June 21, 2021

Why Is An MVP Important?

In 2011, first-time Bulgarian entrepreneur Ivaylo Kalburdzhiev had what he thought was a great idea: racing wheels for iPads. He figured this product simply couldn’t fail and launched a startup named Kolos, got loans from his bank, and built his product in isolation. Three years, $50K, and no customers later, he was forced to admit the truth. Nobody wanted his product.

He outlined his trajectory in a guest post on Tech.eu: “Before I ever spent a penny on anything, I should have first put together a similar minimum viable product (MVP) and went to talk to people at an Apple Store for feedback. It would have saved me a lot of agony if I had realized early on that there weren’t any real problems to be solved.”

This observation from a McKinsey report about risk could be describing Kolos or any number of products that failed because they didn’t launch an MVP: “We’ve observed that when new-business launches fail, it’s not usually because of problems with technical feasibility. Rather, failure typically stems from flawed assumptions about the new product or service’s desirability to customers. ” (emphasis added)

This article is going to dig into the importance of an MVP and why you should invest in one before building a full-featured product.

Why Should Businesses Invest in an MVP?

Validate Your Assumptions

Failure to validate assumptions can sink just about any product, not just niche products like iPad racing wheels. The numbers bear this out. In a sweeping study of more than 100 failed startups, tech research and analytics platform CB Insights found that the number one reason for startup failure was “no market need.” Nearly half (42%) of the startups they surveyed spent months or years building their product before they found out that they were wrong in their most crucial assumption: that anyone was interested in the first place.

Recall that product market fit is about creating products to solve a real problem people would pay to have solved. Once you’ve done your market research and narrowed your potential target market, until you get something out there in the real world and into the hands of real customers, it’s all just theoretical—no matter how certain you are about your hypotheses. And the best way to test a market need and validate your riskiest assumptions about what features people will crave? You guessed it: the MVP.

Groupon is a great example of how you can use an MVP to test an idea. The service began as a simple WordPress site, and the first offer was a coupon to a local Chicago pizza joint. The system was hardly high tech. Back then, users received coupons via emails, and those had to be sent manually. But the bare-bones aspect of the service didn’t deter users—they liked the content and type of deals they could access. Once Groupon saw that their MVP was attracting more and more subscribers, they were able to scale up with features, functions, and the type of targeted content that people wanted. If they had gone all in from the start rather than basing their growth on demonstrated market fit, it’s highly unlikely they would have nailed the formula.

The television, and more recently the streaming, industries have always known about the power of the MVP; only in that world, they’re known as pilots. These (usually unaired) episodes serve as tests of interest with audiences and studios; essentially, they’re gauging product market fit. Most of your favorite shows probably began life very differently from the versions that made it to your home. In cult favorite Buffy the Vampire Slayer, for example, the eponymous character’s signature blonde locks are replaced by brunette ones, and the iconic Willow character is played by a different actress than the one who became synonymous with the role. Just like with a product MVP, producers had a chance to iterate and improve on the series based on feedback and data before investing in an entire season. In some cases, of course, pilot MVPs get scrapped altogether—just like products that turn out to have no market.

Another advantage to an MVP is the opportunity it affords for validation based on observation over instinct. Gut feelings are fine when it comes to what menu item to choose or what to wear on your first date. But when applied to time- and labor-intensive products? Not so much. Data-driven decisions, informed by behavioral analytics, are always better than feelings. A McKinsey report on de-risking corporate launches elaborates on the importance of observation:

Experience has shown that a better alternative [to going with your gut] is to develop a workable minimum viable product (MVP) and use social media to observe—not ask—how customers respond to pain points, value propositions, and calls to action. Asking customers what they want seldom leads to breakthrough innovations. Who knew they wanted an iPhone until Apple launched it?

And if your assumptions happen to be wrong, an MVP provides the chance to pivot based on facts, not supposition, just one of the many tangible benefits of practicing Agile software development. The MVP embodies a core tenet of the methodology: minimizing time to market while improving and maturing the product based on real-world data with each iteration.

And, as Scott Varho, SVP of product development at 3Pillar Global, notes that an MVP can offer valuable, actionable insights when something goes wrong: “With a big-bang release, if it flops, you won’t have any idea why. This is when organizations start finger pointing and every executive starts an ‘I told you so.’ You won’t know if you built the wrong product (users/buyers didn’t see enough value in it), the right product with the wrong features, or just built a confusing experience that users couldn’t reach the value the product already has. It could be something really big or really small, and you won’t have the inputs to determine it.”

One big lesson here? If you want to know whether or not your product idea addresses an actual problem that people would pay to have solved, skipping the MVP stage is a really bad idea.

In all reality, it’s difficult to overstate the strategic importance of an MVP for your business. And in an ever-more-crowded marketplace, it’s more imperative than ever not to skip this step.

Save Time & Money

Nobody wants their great idea—or business—to fail because they ran out of money. Yet, it happens all the time. In fact, a 2017 Go-Globe study found that “74% of high growth internet startups fail due to premature scaling and 29% of startups run out of cash before they’re able to get fully established.” An MVP can help mitigate (or even eliminate) that risk. For one thing, as Forbes points out, development pivots are a fact of life, so developing an MVP early on with core features will save a lot of money in the long run.

And nothing is more of a time waster than creating and adding features that no one wants. An MVP ensures that you iterate based on real-world demand, rather than hypotheticals. According to Jeff Powers, Solutions engineer at 3Pillar, “From both a defensive and offensive position, [MVPs enable] committing to developing the features in user demand versus what is written on a conference room whiteboard.”

Sometimes, as well as saving money, an MVP can generate additional revenue, and what’s not to love about that? Javier Trevino, Director of Technical Services, observes, “An MVP can quickly become a valuable standalone product that can generate additional revenue while serving very specific and critical functionality to end users, guaranteeing that they stay as end users and not go to use another similar platform that does have the functionality they require.”

Attract Early Investors

Lack of funding can derail even the best ideas, as a recent Fundera report found. “A total of 27% of businesses surveyed by the NSBA claimed that they weren’t able to receive the business funding they needed.” A great MVP—accompanied by hard data—can help ensure you aren’t in that group of un- or under-funded projects by demonstrating a proven track record of success.

Let’s face it: Investors generally field scores of funding requests from hopeful startups and wannabe Next Big Things. What better way to attract their attention than with an actual product, in the form of an MVP? An MVP gives investors the chance to actually see that your idea is viable and has market fit, which goes a long way towards boosting their confidence that you’re a good bet.


In an ever-changing market, minimizing risk and quickly learning and iterating isn’t just a good strategy—it’s essential for survival. After all, as Scott Varho opines, “If the alternative is to build a ‘fully baked’ product, then MVP significantly de-risks the investment. What is the good in being Agile—as a business, not a process—if you aren’t going to seek and act on new information?

An MVP can help you validate that your product has a place in the market and users will pay. It can attract early investors and save you time and money. Who wouldn’t want to invest in those benefits? As prolific startup accelerator Y Combinator puts it, “In a trial-and-error world, the one who can find errors the fastest wins.” An MVP can help you do just that and more.

To learn more about 3Pillar’s services and how we can help you create a minimum viable product in order to test and validate your assumptions with real customers, contact an expert today.

Special thanks to these members of FORCE, 3Pillar’s expert network, for their contributions to this article.

FORCE is 3Pillar Global’s Thought Leadership Team comprised of technologists and industry experts offering their knowledge on important trends and topics in digital product development.