Category: product
Posts
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You’ve found product market fit. You’ve hired a team, including some managers. Your initial, small customer base is very happy. You’ve discovered an initial channel of customer acquisition that’s working. You’ve raised a meaningful round of capital. And then, right then, product innovation decelerates to zero.
The fast pace that characterized the past 12-18 months, when you would germinate an idea and write the code in less than a few days, has evaporated.
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A founder posed me a question earlier this week: Do you have any data/perspective on whether it’s worth keeping the unassisted free trial flow vs. providing only one path which leads to a demo and an assisted free trial? This is a complex question. Let’s break it down.
The unassisted free trial has benefits. There’s a deeper discussion in this post: Confessions of a Perpetual Freeloader.
You capture the buyer at the point of maximum intent and reduces the activation energy of the sale.
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Startups are innovation machines. They identify market opportunities, develop novel products and go out to change the world. Some companies want to change the world in one dimension: a better product or a disruptive go-to-market. Others want to innovate in every dimension and re-invent every discipline from pricing to marketing to support to customer success.
Brad Birnbaum, founder and CEO of Kustomer, discussed the challenges of innovating on two dimensions simultaneously on the [Saastr podcast]().
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I’ve wondered what it’s like to work at Apple. I’ve read books and articles about Steve Jobs and the turbulence the company experienced. Ken Kocienda co-wrote the Safari browser and developed the first iPhone keyboard. His book, Creative Selection, is the first book that provides a view of the day to day environment at Apple. It’s full of wisdom. These are my learnings from the book.
There are few brainstorming sessions at Apple because ideas are difficult to debate.
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Customers will pay you to build your SaaS product. It’s one of the great advantages of a SaaS model. Annual prepay contracts - wherein customers pay for a year’s cost on day - is a free loan from customers. And every startup can benefit from this advance. There’s only one requirement: you must be able to sell your product while you’re building it.
Step 1 is reaching product market fit, the point at which some group of potential customers will pay.
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There are three types of product features, a seasoned head of product told me recently. MMRs, neutralizers, and differentiators. MMRs are minimum market requirements; basic features that every customer expects and demands. Neutralizers mitigate competitive threat. Differentiators are your startup’s competitive advantage. As a product manager, I’d never thought about this type of roadmap segmentation before. But it made a lot of sense to me.
When a startup has established product market fit, the differentiator is clear.
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One typical Friday morning in 2004, I walked into a government building and headed to work. I was a junior Java engineer and part of a hired team building an internal system for a government agency. We were a few days behind on schedule, and a technical issue arose. During the morning team meeting, we made a plan to refactor a small key part of the codebase - an effort that should have taken just the morning.
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At SaaStr earlier this year, I spoke about the huge potential of machine learning in SaaS. In that talk, I broke down some of the advances in ML that might be useful for software companies. In the discussion that ensued, I stressed the importance of not letting the technology obfuscate the value proposition of the software. Yes, ML is a huge step forward, but it’s not enough by itself. In fact, it likely isn’t the most challenging part of building a disruptive product.
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There’s no quicker way to lose a user or buyer of your software than to lose their trust. The software didn’t save my data. The database suffered corruption. The website is down frequently. Data integrity is a challenge every company storing data faces. Machine learning SaaS startups face another trust risk – one introduced by probability.
When Nate Silver forecasted the successful election of Barack Obama in 2008 with nearly 100% accuracy across districts, probability theory shined.
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After a SaaS startup has gained traction with SMBs and mid-market customers, they often feel a pressure to move up-market. Sometimes, demand for a product is so great, larger customers the pull the company up-market before they are ready. The startup finds itself in a critical position - both the product and the sales motion must evolve quickly.
Zack Kass is a friend who advises SaaS startups on their enterprise selling motions and playbooks, refining the account executive profile, and developing a deal strategy.
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A few weeks ago, I had my first customer support experience of the future. I was in a meeting when my Android’s caller ID told me American Express was calling. I stepped of the conference room and answered the call. A machine-generated woman’s voice identified itself as the American Express fraud department. “Do you have a bluetooth headset or headphones you can use with your phone?” she asked.
I replied that yes, I did.
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Perfection is finally attained not when there is no longer anything to add, but when there is no longer anything to take away.
Antoine de St. Exupery
I remember launching a new filtering feature a Google within the AdSense product. At the time, we had hundreds of thousands of website publishers using our user-interface to accomplish many tasks. They might download reports of their revenue from running AdSense ads, configure ads to match their website’s style, and indicate their preferences for the content of the ads to be shown on their site.
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What are the attributes of the ideal SMB SaaS company, an entrepreneur asked me recently. It’s a good question. There are product, marketing, and sales attributes to that ideal company that successful SaaS business have exemplified in the past.
Product
A beautifully designed, simple and elegant product is the first and most important thing.
The product satisfies the top three priority for the software buyer and consequently the software buyer uses a software very frequently.
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A user has maximum intent. She has watched the humorous demo video, chuckled when reading through the clever marketing copy, and filled out the abbreviated, optimized user registration form. She wants to give the product a spin. How long does the account verification link take to appear in her email box? Is it long enough for her to switch tabs, change contexts and lose interest?
The half-life for new product trials brief.
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Numi is a little calculator with a twist. Unlike most calculators, it understands English and other languages. I’ve used many different types of calculators: from the Texas Instruments TI-89 graphing calculator to a HP 12C with its Polish notation, to software calculators Excel and R. All of them employ similar user interfaces. There’s a syntax to translate the user’s desires into something the calculator can understand.
Numi takes that one step further.
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At its essence, a product is a combination of different funnels bringing the user from one state to another. How many funnels does your startup’s product have? How many are you measuring? How many are you optimizing?
Uber’s consumer experience has two funnels. The first is user on boarding: registering a user and collecting their payment information. The second is booking transportation from opening the application to rating a driver’s performance.
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When I was at Google, we worked with a user experience team frequently to help us design changes to the AdWords front end. After having reviewed our designs within our product team for weeks, we often thought the design was complete and foolproof. But we were consistently proven wrong by the UX team whose work surfaced face-slapping oversights.
At UserOnboarding, Samuel Hulick has taken this approach with more than 40 different on-the-mark and a bit irreverent UX critiques of many top internet and mobile services.
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In 1964, IBM announced a mainframe computer family called the System 360. The mainframe wouldn’t ship for another three years, but the announcement reduced the mainframe sales of their competitor, Control Data Corporation, sufficiently to warrant an FBI investigation. And so a new marketing technique was born.
To be clear, there are many different forms of vaporware. Coined in the early 80s by Esther Dyson to describe software companies preannouncing a product, the term vaporware can refer to three different types of these announcements.
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When I was a PM at Google, we conducted customer research often to understand our customers’ opinions on AdSense. In 2005, Google, Yahoo and Microsoft were vying to win dominant share of advertising pages across large publishers. Customer knowledge, both qualitative and quantitative, informed product development, and that research became a key part of AdSense’s success.
A few years later when I joined Redpoint, I learned that venture capitalists perform similar customer research during diligence.
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Over dinner, a veteran product manager argued most SaaS products’ onboarding practices miss a crucial step: create value for the user in the first session. After that conversation, I signed up for many brand-name SaaS products pretending it was for the first time, and I couldn’t help but agree with him.
Most SaaS products guide a user through three steps. First, collect the requisite data to create an account, like email and password.
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What are the pains and aspirations of your customer? Does your product truly solve your customers problems? And fulfill its promise of doing something in a better way?
Most startups wrestle with these questions at their outset, when they are in the customer discovery and customer validation phases of the lean startup cycle. But all startups should reevaluate these questions periodically. After all, a company’s customers evolve with time and so do their jobs.
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Though the term k-factor, a measure of the virality of an application, has waned in popularity since Facebook’s sheep-throwing glory days, the idea of spreading a product through referrals lives on. We all know a good referral mechanism when we see one. Dropbox’s invite-a-friend feature which awards free storage for both the inviter and the invited is the canonical example and resulted in torrid growth for the company. In April 2010, Dropbox users sent 2.
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Recently I met a startup founder who explained a technique for building his product roadmap in a novel way. “We research what our users are doing three minutes before they start using our product and the three minutes after.” I like the idea because it is a simple and ingenious mechanism for brainstorming product ideas, and this type of product development exploration evokes empathy from a product team, which is a the first step of the Stanford d.
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I never thought learning how to write better might help me understand product design but it has. Great literature and well designed products share one defining attribute: they create a telepathic connection between the creator and the consumer. Before you chuckle and write me off as a palm reading gypsy, hear me out. The idea isn’t mine, but Stephen King’s. Over the weekend, I read King’s blunt and inspirational autobiographical narrative, “On Writing.
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Atul Gawande, the American surgeon known for his book “Better”, wrote an article in this week’s New Yorker called “Slow Ideas: Some innovations spread fast. How do you speed the ones that don’t?” He describes the challenges faced by healthcare institutions all over the world: despite the advances in research, the most difficult part of improving care isn’t availing doctors and nurses to these breakthroughs, but changing their behavior. Some doctors simply won’t wash their hands no matter how many times they are told it reduces infection rates.
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This week, I visited a startup whose office had a very unusual feature: a usability lab. There I was in a soundproofed room with a table in the center flanked by two chairs, one for a user and one product manager or UX researcher. On the table, a constellation of web cams record a user’s facial expressions and interactions with a mobile phone or laptop while a microphone captures the user’s voice.
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Do you measure your product’s time to utility? If not, you should.
The best products reward users as quickly as possible after installation and account creation. But it’s easy to forget about this and as a result, watch conversion rates from download/install-to-active fall.
CRM products have the longest time to utility of most software products. The end user, a salesperson, logs into a blank Salesforce installation. She must type in a bunch of data about a customer.
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Many of the SaaS companies I work with are buzzing about a new concept: product qualified leads (PQL). It’s typical to see outbound sales teams create new leads by cold-calling - think Glengarry. And marketing also qualifies leads (MQL) using online advertising, branding, content, email and other channels. But the PQL concept is novel.
PQLs are potential customers who have used a product and reached pre-defined triggers that signify a strong likelihood to become a paying customer.
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Great products are like ducks. They are calm above the water but paddling furiously below the water. An entrepreneur told me this quip last week and I think it had great wisdom in it.
In other words great products are graceful. They make something complex look effortless.
Great athletes are the same. So are great dancers. And even great entrepreneurs.
The secret within this aphorism is that success is a grind.
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Yesterday, I watched as a friend of mine created an Expensify account for his startup. He was trying the product for the first time. I took notes without saying much. The experience reminded me of the hours I spent in Google’s usability labs watching people use our AdSense Demographic Targeting beta product. In those sessions, I remember feeling a sense of excitement followed by frustration - even disillusionment. Often, the product confused users.
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Examining a user’s motivations at the entry point of every major feature in a product and matching the product to this motivation is key to building a great product users love.
BJ Fogg’s Behavior Model Theory is a succinct summary of this idea in a formula:
Motivation + Trigger + Ability = Behavior
This model says that a user will perform a behavior when given the means, the motive, and the opportunity.
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Every social service aims to achieve massive growth and deep engagement. But if forced to choose just one of these attributes, I would pick engagement every time. An active user base implies product/user fit for a social service. Aside from the core functionality of social services, which is a solved problem (profiles, messaging, feed), the essence of a social startup is culture - the values of the community, the mores, the manners of interaction.
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Although today’s society is said to be in a state of information overload, in fact it may not be in excess. It’s just an overflow of odd and fragmented information in the media. The amount of information in each fragment is in fact quite small. In this slew of half baked information, isn’t the brain oppressed? The stress on the brain isn’t because of quantity, but because of limited quality. Kenya Hara, Designing Design