10X Products
I wrote about 10X Founders, 10X Markets, and 10X Durability previously, leaving one more topic in this series to explore: 10X Products.
At GSV, we talk about People, Product, Potential, Predictability as our four investment tenants. A great team operating in a large market need to develop a compelling product that people love not only today, but tomorrow as well, to be truly durable.
“You need a very product-oriented culture…Lots of companies have great engineers and smart people…there needs to be some gravitational force that pulls it all together.” — Steven Paul Jobs
Aspirin Versus Vitamin
A great product solves a pain right now (aspirin) rather than being a nice-to-have (vitamin) over the long term. Most great products were created by people who wanted to solve their own problems.
Apple made iPhone when its own employees hated the Blackberry phones that they had to use. I look at products and try to figure out what specific problem they solve and focus on that specific pain point. Do that one thing really well and see how much people are willing to pay for it.
Also, products have to be durable. If you didn’t work on your product for a week, would it be OK? Or would it die. If CNN did not broadcast or have news for a week, it would essentially be dead. If your babysitter didn’t show up for a week when you needed him there every day, that business relationship would be over. If you are building something that can’t live without you working on it every day, you aren’t building a product, you are building a service. There’s nothing wrong with building a services company, but it’s not a product.
Think Different
Products in the middle usually get squeezed by both higher end and lower end products. It’s extremely hard for the middle of the road products to define its value proposition in a dynamic technology market where costs and prices are constantly changing.
We look for products that either come to the market as high cost, highly differentiated disruption or low cost, lower friction, simpler disruption.
For much of the early 2000s, car companies tried to come up with versions of electric cars that were targeted towards the average car buyer, but too expensive due to battery cost. Tesla, realizing that there is no way to get the battery cost down at that time, instead went to the extreme high end of the market to make a luxury sports car.
The other route is to be a lower cost/ friction disruptor. By 2007, the world already had plenty of online communities. Twitter came on to the market and while many felt it was just another online forum, the simplicity of it allowed many more people to blog (microblog) and lowered the barrier to use.
“Move Fast and Break Things.” — the original Facebook mantra.
If you are not building it, would it be built? The product has to be sufficiently different from other products in the market. Airbnb and Lyft essentially broke our concept of what it means to be a “hotel” and “taxi”, respectively.
Culture
Last but not least, we want to invest in companies with a product culture. A sales culture without a passion for products all think the same: how to squeeze out marginal growth and profitability. Product cultures think about how to build different, unique products to solve important pain points in the world.
That means aligning the entire organization around enhancing the product. Workday started out with the product teams receiving feedback directly from customers. Only when the company grew much larger, did they start separating the product teams from the customer support teams. Even today, these two groups work hand in hand to help solve customer problems as soon as possible.
10X Products are Unique Aspirins built in a customer-first Culture.
Inspired by two of the greatest product people of all time: the incomparable Aneel Bhusri (@aneelb), co-founder & CEO of Workday and Jerry Yang, co-founder of Yahoo!
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