MVP and POC – what is the difference?

In our previous article, we wrote about Startup Life Cycle. This time, we would like to target MVP and POC comparison, as well as some samples. By the way, Did you know that 95% of new products fail in the first year of launch?

There are many reasons why new products fail to resonate with customers. One of the key reasons is that the market was never there for the product in the first place.

So, how can you increase the odds of your new product succeeding? 

Through the use of minimum viable products (MVPs) and proof of concepts (POCs). These two options can help you see if there is customer demand for your product and how it will fare in the current marketplace.

If you’re not sure of where MVPs and POCs fit into the world of lean startup methodology, you’ve come to the right place!

What we will look at in this article

In this article about minimum viable products and proof of concepts, we will look at the following:

  • What is a proof of concept?
  • What should I consider when creating a proof of concept?
  • Why is a proof of concept so important?
  • Examples of businesses that have successfully used a proof of concept
  • What is a minimum viable product?
  • What should I consider when creating a minimum viable product?
  • Why is a minimum viable product so important?
  • Examples of businesses that have successfully used a minimum viable product
  • How proof of concept and minimum viable product can be used together for maximum effect. As well as the circumstances where you only have to use one of them

Let’s take a look at the two different concepts and how you can apply them to your lean startup methodology.

Minimum Viable Product and Proof of Concept. Idea

What does POC mean?

The theoretical idea

POC is short for ‘proof of concept’. It is also known as ‘Proof of Principle’.

The purpose of a proof of concept is to check that a product can be built or not or to see if an idea is technically feasible. A POC is especially important if your product is new to the market.

POCs are commonly used in the hardware, software, manufacturing, medical, and engineering industries – but they work across any industry that you can think of!

What should I look at when creating a POC?

You can spend as much or as little time on your POC as you need, In fact, many POCs can be completed in the space of a few days. 

You can create your POC on a Word document or PowerPoint presentation. Alternatively, there are lots of free templates available online.

Areas you can look at when creating your POC include:

  • Unique selling points (USP): Does your product, service, or app have a USP that will set you apart from your competitors? What other features will it have?
  • Goals and objectives: How will your product or app align with the organizational goals and objectives of your business? If you haven’t put a vision statement together yet, this will help you answer this question.
  • Customer research: Do your existing customers or target audiences like the idea of your product or app? Would they buy it? What pain points will your product or app solve for them?
  • Financing: Is your product or app financially sustainable? How much money do you need to get started? Will you need external investment?
  • Potential issues and risks: Are there any risks or errors that you need to be mindful of? If you’re not sure, a SWOT analysis is an excellent way of identifying your product’s strengths and weaknesses, as well as the current state of the market.
  • Next steps in the process: What will be your next steps if the POC shows your product or app is viable? In most circumstances, this will be the creation of an MVP, which we will discuss later on in the article.

You don’t need to do a lot of research or look at deliverables at this early stage of the process.

Why are POCs so important?

POCs are important in the following ways:

  • They help you identify potential risks. It’s much more convenient to spot any issues at this point before you spend time and money building your product. You can then decide whether you want to mitigate these risks or go back to the drawing board and start again.
  • They help you see if your idea is scalable or not. Will your product or app be able to grow in the future as your business does? A POC will give you helpful insight into this.
  • They help you appeal to investors. A POC gives you valuable information to show stakeholders that may be interested in investing in your project. Stakeholders will want to see the benefits of your product or app and how you will alleviate any potential risks.

Is a POC the same as a pilot?

Some startups ask us if a POC and Pilot are the same things. We’ve seen some customers use the terms interchangeably.

While a POC focuses on seeing if your product will be viable in the market, a pilot (often referred to as a prototype) is slightly different.

A pilot is to all intents and purposes, a rehearsal to see if your product, infrastructure, supply chain, and third parties will work well together. Software companies are using Pilots to check everything will rip smoothly before moving to the next step.

You may choose to carry out a pilot as well as a POC, depending on your circumstances.

More information about a pilot project and what it entails

Example of a POC

The American supermarket chain Walmart wanted to see if blockchain technology would help it to improve its logistic systems. To do this, the company created a proof of concept. 

Walmart carried out this POC by researching blockchain technology across two of its product lines. They did this behind the scenes, and customers didn’t know about the changes.

The POC was successful and ultimately rolled out across the whole company, helping Walmart save valuable time and resources.

More information about the Walmart blockchain project.

Proof of Concept and Minimum Viable Product. startup

What does Minimum Viable Product (MVP) mean?

The physical product

MVP stands for ‘minimum viable product’ – sometimes also referred to as a ‘minimal viable product’ or ‘minimally viable product’. 

An MVP is a basic version of your prospective product that you have put together for customers to use. You can use an MVP to see how your customers react to your product and generate feedback. 

This feedback can either be qualitative (direct feedback and comments from customers) or quantitative (statistics and data, for example, the number of paying users or churn rate). We’d recommend tracking both to get the best results.

The term ‘MVP’ was coined by the author of the ‘Lean Startup’ Eric Ries in 2009. However, the concept of MVPs has been going on for much longer than that, as we will see later. 

“The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.” – Eric Ries

What should I look at when creating an MVP?

While it is okay not to spend a lot of time on your POC, you will want to spend more time working on your MVP. After all, members of the public will see it and you don’t want to create a wrong first impression!

Your POC will help steer you when it comes to building your MVP. For example, if you have carried out market research at the POC stage, you can use this to build the functionality that your customers are most interested in. If you have scoped finances, you will know how much money you have to invest in creating your MVP.

The key things to bear in mind is that your MVP:

  • Is focused on one specific target audience
  • Has your targeting audience an issue you are focusing on to solve
  • Is well-designed and easy to use (just because it is basic doesn’t mean you can cut corners)
  • It is quick to build and launch

Just remember, keep your MVP simple. You can add functionality later on if you need to.

Why are MVPs so important?

MVPs are important in the following ways:

  • They help you determine viability. An MVP will let you see if your product is suitable for the market. If you decide not to go ahead with the full version of the product, you have not wasted your time and money
  • They help eliminate misconceptions about your product. Sometimes your startup team may think a certain thing about your product, but in reality, something else applies. For example, if you have a specific target market in mind when you launch, but the MVP appeals to a completely different demographic than you expected, you can make changes
  • They can help you get your first users. It can be a challenge to get your first customers on board, especially if you are promoting a paid product. An MVP can help you target a specific audience. Some of these customers may become loyal super-users down the line
  • They can prove market demand. An MVP will show how many people are interested in your product. This can be great feedback for stakeholders, as well as help you determine how to promote your product in the future
  • They can help you get funding. Like POC, you can use MVP to gather the information that will help you gain external funding from angel investors and venture capitalists
  • They can give you valuable feedback. As we mentioned above, you can collect valuable quantitative and qualitative feedback about your product. You can use this data to improve it and make it better over time

Examples of MVPs

A lot of apps and websites that you know and love today, like Spotify, Uber, Facebook, and Twitter… all started as MVPs!

Here are some examples of how our favorite apps, services, and websites got started on their MVP journeys.

Want to see even more examples of MVPs? Check out our article where we discuss tactics used by Yelp, Craigslist, Uber, eBay, and more! 

Minimum Viable Product vs Proof of Concept. Twitter startup

Twitter

At the turn of the 21st century, podcaster Odeo was looking for new ideas to help it survive. Apple had just launched iTunes, meaning that the company was concerned that it would soon go out of business.

Odeo’s development team came up with an SMS messaging service that they called twttr. They used the basic version to send messages internally, but the app was so popular that it was released for public use in 2006. The app then grew and evolved into the Twitter that we know and love today!

Facebook

When Facebook launched in 2004, everyone knows it as ‘thefacebook’ – an exclusive social media platform for students in different colleges and schools. You needed an official academic email address in order to sign up.

Feedback from users helped the platform grow and evolve over time, and the social media site as we know it was rolled out to the general public in 2006.

Airbnb

In 2007, friends Brian Chesky and Joe Gebbia wanted money to help them fund a new business. They decided to make money by creating a small website to help them rent out their apartment.

The feedback they received from customers helped them to create AirBedAndBreakfast, which eventually evolved into Airbnb.

More information about Airbnb’s MVP

Buffer

Social media scheduling platform Buffer started its MVP journey not with an app, but with a landing page.

CEO Joel Gascoigne created a small website explaining what Buffer was and set up a signup form where people could register for updates. Joel started conversations with interested people, asking them what they wanted to see from Buffer and getting helpful feedback that would shape the platform moving forward.

More information about Buffer’s MVP

 MVP and POC. Amazon startup

Amazon

Nowadays you can get everything on Amazon, but it initially started as an MVP, only selling one type of product.

Jeff Bezos wanted to create an eCommerce store but wasn’t sure which product to focus on. He carried out research and decided that books would be the most marketable product, given the considerable number of different types of books that could be sold.

He then launched Amazon as an online bookstore, acting as a middleman between the buyer and the book distributors. Over time, the business grew and grew, to the point where it is now one of the largest retailers in the whole world.

Kickstarter

Looking for lots of different examples of a minimum viable product? Take Kickstarter. Lots of entrepreneurs and startups use Kickstarter to see if there is interest in their product. 

How do entrepreneurs do this? By offering people the chance to purchase an MVP at a low price. They can then take people’s feedback and thoughts on the product and if positive, they can roll the product out to a larger audience!

Phoenix

You may not have heard of Phoenix. That’s okay, as it is an example of a business that could have used an MVP. 

Phoenix was created as a way that users could send a message to loved ones after they had died. Customers could set up a message and regularly check in to say that they were alive. If they didn’t check in after a certain period of time, then Phoenix would assume they had passed away. They would then send out the message on the customer’s behalf.

Unfortunately, the startup failed. Why was this the case? Phoenix had gone all-in on the website without creating an MVP. If they had, they would have found that there was no interest in the service. Younger people were not thinking about dying, and older people weren’t interested in the technology that was being used.

The ‘Startup cemetery’ on Failory has lots of information about startups that failed, and the reasons that they did, including the startups that had not done their research. It’s an interesting read if you have some time! 

Minimum Viable Product vs Proof of Concept. MVP vs POC. Chart

Should I use an MVP or POC for my startup?

We hope this article has given you clear insight into the definitions of MVPs and POCs and the differences between them. 

The next question you may ask is… which one should I use for my lean startup?

The answer is that you may very well use both MVPs and POCs when creating your product… just at different stages of the process!

POCs are intended for internal use to gather research within your own company, whilst MVPs are intended for external use to collect feedback from customers.

As a rule of thumb, you would create a POC first. Once you’ve determined that your product is viable, you can use this information to build your MVP. 

How do POC and MVP work together?

For example, let’s say that you want to launch a mobile app. Before wasting time and money creating an app that doesn’t work or that people aren’t interested in, you can implement a POC. 

In the POC, you can look at how the mobile app will work, the different features that will be available to the user, as well as the various configuration settings. You can then use this POC to see if your app is a viable idea.

If the app is viable, the next step is to create an MVP. In this case, an MVP will be a simple version of your app, using the information you collected when you created your POC.

Your MVP won’t have all the features and functionality yet, but this is okay.  You can launch your app to some of your customers and see what they think of it and how they use it. You can then adapt and improve it based on the positive and negative feedback they provide.

Even though your app is a simple and no-frills version, it should be robust and thoroughly checked for bugs and other errors. After all, you are still launching it to market – you may even be asking for payment for it.

Do I need to create both a MVP and POC?

We are often asked this question by our customers – are both a POC and an MVP really important? 

Our honest answer is yes, but you might be able to get away with just one depending on your circumstances.

There may be circumstances where you might jump straight to an MVP. For example, if you are confident that your product is a viable one, or if you are pushed for time and need to launch as quickly as possible.

Similarly, there may be circumstances where you just need a POC. If your idea is already on the market, then you could argue that an MVP is not required as you can just research what your competitors have already done to save time.

However, if your idea is an entirely new one, or you need to double and triple check the details before you commit, we’d recommend you use both a POC and MVP. 

Using both may take a little longer, but it increases the chances of your product succeeding.

In summary

According to Statista, there were a staggering 208 billion mobile app downloads in 2020 alone. This means that if you are looking to launch a new product, service, or mobile app, you will find that there is a lot of competition.

Taking the time to create a thorough POC as well as a high-quality MVP will take time, but they will help you generate the valuable feedback you need to take your lean startup to the next level. Check more about Lean Startup & MVP combination.


Still not sure what MVP and POC mean? We’re here to help

You Are Launched has been working with lean startups, accelerators, and venture capital companies since 2014. 

Specializing in lean startup methodology, we have the experience and expertise you need to help get your startup up and running. We can help you create your POC, MVP, and all the way through to getting funding from investors.

If you need a hand to help get your idea off the ground, get in touch with us today!

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