As I read about the unveiling of the Tesla Model X, I have two thoughts. The first one is “I want” (hint: Amy – you need to replace your red Range Rover.) The second is that price of admission is an amazing product.
Indulge me while I go on an amazing product rant from our portfolio.
- Glowforge is turning 3D printing inside out by using a laser to cut and engrave, instead of an extruder to, well, extrude. They just crossed the $4 million mark in day five of their thirty day pre-order campaign.
- Sphero has sold more BB-8’s in the month since they launched than even I thought possible. I have one on my desk and it gives me joy every day I’m in the office.
- Accenture just launched their Connected Analytics Experience’s immersive environment which is enabled by Mezzanine. As a daily user of Mezzanine, it actually makes video conference and collaboration tolerable.
- The demand for the 3D Robotics Solo drone is off the charts.
- Rock Band 4 comes out next week. Yesterday two new U2 songs were added as exclusives. Enough said.
- We closed an investment yesterday in a company that will announce next week. I’ve been using the product for sixty days along with their competitor’s product. Their competitor has raised 10x the amount of money so far (prior to our investment), and the product from the company we invested in, from my own head to head comparison, is amazing, compared to the “meh” product from its competitor.
- We are issuing a term sheet today to another company that I hope accepts our offer. Your mind simply explodes when you use this particular product.
I could keep going but you get the idea. When I reflect on our successful investments, regardless of the form factor (software or hardware or both) that they take, they all are amazing products. And the founders come from a product first mindset – their goal is to unambiguously create the best product that delight users every time they come in contact with it.
I’ve heard the discussion about how important product is for over 20 years of being an investor. But it’s not important anymore. Instead, an amazing product is simply price of admission. If you don’t have an amazing product, you don’t get to play, at least in my little corner of the world.
I read a lot – somewhere between 50 and 100 books a year. I prefer long form (books) to medium form (articles, blog posts), although I read plenty of that as well. I’m a visual learner, so I learn a lot more from reading than I do by listening to a lecture or a video.
I’m always curious what my friends are reading and often grab books they recommend. Last week Fred Wilson wrote a post recommending two books including Randy Hunt’s Product Design for the Web: Principles of Designing and Releasing Web Products. I grabbed them both.
I read Randy’s book yesterday while procrastinating working on my next book, Startup Opportunities. Randy was the Creative Director at Etsy for a number of years and has written a strong, easy to read, and very accessible book for anyone interested in better understanding how to design web products. And, he does a great job of defining a “web product” as much more than just a web site – think Etsy, Pinterest, Facebook, or Twitter – and all the corresponding pieces including the APIs, native apps, mobile apps, and website.
I love the way this book starts off – with a quote from Paola Antonelli, MoMA Senior Curator of Architecture & Design + Director of R&D.
“People think that design is styling. Design is not style. It’s not about giving shape to the shell and not giving a damn about the guts. Good design is a renaissance attitude that combines technology, cognitive science, human need, and beauty to produce something that the world didn’t know it was missing.”
If that sounds a little Steve Jobsian, and it resonates with you, then you will enjoy this book. Randy treats the subject simply and clearly. He does it in a way that anyone who is not a natural designer or developer will understand. It’s not about UX, UI, IxD, or any other initialisms or TLAs. It’s about product design.
Thanks Fred for the recommendation. While short, I learned a couple of things, which made my time with this book worthwhile. And, for the zillions of entrepreneurs out there who think they grok how to design things, I recommend this book as you’ll learn something that will make you even better at what you do.
I was sitting with the founders of a company we’ve funded the other day talking about their competition. I love this product and I use it every day. It doesn’t yet have widespread adoption, but it as extremely actively used by the early adopters.
This company has several competitors – long time incumbents with somewhat stale, but useful products, and several new competitors, including well-funded and noisy ones. I use several of these products regularly in different situations and have encouraged the founders to use them also.
During our conversation, we started off by talking about pricing and go-to-market strategies. As part of this, we were talking through a strategy to change the current game being played in the market, both from a product and pricing perspective. We had clarity on the product side (we have several fundamental architectural differences that enable a powerfully different approach at scale) but thrashed for a while on the pricing perspective.
I realized I wasn’t very clear on the pricing strategies of the competitors so we went through them on-line. While this was sort of useful, our knowledge of their products, how they work, and what the current limitations of them are was more enlightening. Ultimately the product differentiation drove the pricing differentiation discussion, which resulted in our hypothesis about how to change the game which we are now testing.
If we hadn’t all be active users of these competitors products, we would have had a stupid conversation. While we have limited visibility into the competitors’ product roadmaps, we know how hard it will be for them to change several dimensions of their products. Sure, we should assume they can and will do this, but as we enter the market in a serious way, I think we can carve out a unique and very significant position for ourselves by leading with the product differentiation and supporting it with a pricing strategy that undermines theirs. In the absence of the product information we have from our experience using their products, we wouldn’t have been able to tie these two constructs together, and our resulting approach would be weak.
My general approach to competition is to “obsess about their products while completely ignoring the company.” If you can identify competitors, use their products continually, if only to have that knowledge when the moment comes that you have the conversation about how you are going to change the game.
I’m mid 2011 I wrote a post titled Competition. Things in my universe had heated up and many of the companies I was an investor in were facing lots of competition. It’s 18 months later and there’s 10x the amount of competitive dynamics going on, some because of the maturity, scale, and market leadership of some of the companies I’m an investor in; some because of the increased number of companies in each market segment, and some based on the heat and intensity of our business right now.
I wrote a few more posts about competition but then drifted on to other things. But I came back to it this morning as I find myself thinking about competition every day. Yesterday, I was at the Silicon Flatirons Broadband Migration Conference hosted by my friend Phil Weiser. I go every year because it’s a good chance for me to see how several of the parallel universes I interact with, namely government, academics, broadband and mobile carriers, incumbent technology providers, and policy people think about innovation in the context of the Internet.
News flash – most of them think about it very differently than I do.
One thing that came up was the idea of creating the best product. This has been an on and off cliche in the tech business for a long time. For periods of time, people get obsessed about how “the best product will win.” Then, some strategy consultants, or larger incumbents, use their market power to try to create defenses around innovation, and suddenly the conversation shifts away from “build the best product.” And then the entrepreneurial cycle heats up again and the battle cry of the new entrepreneur is “build the best product.”
This isn’t just a startup vs. big company issue. I remember clearly, with amazement, the first time I got my hands on an iPhone. Up to that point I was using an HTC Dash running Windows Mobile 6.5. It was fine, but not awesome. I remember Steve Ballmer in a video mocking the iPhone.
We all know how this story has played out.
I remember a world when Microsoft and RIM were dominant. When Apple and Google didn’t have a product. And when people talked about “handsets”, WAP, and we squinted at our screens while pounding on keyboards that were too small for our fingers. Next time you are in a room full of people, just look around at the different phones, tables, and laptops that you see.
In my startup world, the same dynamics play out. Building the “best product” doesn’t only mean the best physical product (or digital product). It doesn’t just mean the best UI. Or the best UX. It includes the best distribution. The best supply chain. The best customer experience. The best support. The best partner channel. The best interface to a prospective customer. I’m sure I’ve left categories out – think about the idea of “the best complete product.”
This is getting more complicated by the day as technologies and products increase in interoperability with each other at both the data, network, application, and physical level. That’s part of the fun of it. And being great at it can help you dominate your competition.
Give me the best product to work with any day of the week. But make sure you are defining “product” correctly.
I’ve invested in hundreds of companies that have started from scratch and I’ve been though some crazy number of product launches, especially if you include all of the TechStars companies I’ve been involved with. These alphas, or betas, or v1.0 or v0.1 launches are exciting moments as they signify the transition from an idea to a product. And, it’s at that point that the real work begins.
Early in the life of your company you want feedback. From anyone. Of any kind.
It’s often hard to get this feedback. You spend all of your time trying to get some people to use your product. When they have problems, you try to fix them. But you are maxed out – with all the various responsibilities you’ve got and all the things you are trying to do to keep things moving forward.
Occasionally you get feedback. Sometimes it’s precise – a feature request, a suggestion for how to do something differently, or a description of something that’s not working correctly.
Reward this feedback with features. Fix the bug and then tell the person who reported it that you did and thank them for pointing it out. Implement the requested feature and tell the person that suggested it that you did it. Write a blog post about it and name the feature after the person. Be public about thanking the person for the suggestion.
In addition to making your product better, this does two powerful things.
First, it creates a feedback loop with your early users so they know they are specifically appreciated and valued. This will encourage them to give you more feedback, use your product more, and be part of your extended early community of fans.
More importantly, it builds a feedback loop culture into your business. You and your team will realize the feedback matters. You’ll show this through action. Your users will realize this. And they’ll value it, and you, more.
What do you do to get feedback from your early users?
If you are a developer, I encourage you to carve out an hour and watch TechStars CEO David Cohen’s presentation at RailsConf 2012 (30 minute presentation and outstanding 30 minutes of Q&A). He starts out with the assertion that “developers are the new investors” – how could you not be interested in hearing more about that?
David and I wrote a book last year called Do More Faster: TechStars Lessons to Accelerate Your Startup and this is his riff to a room full of developers about some of his top tips. Special bonus – see a photo of me in my pajamas at minute 7.
I was reminded of the importance of starting with the customer experience while I was watching this brilliant video from WWDC 1997 of Steve Jobs. In the video, Jobs appears to be responding to attack by a troll, but is actually doing something much more interesting. Rather than take the bait and react, he thinks carefully in real time and makes a critical philosophical point about his – and Apple’s – approach to creating new products.
The punch line happens early when he says “you’ve got to start with the customer experience and work backwards for the technology.” It’s five minutes long and worth watching, if only to see how incredibly durable Jobs’ philosophy has been over the past 15 years.
When I think about the companies we’ve invested in, some of them embody this philosophy deeply in their culture. Oblong, MakerBot, Orbotix, Fitbit, and Cloud Engines immediately come to mind. The entrepreneurs running these companies are completely and totally obsessed with the consumer experience of their products, even though their products embody an incredible amount of technology (in each case, both hardware and software innovations.)
As an investor, I often lose sight of this, especially when I’m working on non-consumer facing companies (e.g. enterprise software companies). But I believe very strongly in the consumerization of IT – namely the notion that innovation in software is now being driven by consumer applications, and correspondingly by consumers, not by enterprise IT organizations and enterprise software vendors. If you accept this, it means that if you are working on enterprise applications, you also need to be obsessed with the customer experience.
When I think about this abstractly, especially in the context of “software eating the world” or my view that the machines have already taken over and resistance is futile, I completely buy the premise that the consumer experience trumps all technical decisions in any context. Apple has proven this throughout the entire customer experience, including being exposed to the product, buying the product, implementing the product, upgrading the product, and getting help with the product. And I think it’s going to get a lot more important going forward.
I was at an board meeting yesterday morning for a new seed deal that we’ve done that will be announced next week. I love the product vision – it’s in an area that I’ve been working in for a while across a variety of companies and will take a new approach to a very old and persistent problem.
The entrepreneurs have been living the specific problem for a long time and believe they have a unique and very informed way to solve it. Given that the company has had no funding to date, the founders have been scrappy and have cobbled together a really impressive prototype that they’ve been using to get early customer feedback. It’s an ambitious product vision that will take a while to fully roll out.
In lean startup language, they’ve got a minimal viable product. However, they are faced with two choices. The first is to polish and release the current prototype. The second is to use the prototype to continue to explore and understand the specific customer fit while building a production version from scratch that incorporates much of what they learned during the prototype development.
In their case, the customer is a business customer rather than a mass market consumer web product. Consequently, having 100,000 free users is not important in the near term – I’d much rather see them have 100 paying customers which might translate in several thousand users across all of these customers, as our premise is that organizations will have between 1 and 100 early users of the product.
We spent a lot of time in the meeting talking about this choice as well as overall product cadence. We left it up to the founders to figure out what they wanted to do and what they wanted the cadence to be, but we encouraged a one year top down view, rather than a quarterly bottoms up view. We encouraged them look at where they want to be in a year (remember – this is a seed deal, so we have plenty of ability and desire to continue to fund as they make progress, with or without new investors) and work backwards to a product cadence that works for them.
I don’t know if they’ll have a once a week, twice a month, once a month, or once a quarter release cycle. But I’m fine with any of them as long as they pick the cadence and stick with it. Given my deep belief in an agile development approach, I don’t really care what’s in the actual incremental releases at this point as I fully expect the furthest out they’ll be able to see is one quarter.
It reminded me of something I often tell TechStars teams – “slow down to speed up.” I see so many startups rushing to just get stuff out, without thinking hard about “what that stuff is and why anyone would care.” Part of this is lack of understanding of what you are trying to accomplish, but some of this is a lack of product cadence. When you have a clearly defined cadence (e.g., a monthly release) you can focus on “what’s next” while in parallel explore “what’s after next.” But in the absence of a cadence, you are always working on “what’s next” and never looking out any further.
For some reason I’ve been doing a lot of interviews lately. In many of them I get asked similar questions, including the inevitable “what makes a great entrepreneur?” When I’m on a VC panel, I’m always amused by the answers from my co-panelists as they are usually the same set of “VC cliches” which makes it even more fun when I blurt out my answer.
“A complete and total obsession with the product”
The great companies that I’ve been an investor in share a common trait – the founder/CEO is obsessed with the product. Not interested, not aware of, not familiar with, but obsessed. Every discussion trends back toward the product. All of the conversations about customer are really about how the customer uses the product and the value the product brings the customer. The majority of the early teams are focused entirely on the product, including the non-engineering people. Product, product, product.
And these CEO’s love to show their product to anyone that will listen. They don’t explain the company to people with powerpoint slides. They don’t send out long executive summaries with mocked up screen shots. They don’t try to engage you in a phone conversation about the great market they are going after. They start with the product. And stay with the product.
When I step back and think about what motivates me early in a relationship with an entrepreneur, it’s the product. I only invest in domains that I know well, so I don’t need fancy market studies (which are always wrong), financial models (which are always wrong), or customer needs analyses (which are always wrong). I want to play with the product, touch the product, understand the product – and understand where the founder thinks the product is going.
I don’t create products anymore (I invest in companies that create them), but I’m a great alpha tester. I’ve always been good at this for some reason – bugs just find me. While my UX design skills are merely adequate, I’ve got a great feel for how to simplify things and make them cleaner. Plus I’m happy to just grind and grind and grind on the product, offering both detailed and high level feedback indefinitely.
How a founder/CEO reacts to this speaks volumes to me. I probably first noticed this when interacting with Dick Costolo at FeedBurner when I first met him. I am FeedBurner publisher #699 and used it for my blog back when it was “pre-Alpha”. I had an issue – sent firstname.lastname@example.org a note – and instantly got a reply from Dick. I had no idea who Dick was, but he helped me and I quickly realized he was the CEO. Over the next six months we interacted regularly about the product and when he was ready to start fundraising, I quickly made him an offer and we became the lead investor in the round. My obsession with the product didn’t stop there (as Eric Lunt and many of the other FeedBurner gang can tell you – I still occasionally email SteveO bugs that I find.)
I can give a bunch of other examples like FeedBurner, but I wrap up by saying that I’m just as obsessed with product as the founders. And – as I realize what results in success in my world, I get even more obsessed. Plus, I really like to play with software.