In 2011, Eric Ries popularised the concept of a Minimum Viable Product (MVP) as part of the Lean Startup methodology. An MVP can be defined as a product with just enough features to attract early adopters and gather feedback for improvement. According to Ries, building an MVP helps startups only invest heavily in a fully developed product after first confirming whether it addresses a real market need.
To what extent can this approach be transposed to digital platforms? To address this question, we follow the analysis presented in our book and proceed in two steps. In a previous article, we showed that we cannot simply substitute ‘platform’ for ‘product’ in the MVP acronym. In this article, we question how minimum a platform should be to be viable and whether the minimum viable platform shouldn’t be a pipeline to start with.
From “Minimum” to “Maximin”
In the previous article, we argued that a platform needs to deliver enough value to its users to be viable, which it can only do if it attracts enough of them. In more technical terms, the platform must reach a critical mass of users. The critical mass can be defined as the minimum number of users required for the platform to become self-sustaining and leverage network effects. At this point, the platform’s value increases significantly for existing users, which makes it easier to attract new users in a positive feedback loop. Achieving critical mass is essential for the platform’s long-term viability, as it ensures enough activity, content, and interaction to make the platform valuable and engaging for its users.
The necessity to reach a critical mass of users also questions a platform’s ability to follow the lean startup methodology. Unlike products, platforms may find it hard to improve gradually based on users’ feedback. Making iterative development is challenging when value only materialises through user interactions.
Yet, from an efficiency perspective, it is also wise to start with a minimum set of features and, if proximity between users matters, in a limited location. Indeed, a nascent platform should not waste precious resources by trying to solve every user’s need at once. The term ‘minimum’ has, thus, two distinct meanings in the case of platforms. On the one hand, there is a minimum to be reached (the critical mass of users); on the other, there is a minimum not to be exceeded (the set of functions strictly necessary to facilitate the platform’s core interactions).
The ‘maximin’ concept (borrowed from mathematics) can help us reconcile these two diverging dimensions. The maximin is defined as the highest of a set of minimum values. Applied to our problem, the idea is to choose among different minimum combinations of features (or geographies) the one that should appeal to the largest possible audience. Doing so increases the chances of attracting a critical mass of users (the minimum to be reached) while saving on resources (the minimum not to be exceeded).
From “Platform” to “Platform or Pipeline?”
Since platforms co-create value with their users, persuading users to join is essential for value creation. However, this is easier said than done because users will only join if they believe others will also join. This dilemma is commonly referred to as the ‘chicken-and-egg’ problem. In contrast, traditional organisations—often called ‘pipelines’—do not face this issue because they generate value by relying on their own resources and assets.
When network effects are strong (that is, when users must be able to interact with many other users to meet their needs), the chicken-and-egg problem can be so challenging that the most effective way to launch a platform might be to avoid being a platform initially. Starting the venture as a pipeline might be the only way to attract one group of users, which can then be leveraged later to attract another group and, thereby, turn the initial pipeline into a platform. The objective of this strategy is straightforward: attract the first users by directly providing the services or goods they desire and, thereby, reassure them that what they seek is available without needing to worry if others will join the platform. Essentially, the chicken-and-egg problem vanishes because there is no uncertainty about which comes first: the chicken (or the egg) is already present!
Some prominent platforms have taken this approach. For instance, early gaming consoles came with their own games. Apple similarly led the initial personal computer market through an integrated strategy. Amazon is an even more striking example, beginning as a straightforward reseller before harnessing same-side network effects on the buyer side through rating, review, and recommendation systems, and eventually exploiting cross-side network effects by allowing third-party sellers to utilise its marketplace infrastructure.
Takeaways
The Lean Startup methodology and the MVP concept have been designed to help launch new products. However, several caveats must be considered when transposing both to new platforms.
- While consuming a product is an individual decision, interacting on a platform is, by nature, a collective process. As a result, it is hard to design a platform iteratively and validate learning through a build-measure-learn loop. If the platform's first version fails to attract users, there will be no second chance. In the presence of network effects, it’s all or nothing, not a matter of degree.
- A ‘Minimum Viable Platform’ must be ‘minimum’ in two diverging ways: to be viable, the platform should attract a minimum number of users, and to be cost-effective, it should not exceed a minimum set of necessary features. These two imperatives can be combined by adopting a ‘maximin’ approach, which amounts to choosing among different minimal sets of features (or geographies) the one that is likely to maximise the potential audience.
- It might be that the ‘Minimum Viable Platform’ isn’t a platform at all, but rather a pipeline. Providing services or goods directly to a specific group of users could be the sole solution to overcoming the chicken-and-egg problem. Subsequently, this initial pipeline could expand to accommodate another group of users, evolving into a fully-fledged platform.
(During the preparation of this post, the author used genAI tools to collect ideas and improve the expression. After using this service, the author reviewed and edited the content as needed and takes full responsibility for the content of the publication.)
