Why prototype matters to a first-time founder
A prototype is the cheapest way to find out that your design is wrong. Watching a customer stumble through a rough version costs hours; discovering the same problem after building and launching costs months and money. Prototypes also make conversations with customers, co-founders and developers concrete, because everyone reacts to the same thing instead of their own imagined version of the product.
Examples of prototype
You click through a fake screen of the chase email on your phone with a freelancer beside you. They tell you they would never send the third line. You change it before anyone can sign up. The prototype did its job. It was never going to take a payment.
Common misunderstanding
People treat a prototype as a launch, or as an MVP. An MVP is released to real customers to test the offer and demand. A prototype primarily tests how the proposed product could work. A functional prototype may do real work without being reliable enough for customers to depend on.
When to use it
Build one when you need to watch someone react to a flow, and you do not yet know if the flow is right. Stop polishing it once the reaction is clear. The next step is a version someone can rely on, or a decision to drop the idea.