Lately, you can’t swing a dead cat at a gathering of Internet entrepreneurs without hitting someone in mid-sentence talking about their “minimum viable product.” The problem is that half the time, I don’t hear them talking about minimum viable products. I hear them talking about “minimum products.” It’s the intersection that is important. Maybe the following graphic will help explain the concept:
As a startup, attacking the minimum problem speaks to capital efficiency; but it still needs to be viable. And viable changes a lot depending on your market. For example, “viable” for a game is much different than what would be considered viable for a Twitter client or a contact manager or a Rails plugin module. Game customers are a a (rightfully) demanding bunch who expect stuff to be fun; thus, fun becomes the benchmark for viableness–whereas coders might love the idea behind a Rails module, and even be willing to contribute to make it better.
The goal of a startup is to find the sweet-spot where minimum product and viable product meet–get people to fall in love with you. Over time, you listen to your customers, make improvements and raise the bar on what viable means–making it more expensive for competitors to jump in.