The ‘product’ value in a startup.
🇪🇸 First. Do you want to read this article in Spanish? Check it here.
Let’s close our eyes for a moment and put ourselves in situation.
We must move around the city from point A to point B, (we ignore the taxis for this action) we enter Uber or Cabify, select destinations and we are on the move.
Another example, we are on the bus and we want to listen to some music to disconnect a bit, we open Apple Music or Spotify, select the list or the song we want and that’s it.
More examples, we need to travel (for work or pleasure) to Paris, and we look for a place to stay, we automatically access Booking or Airbnb, in this trip we have made many pictures and memories that we want to share with our friends or followers, for we will use Instagram or Facebook (although the latter has lost the main essence).
And the last and most emphatic. We need to communicate with a friend, family member, couple, etc. We open WhatsApp and that’s it. “Writing …”
All these products and services have something in common that has made those products be where they are. Obviously, the financing of hundreds of thousands of millions that accumulate help, of course, but if we had to weigh each of the legs of these products it would be something like this:
From this we get that all legs are equally important. Right? It must be something balanced.
“In the foundations of a startup, the main legs: Business, Technology and Product are basic, and all have to be properly aligned and balanced from the start”
Faced with this situation and relying on an earlier article that I wrote. “MVP has died, long life to the MAP”, in the first stages of creation of a new startup having controlled the part of the product is critical.
Cris Busquets at UiFromMars, has an article called: When is the best moment to invest in product?
“Solving an error in the development phase costs 10 times more than doing it in design, and 100 times more if you’re trying to do it in a product that has already been launched.”
What do we deduce from this? Investing in product is always a good option, and in current times it is practically a must.
Obviously, each startup has different resources, different equipment, different time, which means that it is not always the time to invest in product, in the examples above, all are large companies, almost all American companies with a large economic capacity, but it does not mean we cannot compete in product against them.
The product as a base
There is a methodology known as design-driven, and it is a culture that is rooted in large listed companies on the stock market, where the product is a fundamental part of your company, we found an example in this DMI article, where it says that design-driven companies outstrip + 200% traditional companies.
“Companies that invest in product are more valuable and in the long run are more successful.”
Basically, it is thinking about solutions that both the market and the average user expects or seeks, designing them in the best possible way.
As I mentioned in the MVP vs MAP article, this will be key in the future, since the creation of apps / webs is popularizing a lot, and practically anyone can launch an average app, the differentiation will be in the product, its vision and shape.
Let us give some examples, both Spanish and from outside our borders, where the product has been key and use Design-Driven as a base in their startups.
Cabify
The first of the list, Cabify, an app for mobility, transport of people, Uber competition in Spain and Latin America. A clear business, a very sustainable and reliable technology and a very good product. (Personally, I think it’s better than Uber App).
The whole of a wonderful product, a growing user base, and betting on the product from the beginning. Result:
More than € 440M in funding in 8 rounds since 2012.
It is said that in a short time they want to go public…
Badi
An app to find your roommate or put a room for rent, with search engine by cities, chat with potential tenants, etc.
A careful worked interface, quite close to the Airbnb experience, badi seeks to earn a place among the millennials and the new Z generation to search for a flat. Result:
More than € 44M in financing in 5 rounds since 2015.
Triporate
We have talked about companies that are already well established, but let’s give an example of something that literally has MONTHS in the market. A good business, a simple service, but a masterful execution. The product offered by Triporate is careful, worked and detailed.
The example of ROI in product at its peak, in just a few months (Feb 2019) billing, growing and with a record round in Startupxplore. Result:
More than € 330K in financing in 2 rounds since 2018.
A startup to consider and believed in product differentiation.
Revolut / N26
On this occasion, the example is worth for two startups, both N26 and Revolut, two mobile banking giants that based their entire strategy on a good product. Traditional banking (except for BBVA in my opinion) is lagging at the service, usability and product level, that’s where these two banks saw the possibility and they fully launched themselves for product.
By taking mobile banking to a clear and simple concept, (just what the millennials and generation Z need or seek) these two grow by giant leaps and between them they add billions of valuations. Result:
A total of + € 840M in financing in 16 rounds between both.
Flywire
From its offices in Valencia and Boston, Flywire is revolutionizing international payments. They realized a very big problem in delays and feeds with the traditional international bank payments.
In addition to finding the niche, the solution they created was highly intuitive and accessible. Another top product. Result:
More than + € 140M in financing in 7 rounds since 2010.
These are just some of the examples where we could take 10 or 100 more, great startups where they balanced the whole business, technology and product, offering the best version they could offer, always innovating, improving and always investing in product. Success goes along them all.
“Investing in the product is just as critical as investing in technology, you want hundreds of thousands of users to use your app, and all of them will add value to your product.”
What do all these startups have in common?
With all these examples I emphasize the fact of the importance to dedicate resources, time and effort in the product that you have thought or is about to be launched. Obviously, it will not be the magic key that makes you receive automatically investment, and be a profitable company from the minute one, however you will be putting effort and care into something that the user will really see a value from minute one.
Therefore, if you want your startup to one day reach the level of Booking, WhatsApp, Instagram, Airbnb, Spotify, … [add here 100 more top startups] think about investing in product.
The moment to invest in product, is … always”
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