The Product Hierarchy of Needs
Using Maslow’s famous framework for product planning
Maslow’s Hierarchy of Needs is one of the most well known frameworks of all time. Famously, Maslow draws the pyramid of human needs where lower layers of the pyramid represent the more basic needs (for example, physiological and safety needs) while each level above moves towards transcendence and self actualization. As the theory goes, one can only satisfy the needs at a certain level after satisfying the needs of the levels beneath it. If the lower need has not been met the person will not have the motivation, focus or capability to work on a higher need. For example, you won’t be bothered to worry about your social standing if you are starving, naked, and sick.
Appropriating Maslow’s model and applying it to something I am working on has been an interesting exercise over the years. Most recently, we did this at Varo Money to help us think differently about our product roadmap and 2018 strategy. Here’s how we thought about it in regards to our business. I think it can be applied broadly as a simple, useful framework for startups.
The Foundational Layer
The base level of the pyramid for any app, product suite, or startup is the Foundational Layer and includes features and systems that are not necessarily sexy but absolutely necessary. At Varo, we call this stuff “The Air.” As in, you don’t really notice it when things are working normally (breathing), but when something is borked, you’re in serious trouble (suffocating). Work that fits into this group are things like: registration, account/password management, settings, performance, security, customer service, and business intelligence. To make an obvious point, no one has ever said, “that password reset was so extra!” But I know I have flipped over a table or two after an encounter with broken password reset functionality. You know what? I am still mad!
In any specific domain there may also be foundational, “table stakes” features that simply need to exist. At Varo we are a banking app and users must have the ability to deposit money into their account. It may not be the killer feature moving people to switch their banking to us, but it has to be there and work as well as lemon on oysters.
The Foundational Layer must be complete and work extremely well. It’s mostly about sound execution, operational excellence and solid technology. Watch your customer feedback channels (NPS, App Store Reviews, Customer Service issues) to measure how you are doing. It’s critical to understand that in this layer you are building TRUST with your customer. As the saying goes, trust is hard to earn and easy to lose.
Do the foundational work flawlessly. Pause work in above layers if you are seeing cracks in the foundation.
The Value Proposition Layer
If the Foundational Layer is strong enough, you’ll be ready and able to focus on the layer above, the Value Proposition Layer. This is the body of work that solves a real customer pain point better than any other solution out there. Work in this layer takes on a different character. Your company vision will lead you. When I was at TaskRabbit, we were striving to make everyone their most productive selves. We knew our clients needed help with their everyday chores and our Taskers wanted to find good, respectable jobs. The work we did in the Value Proposition Layer was our core marketplace engine to match clients and Taskers.
Success in this layer is hard and the closer you are to your customers the better. Consider doing things that don’t scale while you don’t have a ton of users. Talk to customers on the phone, text or email them personally (turn off your automation for a bit), visit them IRL. Do whatever it takes to really understand what is working and what is not. When Airbnb had only a handful of customers, the founders famously visited every one.
This is the layer where you’ll want to go slow to go fast. Build low-fi prototypes of your new ideas. Show them to customers. Vet and de-risk your ideas before transposing them into code. Spend time on the design and UX upfront. Involve your engineers early in ideation. Get it right and solve that problem better than anyone else can.
Most importantly, determine what success is for your customer and your business. Instrument your app or website to measure your success metrics and make those transparent to everyone on the team. Talk obsessively about how you are tracking (or not) and why. Create a feedback loop of measuring, learning, and recalibrating. You will get on a roll and things will start happening.
The Value Proposition Layer is where you will really start creating business value. The balance between speed and quality is the greatest challenge.
The Growth Layer
Oh how tempting it can be to start building the growth engine before you have really cracked the foundational and value proposition work. Growth is fun! Even when things are really broken, growthy activities can cover all that up and make you feel goooooood. For a while anyway. Eventually the money tightens up and if you didn’t do a good enough job on the layers below, you’ll discover that your acquisition costs and unit economics are upside down. You’ll discover that users only really like your product because you’ve subsidized it so much. You thought you were an interesting mainstream product and it turns out you are premium, niche and uninteresting. (So sad!)
However, if you know that you have built something that really solves customer pain and the customer can see that value, if the customer really trusts your product and identifies with your brand, and if you are seeing positive organic lift, then building a growth engine is the right thing to do. Activities in this layer may include performance and brand marketing, referral programs, influencer and social marketing, events, and targeted funnel or deep engagement optimization. Whatever it is I can tell you that you’ll want to be scientific about it. Create hypotheses and test them. Document all learnings. Develop guiding principles based on those learnings. Constantly be scanning for new channels. Your goal is to find predictable, sustainable and profitable growth.
(I do think sober, measured early experimentation in growth-focused activities can be a healthy. Setting up your growth systems early so that you can turn it up when you’re ready make sense. Just don’t get too carried away.)
Pro tip: Understand that CAC (customer acquisition cost) is likely to go up in each channel as you push on volume. When that happens figure out how to increase LTV (long term value) so you can afford to pay more on acquisition. The best companies beat the competition by being able to afford to pay more for a customer.
One of the biggest dangers to a startup is working on the growth layer too early or too late.
Where does the business model fit in?
In my view, proving that you have a business model that is worthy of pursuing fits snugly into the Value Proposition Layer. The understanding that someone will pay (in attention or money) for the value they are getting out of your solution is critical to know before spending money and effort on growth activities. It’s cheaper to iterate on the value exchange earlier on. It’s harder to shift a company that’s already deep into building a growth engine. There are, of course, some famous examples of companies focusing on growth before monetization. However, I believe those are exceptional and perhaps may be a thing of the past.
Final Thoughts
It’s not really going to make sense to rigidly focus on one layer of the pyramid at a time. You’ll probably end up doing a little bit in two layers and a lot in one layer depending on where you’re at and that’s exactly right. In my experience, this pyramid almost always reminds me to periodically drop down a layer and work on the more fundamental work. Mostly, I hope this framework is helpful in facilitating honest evaluation of what you need to prioritize at any given time.
And now, time to reset that freakin’ password.
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