How to build a MVP

The last two weeks I was asked by 2 different clients, one partner and 2 new references to build a MVP for them. Out of these talks I post some recommendations on how to build a MVP.

The definition of a MVP: MVP stands for Minimum Viable Product. The focus here is that it should have a minimum set of functionalities, it should work and look like a product.

The problem is, that the need of a MVP arises out of a vision, a constantly evolving product with a huge set of functionalities.

The risk is that a MVP is over engineered before market launch, because you fear not to have a solid product on release. The disappointment factor in finding out that the over engineered MVP is not accepted by the test market correlates with the time spent on developing the MVP.

How to avoid disappointment:

A MVP should include these three things:

1. Define the scope of the MVP in 1 sentence. Example: «Our product solves feed integrations for real estate agencies». This definition describes the technological scope of the MVP: You need to integrate feeds, you need to target real estate agencies.

2. The MVP should focus on the transaction. You need to earn revenue with the tool and probably the most important KPI to understand market acceptance is the generated revenue.

3. Detach emotions form the MVP. The biggest problem is that you have a vision and want a perfect product. It´s in your head and needs to get out because you know that the market will love your product. Your emotions want the Ferrari ready in 2 days, while you should be focusing on getting the skateboard online. Here a often used image that explains the emotional issue:

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Some KPIs on MVPs:

1. Limit team size to max. 2 developers. Lock them away and have them focus on the MVP.

2. get the thing online in max 4 weeks

3. don´t spend more than 10.000 € on a MVP. If you don´t know how much you are spending, try to track your time and budgets.

4. if its a SaaS driven cloud solution, you should get 10% of the marketing invest back as recurring revenue after month 1 (example: if you invest 5000 € in marketing and do not get 500€ in recurring revenue back, the product will not take off.)

5. if its an E-commerce solution, you should have generated at least pro-rated orders of max 15 € CPO (Spanish Market) of the marketing budget (example: if you invest 5000 € in marketing, then 5000/15= 333 orders for a product portfolio of products with an average basket below 100 €. CPO will drop over time, so even if you are not making money right off the batch with a 15% invest in marketing, the indicator of the MVP is that you have a viable product.

6. do not kid yourself. We are back again at the emotional attachment: figures do not feel and they always tell the truth, if the product is not viable stop it.

Keeping it alive: if the MVP does not meet the test KPIs and is therefore not viable, it does not mean that it is dead. If it did generate revenues during the test phase, you might want to keep it alive, especially if it is a SaaS driven solution. It could mean that you are an early bird with your idea. You can keep it running for a minimal cost. One of our MVPs we built a few years back did not meet the KPI set we defined for it, but we kept it alive re-investing only the revenue it produced. The product did not convert into a hockey-stick hottie, but does provide solid revenues that were built up with patience and time.

Written by

Luis Krug

E-Commerce & Start-Up Expert with over 16 years of experience.