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Minimum Viable Product (MVP) and Riskiest Assumption Test (RAT): Definition and Examples

Before entering the subject, it is important to clarify that the MVP and the RAT are not rival terms, but are complementary.

What do MVP and RAT mean?

They both are used to understand the viability of a business model or a product. However, the RAT allows testing at an earlier stage.

The MVP normally begins by developing a marketable product with the minimum possible characteristics (normally very well implemented). RAT, on the other hand, has its beginning in the idea. It finds out whether the consumers will be interested before developing the product, testing the riskiest hypothesis of the business.

 

MVP, or Minimum Viable Product

The main purpose of the MVP is to obtain knowledge about the consumer. Everybody agrees on this. However, some believe that the MVP is any experiment that gathers consumer information: likes, landing pages, posts, etc. Here the A/B tests are framed, which we will see below.

To contrast, there is the part of the community who believe that an MVP must have the minimum functionalities while still being able to implement a profitable business model. If we dissect his name, can achieve a further understanding of this concept:

– Minimum: The smallest number of functionalities that will satisfy the main needs of a target client.

– Product: tangible or intangible elements that work well, and can be sold.

– Viable: Implements a business model that can be sold and generates profits.

From the point of view of developing companies, the objective is to create a product with an intuitive interface and functionality that can be used immediately without help or manuals.

In DIGITAL55 we talked about the MVP in another post. We offered advice on how to create it, mistakes to avoid, and practical cases.

"The minimum viable product is that version of a new product a team uses to collect the maximum amount of validated learning about customers with the least effort." Eric Ries.

RAT or Riskiest Assumption Test

RAT is a relatively new concept, emerging in September 2016 in the article “The MVP is dead. Long live the RAT.” As we said, its purpose is to find out if consumers will be interested in what is offered.

This concept explains that to launch a product to the market we must identify our riskiest hypothesis and test it beforehand. In this way, one knows the model’s viability without have developed it.

The RAT can be very important for startups. It lets them test their hypothesis so that they know whether or not there exists demand for their product. In terms of testing these hypotheses, we will start with the MVP’s applications.

MVP examples

Instagram and Twitter

These networks’ MVPs started with a single perfectly developed functionality. Instagram allowed its users to apply filters to photographs before uploading them. Twitter offered the possibility to write small texts of 140 characters, now extended to 280. By not allowing extensive publications, users contracted their messages as thoughts, opinions or experiences. This allowed them to read many tweets throughout the day.

Tests A/B and the Doritos case

A few years ago, Doritos launched a campaign asking consumers to vote for one flavor or another. This vote was relatively important since the flavor that lost would disappear. This case is an example of the A / B tests, where companies launch two products and consumers must choose between both options. This allows companies to gather valuable information about users with minimal effort.

RAT examples

Zappos

Zappos’ founder, Tony Hsieh, had the concept of an online store to sell shoes. However, he didn’t know if users would be interested in paying for footwear that had not yet been tested. So he took pictures of the shoes of nearby stores and uploaded them to a virtual store that he had created. Every time a user bought through the store, he went to the shoe store to buy and send them.

Airbnb

In 2007 a startup raised the possibility of converting your living room into a room for guests with breakfast included. The problem was that they did not know if this idea would be interesting, or if users would contemplate sharing their house with a stranger. They created a site called airbedandbreakfast.com to test their RAT. In this way, they checked their hypothesis. It came out positive, giving birth to what we know today as Airbnb.

Mixed examples

Dropbox

Dropbox used its Riskiest Assumption Test without a line of code. The cloud storage platform began with a video presentation, and 75,000 users registered. The riskiest hypothesis had been tested and the result was positive. From there, they made an MVP and slowly opened it to the users to avoid failures and receive positive feedbacks.

Kickstarter and Indiegogo

These crowdfunding platforms allow their users to lay out their RATs to other users. If the idea or the product is interesting to members of the community, they can become “sponsors” by investing a certain amount of money in the project. If the minimum money is raised for the idea to continue, the MVP begins. It is sent to the users who invested in the project.