These MVPs Shot Airbnb & Amazon Into Startup Stardom
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| By Chris Graebe |
One of the biggest factors in growing a successful business is the speed at which a concept can be created, developed and validated as a product or service that attracts buyers and, eventually, investors.
Known as an MVP — the minimum viable product — is a bare bones version that helps a company get off the ground early on. It’s actually one of the best ways to learn whether customers are willing to pay for a product or service that solves a specific problem. You can also think of an MVP as the opposite of a final or finished product.
This is the point in a company’s life cycle where its founders combine a few key pieces of the big vision and determine if there’s a market to support it.
It should require a minimal amount of effort to define the product, test its appeal and start gaining traction.
As an investor, a company that hasn’t already completed an MVP is far too early in its development to look for funding. And it’s a deal breaker for me if the founders don’t think an MVP is an important part of the process. Because it is.
I not only want a company to have their MVP ready for me to review, but I also want to see and hear all about the product’s evolution from day one. I need to see progress before I hand over a single penny.
Funding a startup that hasn’t done its due diligence in the validation process is a waste of money and time for all parties — so is an investor not performing due diligence on a private equity firm.
That’s why when I recommend a startup to my Deal Hunter’s Alliance subscribers, they can be confident that I’ve asked every tough question, and left no stones unturned in my search for potential wealth builders.
Ensure a Successful
Start with an MVP
It stands to reason that some of the best concepts-turned-wildly-successful-companies began as MVPs. So, let’s dive into a few current examples.
A great one I’m sure you’re familiar with is Airbnb (ABNB), which started in 2007. Its founders, Brian Chesky and Joe Gebbia, were struggling to pay the rent of their home in San Francisco. As a solution, they thought of renting the top floor of their apartment to visitors.
The two placed an ad about renting an air bed on a basic web page. They included photos of their home on the page and soon enough, they had three guests. That’s all they needed for Airbnb to take off.
Once Chesky and Gebbia got proper validation on their MVP, they promptly redesigned the Airbnb platform … and the rest is history. What began as a peer-to-peer rental concept is now more commonly and popularly known as short-term rentals.
Today, Airbnb offers accommodations and provides its users with a list of restaurants and events in their destination cities, along with feedback and ratings. From MVP to startup to publicly traded stock, Airbnb is now valued at $92 billion with 7.7 million listings, up 16% from 2022.
Another example is Foursquare, a location-based social network that started as a single-feature MVP in 2009.
Back then, it allowed users to check in from different locations, share with their friends and family and in return, they earned rewards. There was no special functionality or sophisticated design, but gamification made people excited about using the service.
This made the product increasingly popular and as you know, Foursquare is now a comprehensive city guide that’s used by 50 million users worldwide to search for hotels, restaurants, entertainment venues and more.
The MVP of the MVP
Finally, Amazon.com (AMZN) is one of the most successful examples of an MVP that made it big.
Depending on your age, you might not know that Amazon once started as an online bookstore in the early 1990s. At that time, people did not trust the internet and having an online store of “everything” was just not possible.
However, with visions of building a massive empire, Founder Jeff Bezos read a report stating the annual growth of web commerce in the immediate future would be 2,300% higher. So, he started by creating a minimum viable product.
The first phase of development included streamlining the top 20 products that could be most effectively marketed on the internet. He then narrowed the list to five.
Bezos eventually chose books as the most marketable online product. He started by buying books from distributors and selling them at a lower price through a simple website.
While most entrepreneurs would have invested in a fully functioning store, Bezos wisely chose the frugal route and tested his idea through a simple website, aka MVP.
It worked phenomenally, and over the next two decades, Bezos expanded the number of products, customized the Amazon website and added warehouses. The nearly $2 trillion company has surpassed many eCommerce giants for the title of world’s largest retailer (outside China).
Finally, Bezos added a cloud provider business called AWS (Amazon Web Services), used by many of the biggest names in technology. Analysts estimate that AWS is on its way to becoming a $3 trillion unit on its own.
Imagine investing in Airbnb, Foursquare or Amazon in the very, very early stages of development. Well, you can stop imagining.
My portfolio holds more than 20 of the most promising and profitable startups in the universe, and I make members of Deal Hunters Alliance privy to many of them. And I assure you, they all began as MVPs.
That’s all for now, my friend!
Happy hunting,
Chris Graebe
P.S. Speaking of MVPs, you don’t want to miss this presentation of a breakthrough technology that was able to beat the S&P 500 by a factor of 51-to-1. Click here to watch now!
