MVP stands for Minimum Viable Product. Some may call it a v0, a prototype, a demo, yet the term MVP is my favorite: each letter is meaningful.
Let's work our way backwards.
Some wise man once said "If your business costs you money, it's not a business, it's a hobby".
You're here for profit. So is your MVP.
A successful MVP is, before all, a product: it belongs in a market, is sellable, and preferably buyable. Some founders start with a free tool, hoping they will be able to monetize it later.
It happens this doesn't work –most of the time–.
Basically, the people looking for a free tool aren't the same as the people eager to pay for it. They are 2 different persona.
You may think: "ok, but many successful startups out there offer free plans" (or may even be entirely free of use). This is true, but they can afford to do so because they are VC-backed. Investors throw in huge amounts of money to grow the user base until they eventually find a way to get profitable (sometimes they never do).
It's a trap!
Back to our persona. You have to define your ICP - Ideal Customer Profile, ie. "who's willing to pay for this product"? This is not called Ideal User Profile, so emphasis on the customer.
For example, I have a personal preference for B2B SaaS because generally speaking, companies are more incline to spend money than individuals if you can offer a good ROI (eg. save time, save money, make more money).
Obviously, "a company" is not good enough. You have to refine, to niche down.
Are your selling to huge multinational corporations or to local businesses? IT firms or real estate? Also, who's buying? The CEO himself, the sales manager? Who are they, a 50-yo white male from Minnesota who goes to the country club every weekend or a young lady from Bogotá with a passion for experimental music?
If you haven't thought about your customers' persona, chances are you do not have a product, only an idea.
Once you know who's your potential customer, try and put yourself in their shoes. The product should be viable for both of you:
This leads to the concept of USP: Unique Selling Proposition. Finding your USP is answering this question: why should a customer use your product? In order to answer this, you should think about two things:
If you are able to answer this last question, you will find your USP, and chances are you got yourself a viable product.
Once you know your customer and how he will benefit from your product, you have to scope your MVP. It's needless to try and build a full-featured product. Remember, you don't even have customers yet. The purpose of the MVP is to test your startup idea in order to assess product-market fit (PMF).
For example, for the first SaaS I built (a Pipedrive CRM × Outlook connector), the MVP was "missing" a lot of features:
However, I was able to sell the product, because I had identified a pain point for my customers: dozens of people were complaining about the lack of proper integration between the CRM and Outlook. Once I had some users, I gathered feedback and implemented the missing features to improve the product.
The term "minimal" refers to the SaaS, reduced to the crux of the matter: the one thing that makes your USP, that solves the pain point of your client.
Minimal also applies to the design and UI of your product: if it's useful, people don't care if it's ugly. Vice versa, if it's fancy but useless, nobody will use it. Same thing goes for the inner mechanics of your product: your MVP probably doesn't need to be fully automated. I've seen successful SaaS started as a Google Sheet (note: no, Excel is not a database). Sometimes an MVP is just a front-end for a Mechanical Turk: as a user you sign up and pay, then the founder manually does the job and then sends you back the output when it's done.
At the beginning of times, (the) Facebook had no groups, no chat, no marketplace, no "Meta Business Center". It was just "the wall". You could sign up, connect with people and post updates about your life. That's it. Oh, only if you were a student at Harvard!
Bonus points for ugliness.