second-phase national rollout.
Key Takeaway: The MVP removed lipids, demonstrated the value proposition and that the supply chain solution was in place. A future product roadmap includes expanded use and expanded markets.
Case Study 3: Life Sciences Company
Problem: In the ICU, nurses need to check patients with post-op monitoring on urine outflow. Currently, nurses do physical checks on a patient and record observations in the patient’s electronic health record.
Solution: Digital monitoring of urine outflow can provide real-time updates and can integrate with electronic health records. A physical device (form factor and functionality), which utilizes wireless technology and software applications, can monitor and communicate urine outflow data is required.
Challenge: Multiple stakeholders are involved in approving the solution. Nurses value the solution, but do doctors consider urine reporting a real problem? What are the economics of the solution? Who will pay? What FDA approvals are required? What about reimbursement codes?
Mitigation Strategy: Key stakeholders, nurses, were extensively surveyed to validate need and inform product design. The process can be repeated with other stakeholders, including buyers, payers, influencers, external entities (FDA, CMS, APA, more).
Key Takeaway: Who is the buyer? The minimum viable stakeholder surveys informed early product design resulting in modifications. Surveying multiple stakeholders (more than nurses) is an ongoing process. In this case, medical economics did not justify building the product. The market was too small.
MVP provides a framework for startup companies to maximize their learning potential from customers with the least amount of build. The objective is to mitigate risk by building an MVP that will help your startup learn and develop the features that are most valuable to customers.