Adding features to a product adds more power to the product, yet at the same time adds complexity that makes it hard for new users to even get started.
Create a product that competes because it’s taking a fundamentally different position in the market.
Know Your Market
If the market is full of complex enterprise tools, then make a simpler product aimed at individuals.
If the market is made up of fancy, high-end wines, then create one that’s cheaper, younger, and more casual.
If the market is full of long-form text blogging tools, then make one that makes it easy to communicate in 140 character bursts.
If computers are techy and cheap, then make one that’s human and more premium.
Ramifications for startups building initial versions of a product
Don’t compete on features
If your product initially doesn’t find a fit in the market (as is common), don’t react by adding additional new features to “fix” the problem.
Make sure your product reflects the market positioning
Unit economics measures whether a company makes or loses money for a single unit of the good or service that they sell.
Lifetime Value (LTV) is the net profit for a single customer. This is measured over the entire time that the customer uses a product (which can require multiple payments).
Customer Acquisition Cost (CAC) is the cost of gaining a new customer.
Together, these measures can tell us a lot about the potential success of a startup. For instance, a high growth startup may, on the surface, look really promising. However, if it has negative unit economics (it loses money for each good sold), the startup is merely using its investors’ money rather than making a profit. The same occurs when CAC exceeds LTV: the startup loses money for every customer. In the short term, negative unit economics or a high CAC may not spell trouble, but longterm success of a startup will likely be driven by good unit economics.
Simple products have better designs and are easier to market. The impact of simple products on consumers is more desirable and well-optimized.
Why simplicity is more preferable
Simplicity and optimization of flows make it easier for consumers to use/manage the product. Consumers can simply figure out the question “what do I do next?”
Since the product is usable by a variety of consumer types, the product is exposed to more data, thus more improvement opportunity.
Simple products with convenient usage will get better signup rates, and this helps the designers or producers to put their attention to improve and innovate more, rather than focusing on low-impact features.
Simple and highly optimized products are more marketable because they have the tools to communicate their impact to users, soft onboarding flows, easy to understand call to action methods, and drive a lot of values.
Need curiosity and listening to ensure problems you think should be solved are actually pain points. Jobs-to-be-done (JTBD) framework helps find these pain points.
Do the work to make sure you are building a product that people will actually find valuable.
3 main issues companies run into when building a product
Relying too heavily on your own vision
Confirmation bias leads to assumption consumers want a product
More focused on excitement of the technical challenge than your users
New and fun to build doesn’t mean people want it
You can’t articulate a value proposition and the team doesn’t align
Need a shared sense of empathy on issues users face
JTBD framework creates non-obvious insights about an audience
People complete certain ‘jobs’ and ‘hire’ specific products or services to accomplish them
JTBD statement describes how a product/service fits into a person’s life
- Increases focus across your team on solving important problems
- Higher likelihood of deliver new value
- Stronger understanding of competition for the product
4 step process to create JTBD statement
Define audience clearly
Ground yourself in market research
What they currently use, pain points
Talk to your users
Find motivations, barriers, current products they use
Focus on 1 ‘job’ that your product can solve, not all of them
Structure of JTBD statement
- When I… (context)
- But… (barrier)
- Help me… (goal)
- So I.... (outcome)
JTBD can be used in each stage of product development
- Idea generation
- Feature prioritization
- Value proposition testing
- Go to market planning
- Analyzing customer data and feedback
Revisit JTBD statement to ensure it is still solving the customer’s problem over time