As a new founder, your vocabulary should include these essential terms.
The real MVP
MVP stands for minimum viable product. An MVP is a simple, functional version of your idea that can be tested in the marketplace swiftly. It is often essential to establish an MVP prior to industry collaboration so that partners can see your technology at work.
It’s important that an MVP prototype be relatively easy to make or duplicate, because you will be testing it again and again until it works. Prospective industry partners are often eager to hear about the status of prototypes and the success they have had.
Before you settle on a terrific prototype, remember to make sure that your focus is on the end user. Don’t be afraid to be specific! Unlike your business plan, which will no doubt cover multiple outcomes, an MVP can be clearly defined to test the needs of one audience. Be efficient and specific to a single hypothesis to figure out if that hypothesis is viable.
TAM, SAM, and SOM
It’s important to know what your addressable market is. While the MVP should be targeted towards one audience, the research you do about any potential consumers will have to be both detailed and broad. This might sound like conflicting advice until your understand the three levels of an addressable market: TAM, SAM, and SOM.
First, any new company needs to consider their TAM, or Total Available (sometimes also called Addressable) Market. This contains everyone you would like to reach with your product or idea.
Following close behind is your SAM, the Segmented Addressable Market or Served Available Market. This is the subset of your TAM you will target first, most likely using the great new MVP you just created.
SOM, your Share of the Market, is the realistic portion of your SAM that you can reach, usually in the second or third year of business. While not all industry collaboration takes place on this timeline, many partnerships can last multiple years, and your SOM forecast can help inspire a potential partner.
Growth-minded startups can meet new industry partners on seedsprint. Learn more: