Estimating Product Growth Potential 🤔📈
I love to invest in workplace collaboration products because solving problems at work is such a fertile space. Successful products grow like traditional consumer products but have similar retention to traditional enterprise products. A compelling brand and the associated virtuous cycle of earned media coverage are very important to topline growth, as is the overall product quality — just like consumer companies. Founders building collaboration products have to do two of the hardest things known to startups: design for easy growth, and create deep product value.
These two forces determine a company’s product growth potential — whether a company can develop quick, lasting growth. I’ve plotted some of today’s most notable collaboration startups against these axes.
Designing for easy growth
Companies with high product growth potential build products that are easy to join, can be used daily by most or all employees at a company, and are (to some extent) free. It seems obvious, but the easier it is for customers to adopt the tool, the more quickly the business can grow. Executing well on “easier to adopt” is the hard part.
A tool meant to be used on a daily basis provides an efficient feedback cycle that’s critical to surviving until you reach product/market fit. (Always remember startups are not companies, they are experiments to figure out whether there could be a viable company.) An agnostic use case goes a long way toward the spread of a tool, meaning a product that anyone at a company can use as part of their daily role has many more potential users than one just for product managers.
Finally, the business model (or eventual business model) matters. Freemium products can grow more quickly than products that need a top-down deployment. The big question is whether they can stick at the same rate, which is where product value comes in.
Creating product value
Part of what makes workplace collaboration such a fertile space is that these are valuable problems to solve — which is where the product value comes in. Product value is where you see product/market fit driving growth through retention and expansion. It’s not enough just to acquire customers with a free(ish) product that’s easy to use, you have to also retain your customers and encourage the spread of the tool throughout the organization where it first landed.
Products with high product value must solve a valuable, core, business communication problem: how designers and engineers work together, how the entire company communicates, how people know what their goal is, or what they’re working on today. Because of the value of these problems, these also tend to be products that companies expect to pay for. And because of the nature of the communication problems these platforms aim to solve, they tend to have a lot of inertia once they get going.
Think about product growth potential early & often
If you’re starting a company in this space, thinking about starting a company, or have product/market fit and want to push on growth, I can help you.
