Priorities when building your product: Utilities vs. Networks
Are you building a utility or a network? The answer to that question has big implications on your product strategy.
Let’s define a network as something where the value you derive from the product is mainly influenced by the other people using the product. Examples of networks include: Facebook, Yelp, Uber, fantasy sports sites, multi-player games, the e-mail protocol, and the world wide web protocol. Networks are useless when nobody else uses them.
Alternatively, a utility is not only a product that helps you get a task done, but when juxtaposed with a network, it’s a product where the value you derive is independent of how many other people are using it. Examples of utilities include: Maps, Photo editors, Analytics suites, Weather apps, single-player games, e-mail clients, and web browsers. Utilities are useful even if no one else uses them.
The strategies for success within each of these two categories are vastly different.
How Utilities Win
Utilities win on quality.
Quality can be richer features, superior design, cheaper prices, higher limits on storage, etc. The utilities I use are the best in class for their particular price point.
I switched to Gmail because of its threaded conversations and storage. I switched to Dropbox because it was simple and free to start. I switched to Google Maps because Mapquest was ugly and overrun with ads. I switched to Chrome because it was fast and it focused more of my screen on the sites I was browsing instead of on Firefox toolbars.
How Networks Win
Networks win on density and engagement.
For Uber, density means that a driver is available within a reasonable distance whenever a passengers hails a car. That density of drivers is caused by the engaged group of passengers frequently hailing cars. For Yelp, density means a user looking for a specific venue can find enough high-quality reviews to make an informed decision and that density is driven by the engaged group of people who take time to write reviews.
For Facebook, Instagram, Twitter, etc. density means a consumption-minded user can find enough people and interesting content upon logging in. More importantly, density means a sharing-minded user has an active audience to share with. Consuming users will judge the network by whether fresh, entertaining content is available, and they will show their appreciation for that content by engaging with it via favorites, likes, and comments. Sharing users will judge the network on how much social engagement their posts receive, and they will show their appreciation by contributing more content to the network. The more engagement a social network can funnel back to its content creators, the more fun, higher retaining, and faster growing it will be.
When the keys to success of a network are increasing density and engagement it will affect how you should prioritize your work. Many of the quality-enhancing features that would be at the top of your backlog for a utility are significantly less critical than the density-enhancing and engagement-driving features that are important to a network. When you’re organizing your roadmap make sure you know where your product stands, and it will become more obvious whether you should be investing in quality or in driving density and engagement.
Don’t you need both?
The obvious counter to my argument is that the quality of your networked product needs to be high in order for you to retain users and keep the network dense and engaged, but I think most technologists overestimate the need for quality in a networked product.
Ivory-tower tech employees often marvel at Facebook’s success despite bugs, privacy breaches, and a low net-promoter score. However, they miss the fact that the network effects of Facebook are so crucial that the single most important thing to Facebook is how many of your friends, family, and co-workers log-in, share, and engage. Everything else including caching bugs, photo resolution, speed of the app, and confusing privacy settings, are a distant second to building a dense and engaged network. Sometimes I marvel at Instagram’s continued success in spite of: no zoom, no type-ahead on search, no swiping to browse through photos, weird thumbnail views, awful resolution, and a generally slow app, but then I remember that their graph is too dense and too engaged for such “trivial” quality issues to slow it down.
Next time you are planning your backlog, take a step back and frame the discussion in the context of whether your product is a network or a utility. Once it’s clear what type of product you’re building it should also be more clear which feature is more important to your product’s success.
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Special thanks to @noahlt, @justmadhu, @anm, @mattknox, @ptr, and @lexcooke for reading drafts of this.
