Minimize your risks and go for Minimum Viable Testing (MVT) instead of building an MVP

Ever since the Lean Startup book was published in 2011, most Startup founders have been following the advice to conduct customer research and swiftly launch a minimum viable product (MVP).

While this approach can certainly work, it still poses significant risks:

You don't do enough testing: Very often I see that teams are not rigorous enough in their customer research and testing phase. Instead of precisely testing their critical hypothesis, they consider early positive signals as validation. Biased towards a certain solution, they are often not rational and unattached enough to find an approach that actually works at its core.

You overestimate the scope of your vision: If you are building a new product, it is tempting to get lost in the visionary potential of your products. While this mindset is valuable, it must be accompanied by a clear understanding of how the business can work bottom-up. Successful products are not defined by a multitude of features, but a singular and essential one.

You prioritize company-building over finding product/market fit: Establishing the foundation of a company should take a backseat to delivering value and establishing PMF. Whenever possible, avoid attaching yourself to unnecessary tasks until you have a clear understanding of how you will create value and for whom.

Instead of immediately building and testing the product in the market, Minimum Viable Tests (MVTs) enable you to assess the validity of your assumptions very precisely.

What is a minimum viable test?

Minimum Viable Testing (MVT) is a process for validating a fundamental hypothesis that is critical for a company's success. It involves conducting tests focused solely on specific hypotheses related to the market. One advantage is that it allows you to build a company even without technical expertise. By consistently testing ideas before involving a technical co-founder, you can demonstrate demand for your product using concrete evidence, which is more appealing to potential technical team members. Engineers appreciate data and evidence rather than unrealistic concepts. Needless to say, investors will also be much more impressed if you have clear numbers backing up your core hypothesis prior to funding.

Here is how you implement an MVT

Step 1: Identify your value proposition.

Define the promise of your idea and why users would be interested in it. Focus on users' actions, as they often reveal their desires and needs.

Find a value proposition that aligns with their actions and avoids complex ideas. Successful companies like Stripe, Airbnb, Dropbox, and Uber had remarkably simple value propositions, even if their solutions were complex. Aim for a value proposition that is a no-brainer.

Step 2: List your risky assumptions.

Identify the main risks that could hinder the success of your idea or break your system. The riskiest assumption is that people want what you're building. Many founders fail to list "people want this" as one of their top assumptions.

Execution risk is another concern; great ideas often fail when they don't work in reality.

Marketing is also a common challenge. Determine if you have enough knowledge about your market to know how to sell your product and who will buy it.

Assess the market size and consider profit margins.

Identify the risks associated with pricing your solution relative to its delivery cost.

Step 3: Test the atomic unit.

Focus solely on what you plan to sell. For Google, it's a search query, and for Amazon, it's the process of ordering a book online.

Select one risky assumption at a time and test it individually.

Design tests for each assumption. For execution-related assumptions, test the most primal way of delivering the goods. If the riskiest hypothesis is whether people will want your product, make them pay for it with their time or money.

Avoid building everything during the test; instead, focus on testing the hypothesis itself. Choose a clear and specific atomic unit that represents your product. Consumers rarely buy into a company's overall value proposition; they purchase specific items.

Examples in action

Let's explore some real-life examples.

Example 1:

Value proposition:

A company that aims to enhance the quality of online education by offering a platform for cohort-based courses.

Risky assumptions:

The main risk is that people may not be willing to pay a higher price for a cohort-based course compared to an asynchronous course.

Atomic unit test:

The atomic unit being tested is a cohort-based course. In this case, the primary risk is profitability. Cohort-based courses are more expensive to produce, so the MVT aims to determine if consumers are willing to pay a significantly higher price for this format.

It aims to gather nuanced results that can influence future go-to-market decisions. It may uncover insights such as specific customer preferences.

The solution:

A single course is run in a subject area they are familiar with. They partner with an established figure, leveraging their existing business and avoiding the need to build a marketing machine from scratch.

Example 2:

Value proposition:

A company aims to revolutionize food delivery by providing fast and healthy meals.

Risky assumptions:

The main risk is that the operational aspects of food delivery will become unmanageable.

Atomic unit test:

The atomic unit being tested is a delivered meal. The goal is to assess the feasibility of delivering meals to customers quickly without establishing a restaurant.

The solution:

A private chef is used for the test. They ask friends to order via Eventbrite. The dispatch is managed using a map, with drivers recruited from friends. In just two weeks, a restaurant-like service is set up.

The goal is solely to demonstrate that food delivery operations can be handled using a distributed fleet of cars.

What comes next?

Once your MVT gives you clear, quantifiable, and positive signals on the most relevant risky assumptions, you can go ahead and build an MVP. The core idea is that you spend as much time as needed to get to this point and don’t jump too early to build your MVP. This way you de-risk the failure rate of your Startup significantly and save on cash.