Accelerating Startups: Products

Part 2: How to think about your product.

Why read this.

As mentioned previously — it has never been easier to start a startup. But its never been harder to build and grow a startup.

Similar could be said for tech products. Its never been easier to learn to code and build tech products. But its also never been harder to grow and scale these same tech products.

In part 2 of this series of Accelerating Startups, you’ll learn three things about some of the tech products we’ve seen grow and scale — from startups across multiple tech hubs and accelerators we’ve worked with. And many well-known products today:

  1. The King’s product test.

  2. Three characteristics of great tech products.

  3. How to build these into your products.

This is aimed at early seed-stage startups. And corporate teams, and startup communities supporting them.

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The King’s product test.

The King’s product test is designed to help you think about the way customers might communicate your product to others. Here’s the test:

  1. Open your phone and take a look at the apps on your home screen.

  2. If you had to describe each app on your phone's home screen to someone else — without mentioning the name of the app, and without describing the app's icon, its brand colours, or its logo — how would you explain it?

  3. You're also not allowed to describe it by saying anything unrelated to its functionality. Like "Its the world's most popular search engine." Or "Its the biggest social network on the planet." 

  4. You can only describe it by saying how it works, what it does, or the benefit you get from it — like "It allows you to search for anything and get million of answers." Or "It helps you stay connected to your friends and family."

Whether you feel this exercise sounds like fun or not, this is how you need to think when thinking about building a product as a solution to the problem.

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This is precisely how people will try to explain your product to others when they see it or use it — or they simply won’t.

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And whether you feel this test is easy or difficult with products that lots of people know and are familiar with, this is precisely how people will try to explain your product to others when they see it or use it — or they simply won’t try.

So, if you’re developing a tech product, how would you explain it using the rules above?

This is the King’s product test. And your product only gets one of two results:

  1. People can explain it = Pass.

  2. People can’t explain it = Fail.

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3 characteristics of great tech products.

There are three characteristics of any tech product to think about when you’re developing a product that aims to solve a problem. The first is something we just got a taste of:

Characteristic 1: Understandable.

It sounds painfully obvious. However, the number of startup pitches and decks we assess, together with corporate-startup programme partners each year that fails to explain how the product works, or why it solves a problem others might have is more than you might imagine. 

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Some of the best tech products can be understood by how they work — by almost anyone, of any age above 6 years old.

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If people can't understand how it works, they’re going to struggle to tell other people about it — and probably unlikely to use it themselves if they also don't understand how it solves their problem. 

Let's go back to the King’s product test for a moment — how we might describe apps on our phone. And look at two examples of how the founders of well-known products we know today first described the products they were building:

Product description 1.

"You push a button, and within 5 minutes a car shows up and takes you anywhere you want to go."

Yep, this is Uber. That's the way the Uber co-founder Travis Kalanick, first described Uber as a product soon after being launched.

Now think of all the ways you might have described Uber if you had to. "It's an app that lets you call a cab." Or "It's a ride-hailing platform."

You wouldn't be incorrect in any of the ways you describe it. But none of these ways tells you how the product works, and how it solves a problem for the user.

Product description 2.

"You simply log-in and see what all of your friends are doing."

Ok yes, there a ton of apps that let you do this today. But even so, one product should come to mind more than others. Facebook. That's how Mark Zuckerberg described Facebook as a product, initially.

Again, if we were describing Facebook to others, or building something similar, we might describe it very differently.

"It's a social network." Or "It's a place where you build community." Again, all true. But describing it this way doesn't tell us how it works, or what it does in a way we can simply understand it.

A great way to understand these popular founders approach to describing their products is simply:

Action = benefit.

What action does a user take? And what benefit do they receive as a result?

WeFarm.

WeFarm — the startup we looked at earlier when we were looking at understanding the problem — built an online network for small-scale farmers to connect, share problems, and get solutions to them. Here's how they described the product to farmers:

"Send a text with whatever problem you have, for free, and receive an answer within moments, with the solution — without needing an internet connection."

Again. Action = benefit.

Now yes, we would be correct in describing WeFarm as “A knowledge-sharing network for farmers.” Which is exactly what it is, or as "The biggest knowledge-sharing network and marketplace for small-scale agriculture in the world."

Which again, it is. And actually, is exactly how WeFarm describes themselves when pitching the company in many other scenarios. 

However, when wanting to get those they were solving a problem for to use the product, and also tell others about it — many small scale farmers in rural parts of the world — they needed to emphasis how it works, and what it does. Rather than what it is.

iPod.

Do you remember the way Steve Jobs first described the iPod?

As a product, he described it not just as an MP3 player — which it is. And not so much as a personal music player. Again, which it is. But he emphasised it as:

"A way to keep your whole music library with you in your pocket."

Simply brilliant.

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Emphasise how the product works, and what it does for its users. Not what it is.

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Now for most of us today, walking around with our music libraries in our pockets is the norm. But back in 2001, most of our music libraries existed on CDs or vinyl records. And we could only carry a few of our favourite songs with us at once.

So the idea of having our “whole music library in our pocket” wherever we went, was a simply genius way of making it understandable.

Characteristic 2: Scalable.

Now, some of you may understand perfectly well what it means for something to be scalable. While others might not. Either way, we’ll explore a little more of what makes a product scaleable to better understand it.

A typical textbook definition of a scaleable product is for example:

"A product or service that once you've built the first copy, can be replicated with an unlimited additional number of copies or provided to an unlimited number of people with little or no equal incremental cost." — Harvard Business Review.

However, let’s break down what this means by using examples from some of the companies we've highlighted before.

And yes, technology inherently does have a scaleable characteristic by nature, so these will sound like an oversimplification — but we’re going somewhere.

Uber.

Now, we're not talking about Uber’s business model just yet. We get into business models in part 4. But as a product, Uber is a scalable one.

Meaning, once the Uber app began being built, it could essentially be replicated on any number of compatible devices — by us as users downloading the app on our mobile phones and using it.

Uber, had little to no equal incremental costs for having 100 users, versus 200 users, or growing from 1 million users, to 2 million users.

Sure there will be an increase in operational costs for recruiting more people, customer support, greater server capacity, etc. But their costs didn’t increase every time they added a new user, or driver, or city.

They can scale up to almost any number of users or drivers that a given market, number of compatible devices, and regulators allow.

Facebook.

There will be huge costs associated with building and growing a product with over 2 billion users: the technology, the servers, the security, personnel and so on. But ultimately, for Facebook, doubling users from 100 million users to 200 million users didn't double their costs.

Both Uber and Facebook, as scalable products could grow with little to no equal incremental cost over time. And the product could continue to perform well as it grew and scaled into new markets and territories. 

Attributes and functions.

However, this describes a product's capacity to scale. And that is not where we’re going with this. As innovators, we should be focusing on building scalable products that have the capacity to scale. And from here on let’s assume that's what you're doing.

The focus of this characteristic is rather how products grow and scale.

In other word's, what are some of the attributes and functions of the product, within the context of how it's used that over time lead to the product’s growth?

Airbnb.

An example's of this is revealed in a Ted Talk, by Airbnb co-founder, Joe Gabbia, called: 'How Airbnb Designs for Trust.'

It truly is one of the most remarkable talks about building a startup, product innovation and growth. And highly recommended to anyone building a tech product of any kind to watch it. 

In this talk, Joe explains that in Airbnb’s early days of building the product, they had indeed discovered a big problem needing to be addressed — the unsatisfied need of travellers wanting to stay somewhere and have an experience unique to them when they travelled.

They had built the product, got the website, chose the name, designed the logo — it was all waiting to happen. And then nothing.

That's when they realised something about the product was impeding their ability to gain traction and grow to achieve the product-market-fit they were expecting to.

A reason so fundamental to their users, and our human nature the team hadn’t considered until then. A vital contributing factor to a brilliant, but the somewhat uncommon idea of people travelling across the world to stay in someone else’s home.

And that is simply: Trust.

You see deep within each of us is a pre-programmed, self-preserving mechanism developed over time through our parents, friends, law enforcement advertising, and Hollywood movies. Warning us that we should be cautious of strangers — people we have never met before.

And here is this new startup, Airbnb, asking us all to ignore our psychological guard-dog, travel around the world, and stay in complete strangers homes.

And at the same time, asking someone else to open their home — one of the most sacred of things people have in life — to someone, they had never met.

Yeah, right.

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Within many products, lies an integral aspect to its attributes and functions, that overlap with aspects of our human nature in the context it’s used, that contribute to how a product grows and scales.

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In this talk, Joe goes on to explain some of the attributes and functions the team considered about the way Airbnb as a product worked.

Like developing the feedback and review mechanism — allowing people to share their personal experiences of using Airbnb. Helping those who read the feedback of others to have trust and use the product the way Airbnb intended. Which was integral to growing the product.

Within many products, lies an integral aspect to its attributes and functions, that overlap with aspects of our human nature in the context it’s used, that contribute to how a product grows:

  • For Airbnb, it's our human need to trust (and belong).

  • For Facebook, it's our huge human need for connection.

  • For Uber, it's our human need to get from A to B efficiently.

  • For WeFarm it’s a Farmers need to protect their livelihoods.

So don't just think about the fact that your product is scalable. Also, think about the context of those using the product, and why aspects of human nature would contribute to the product's use and growth. 

Characteristic 3: Defensibility.

A very common, and significant question we ask founders in our startup accelerators about their products, is “What are your layers of defensibility?”

Layers of defensibility — meaning: what are the several contributing factors of the product that make it difficult for others to copy overnight. Overnight meaning within 3 to 6 months.

Of course, any product can be copied over time with enough resource thrown at it. However, what you should be thinking about as you develop your product, is what several factors make this product harder for others to copy — even if they are a huge tech company with a workforce of more than 60,000 people.

There should be some compounding factors, and nuances, about the way your product works that make it easy for users, customers, and partners to know what your product does, and how it works.

But not everything about how it does it — or why.

Airbnb.

As Airbnb grew, their engineering and data science team introduced ways to leverage their data of how people travel: where they like to stay, and what they like to do when they travel — into new features, functions, design elements and even new products (experiences, luxury, etc).

The better Airbnb do this the more people use Airbnb. And the more people use Airbnb the better Airbnb as a product works for users in its own nuanced way. 

It becomes a positive loop that then makes it harder to compete what Airbnb do, how the product works, and why it works in particular ways. Even for companies that were once twice their size (like multinational hotel chains) who at one point had way more resources than Airbnb.

Today, Airbnb is now bigger in size and value than the world's top 5 hotel chains combined, and it becomes harder for them to compete every day.

WeFarm.

Over the past 5 years, WeFarm has amassed more than 2 million small-scale farmers, who have shared more than 350 million messages. Asked more than 6 million farming-related questions, resulting in more than 12 million answers on all kinds of agricultural and farming-related topics. 

Leveraging all this data, WeFarm has now also built sophisticated AI and machine learning tools into its product.

It’s able to understand questions that are not fully-formed due to spelling or language challenges. It also learns some of the seasonal problems that might occur in different areas of farming — animals, wheat, vegetables and more.

Turning WeFarm from a responsive information network, also into a powerful predictive tech platform for the problems small farmers around the world may face at any given time of the year. 

So now, another company can't just copy WeFarm overnight, no matter how big they are.

They would need similar data, tools, experience and expertise within a team all developed over many years. The network of millions of farmers and so on. Again, compounding itself as WeFarm continues to grow. Making WeFarm more and more defensible as a product over time.

Conclusion.

The 3 characteristics of great products covered are not only common to many of the well-known and successful tech companies we know today — but also those startups across multiple tech hubs we work with.

The actions below will give you some pointers on how to introduce and apply these characteristics to your thinking and plans, building your own products.

Actions.

Action 1: Try the king’s product test either by yourself or with someone else: a friend, family member or your team. 

  • Describe each app on your phone's home screen without mentioning the name of the app, without describing the app's branding, icon, or logo.

  • Say nothing unrelated to its functionality. Only describe it by saying how it works, what it does, or the benefit you get from it.

The reason this is such a powerful exercise is that it begins to train your mind to think about and explain your product the way users or customers would. And to also learn ways you might be able to make it more understandable to others.

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The King’s product test is a powerful exercise because it trains your mind to think about and explain your product in the way your customer would.

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Action 2: Head over to YouTube or the Ted Talks website and have a watch of the video, How Airbnb Designs for Trust. It really is a brilliant talk to watch.

Pay close attention to what Airbnb was aiming to build. The aspects of human nature they had to consider. And the product attributes and functions they had to build for the product to scale as they had hoped, in the context for which they were building it for — people travelling and staying in other people's homes. 

Now think about the product you're building. What aspects of human nature or behaviour, specifically in the context people would be using your product would contribute to the product scaling? And what might be an impediment to it?

Action 3: Either by yourself or with your team, list all what you believe might be the contributing factors of your product that make it difficult for others to copy over time. It may be:

  • Insights from building similar products which are rare, or can be duplicated by only a few people. 

  • Customer data or feedback collected and organised over many months or years.

  • The technology you’ve developed over many months and years to get to where you are today.   

The reason defensibility is such key characteristic of a product — and there are other aspects of defensibility that we'll cover later — is because if your product can be copied in 3 to 6 months, it almost certainly will be copied within 3 to 6 months.

Probably less.

And building a scalable product that can also be easily copied is as good an invitation you're going to give to a market of ruthless competition. Many with way more resources than you have. Starting yourself on the road to failure.

But there's an even bigger reason for the failure of most startups that plagues the tech ecosystem. One that sits above all other reasons when you look at the research about why new ventures fail. And that's what we're going to get into next.     

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