Newsletter #24: How to launch a product?
11 minutes reading time. Thoughts on startups, growth, and technology 🚀
Last week I stumbled on the following tweet by Andy Johns (background as product and growth at Facebook, Twitter, Quora, and Wealthfront):
In the following Tweetstorm, he argued something that at first glance sounds counterintuitive but the more I think about it, the more it makes sense:
"When entering an existing market you must think through two key questions: (1) Who is the precise customer I am attempting to serve? (2) What can I offer them that is 10x better relative to the alternatives?"
Most early-stage startups are inclined to target pretty much everyone, expecting that their product will satisfy the needs of a broad range of customer profiles.
I have seen many startups in the B2B space, located in Southeast Asia, going after small and medium businesses (SMBs). While that gives you a vast pool of potential customers, it's as vague as it can get. When deciding what would be the ideal customer profile and persona, founders need to dive deep into topics like age group, gender, industry, job title, revenue, stage of funding, team size, geography, and whatever else makes sense for their business. The better understanding you have of those criteria, the easier it is to find your ideal customers early on.
In my previous blog post, I used the example of Wealthfront, and I would like to bring it back as I find their niche targeting remarkable:
"At Wealthfront our initial target customer was an engineer at a pre-IPO tech company, typically between 25 - 35 years old, less than $1M net worth, and had a personal preference to delegate money management to a trusted 3rd party..." [Andy Johns]
If your background is in business, most probably you have studied the Diffusion of Innovation Theory (DOI) developed by E.M. Rogers in 1962.
For the rest of you, consider the following, Rogers developed the theory to explain how, over time, your concept/product gains momentum and spreads through particular segments of the population. Different segments have varying degrees of adoption; some people are simply more apt to adopt innovation than others. The chart below illustrates how, as a product matures, it becomes embraced by a broader segment of the population.
As per the model, there are five suggested adopter categories. Most new products would start by getting the innovators on board, followed by early adopters, early majority, late majority, and all the way to laggards.
Depending on the product, you may move fast or slow up to a more significant segment of the population, but you always start with innovators and early adopters.
The benefits of starting small are that a) you can get to know your customers intimately well which will help you collect feedback, b) it's easier to kickstart word-of-mouth amongst a small group of similar people, c) a small number of clients will be easier to satisfy, you will be able to build something 10x better than an alternative solution for the innovators/early adopters.
"When it comes to the question of the target customer, the most common mistake is the target customer definition is too broad. It must be almost comically narrow to the point where you may be misunderstood for such a narrow focus." [Andy Johns]
Without focus, you end up reaching out to a lot of users/customers, but your product wasn't built for the majority of them. As a result, their experience is either mediocre or even negative, missing their expectations big time. We cannot expect that users/customers will know that the product is not built for them; they will simply form a negative opinion, leading you to have a large group of people who have neutral/negative things to say about your solution.
Brian Balfour and his colleagues at Reforge developed a great model to guide founders in the way they launch and release features:
The model breaks down the following steps:
Scope - identify a niche group of early adopters
Access - once you know who precisely you are targeting, it will get easier to understand how to target such users. For example, if you are targeting early-stage startup founders, a good place to find them is VCs focused on the very same stage of funding.
Filter - here, you need to filter out people who are not ideal personas.
4. Success Signals - builds on the previous point and refers to gathering feedback from early adopters, a few ways you can do that are:
Retention rates
5. Leverage - assuming you have gone through the previous steps, your hypothesis is validated, and you understand who are your early adopters. That drives word of mouth and you can focus on the next feature going through the same set of features.
"The reason this is important is you can constrain the messaging and positioning of your product, as well as the product feature set to build something great with a relatively low budget that carves those customers away from the existing market. And that becomes your beachhead..." [Andy Johns]
“It is critical to design a process that allows you to launch vastly different product experiences within specific communities so your product can reach critical mass.” [TBH’s founders]
Resources worth checking out:
📝How To Launch A Product or Feature To Maximize Growth | Brian Balfour - Most of you are probably thinking, “Holy Sh*t, this is the worst way to launch.” Before you draw that conclusion, you might want to look at the amount of word of mouth (like this, this, and this) and press (like this, this, and this) they have received because it is more than 95%+ of the product or feature launches I have seen. Not to mention the substantial amount of capital they have raised over multiple rounds.
🎥 Runnin' Down a Dream: How to Succeed and Thrive in a Career You Love /Bill Gurley - Bill Gurley has spent over 15 years as a General Partner at Benchmark Capital and is one of the most respected VCs out there, this talk represents a summary of what you need to do to build a career you love.
📝 What comes after Zoom? | Benedict Evans - Part of the founding legend of Dropbox is that Drew Houston told people what he wanted to do, and everyone said ‘there are hundreds of these already’ and he replied ‘yes, but which one do you use?’ That’s what Zoom did - video calls are nothing new, but Zoom solved a lot of the small pieces of friction that made it fiddly to get into a call.
A quote worth remembering:
💬 Inventor and businessman Thomas Edison on focus:
"You do something all day long, don’t you? Every one does. If you get up at seven o’clock and go to bed at eleven, you have put in sixteen good hours, and it is certain with most people, that they have been doing something all the time. They have been either walking, or reading, or writing, or thinking. The only trouble is that they do it about a great many things and I do it about one. If they took the time in question and applied it in one direction, to one object, they would succeed. Success is sure to follow such application. The trouble lies in the fact that people do not have an object, one thing, to which they stick, letting all else go. Success is the product of the severest kind of mental and physical application."
A book recommendation:
📖 Inspired: How To Create Products Customers Love by Marty Cagan
Why do some products make the leap to greatness while others don’t? Creating inspiring products begins with discovering a product that is valuable, usable, and feasible. A good read for aspiring entrepreneurs or people who would like to develop a career in product management.
Positive news worth sharing:
Across the world, billions of people are steadily gaining access to improved drinking water. The improvement has been marked in East and South Asia, China in particular. Government commitments and investments have been key, along with community training and better education.
Check out the source here.
The Road to 500
One of my resolutions this year is to grow this publication to 500 subscribers 🚀
The best way to spread the word is to hit the share button and say nice things about why you enjoy reading this every week and what you learn.
Thanks for reading,
Viktor