A Minimal Viable Product (MVP), is a new product that can be rapidly developed in order to efficiently test the value proposition with real customers. The ultimate goal is to accelerate the innovation cycle towards creating the real home run. Eric Ries originally outlined this methodology in his book, “The Lean Startup”, and it has inspired the formation of countless software start-ups that can deliver that MVP with pizza-fueled coding marathons. But for companies looking to commercialize products based on advanced materials, there are typically a myriad of technical, commercial, and regulatory roadblocks that make executing on a MVP much more difficult and time consuming. But this concept is too valuable to be ignored by early stage advanced materials enabled companies.
Market Risk Trumps Technology Risk
After over a decade and half of witnessing the evolution of thousands of advanced materials start-ups, we can confidently say that market-related challenges prove to be the fatal flaw that leads the greatest number of company failures. Successful startups really understand the specific pain points in a particular market, the value chain, entry barriers, and competitive activity. Without this information, it is impossible to define the product attributes that effectively meet the unmet market need. The process of defining an MVP forces a start-up to really understand where the opportunity lies. This will help define the relevant commercial milestones that can truly act as inflection points in the eyes of investors, partners, media, etc.
Many advanced materials start-ups are quite happy to tinker in the lab until they achieve the goals that they originally set out for themselves. With all of the challenges of getting the product to market, it seems logical that a new technology should be as perfect as possible when it is finally launched. The problem is that “perfection” at the start of a project may be hopelessly off base five years down the road. Getting an MVP to market as quickly as possible will help ensure a company has a way to keep a pulse on the market trends and competitive threats.
The best way to reduce risk in the eyes of customers and partners is to cultivate a trusting relationship over time. Having an MVP can be a foot in the door. Even large companies can get excited about the journey ahead for an innovative start-up and with any luck you’ll tow some of these partners along for the ride.
Of course an advanced materials MVP is not as simple as a software app and so it is worthwhile to share a few execution tips that might seem obvious but are often overlooked:
1. Segment based on Unique Pain Points
Entrepreneurs and investors are lured by the promise of multi-billion-dollar markets. The reality is that these markets are usually impossible for a pre-revenue start-up to penetrate. But often there are unique segments within a large market that have critical requirements that are not served by available technologies. For example, our energy storage portfolio company, ESS Inc., found an initial customer that could not tolerate the potential safety and environmental hazards of existing battery chemistries. This requirement was so mission critical that they were willing to bet on an earlier stage technology. Early customers such as this provide the proving grounds required for the majority of customers in that multi-billion dollar market.
2. Get Creative on Business Models
An MVP may very well have a corresponding minimum viable business model. Several years ago I wrote a two-part blog on the merits of licensing business models with advanced materials start-ups. The benefit of this approach to get things going is obvious. There are many creative permutations of the licensing business model and other strategic partnerships also have their role. For example early on it may be necessary to give licensees some slice of exclusivity or other special rights. At the end of the day, the overarching goal should be aligning interests in order that the MVP penetrates its market as quickly as possible.
3. Target Fast Adopting Markets
Our portfolio company Switch Materials has developed an actively controlled glazing for windows, with the automotive market being the primary target. For many good reasons, this market is infamous for its lengthy testing and qualification process. Eager to develop a commercial product as quickly as possible, the company worked with players in the eyewear category to develop a smart goggle product. Obviously the design cycle period and product integration complexity for the smaller eyewear market is greatly reduced, yet many of the issues around formulation and manufacturing are exactly the same.
4. Match Your Product and Technology Roadmap
Developing a homerun product is often a lot of work and just takes time; therefore it can be wise to think about simpler products that fit along the path to the ultimate goal. CarbonCure Technologies introduced an MVP of its concrete strengthening technology to the masonry concrete block market several years ago. While the much larger ready-mix market dwarfs this market, the earlier introduction of the technology into a more controlled manufacturing process allowed the company to further refine the technology for ready-mix. When the company first piloted the ready-mix technology a little over a year ago, it was just a few short months before licensees were putting pen to paper. There is no way this launch could have been as successful without the masonry MVP.
It would be naïve to think that start-ups commercializing advanced materials based technologies could develop a product in a month or two. But for companies looking for the rapid growth trajectory favored by venture capital investors like Pangaea, a smart MVP strategy may very well turn out to be your Most Viable Path forward.