The One Question Every Entrepreneur Must Answer
There are only a handful of behaviors and products that I use every day. I wake up and brush my teeth. Then I normally check my email and text messages. At some point, I get to work and check my email or review some spreadsheets. Maybe I take a car uptown for a few meetings. At the end of the day, I generally collapse into bed. This list isn’t quite exhaustive (I assure you that at some point I both take a shower and eat some food), but it does provide a very rough outline of how the average day transpires.
For most of us, these products that facilitate the everyday behaviors in our life are used without even thinking and probably number in between two or three dozen. It should come as no surprise that these same products that we use on a daily basis are products or services provided by some of the world’s most prominent (and largest) companies. In fact, as I listed everyday activities, you were probably already thinking of the specific underlying brands you most closely associate with them — companies like Procter & Gamble (toothpaste and other household goods), Microsoft (word processors and spreadsheets), Apple (phones), Casper (beds), Google (search and email), Uber (transportation) and Facebook (social media).
The correlation between daily use and the value of these businesses is not a coincidence. In some businesses where network effects apply, there are one or two winners with near monopolistic power (Facebook, Google, Uber) and in other industries where there are less powerful benefits of scale, there may be more competitors, as is the case with Procter & Gamble facing upstarts like Quip, or Sealy dealing with the freight train that is Casper.
Regardless of what industry you are in and what your target market is, the single question every entrepreneur must ask themselves in building any product is a fundamentally simple one: “How do I make this part of my user’s daily life?” While fairly innocuous at first blush, it is core to nearly every one of the most successful products of the past century (and, arguably, far longer). Assuming we’re in agreement there, let’s unpack what the question really means and how to go about achieving it.
Define Your Users
An important distinction is that the question you are asking yourself is specifically how your product can be a daily part of your target user’s life. The key point to recognize is that it doesn’t necessarily need to be a part of everyone’s daily life, only that of your target user base. Said another way, while everyone (hopefully) uses a toothbrush and toothpaste, not everyone uses business customer relationship software. Does that mean the team over at Salesforce has a bad business? Unless $60 billion businesses don’t fit your criteria for success, I think we can agree that’s pretty obviously not the case.
What Salesforce has built is a product that has a specific target user base which is far smaller on a per individual basis than the market for toothbrushes. And that’s fine, because they didn’t try to change their product to appeal to every single person who uses a toothbrush. Instead, they focused on building a product that would become an integral part of the daily life and workflow of their specific target customer base. Nearly every successful sales person I know says Salesforce is one of the first apps they open every day upon arriving at work and the last they close upon leaving the office. That is about as integrated into an individual’s work life as you can get, and it’s that centrality of the product into a user’s daily workflow that has allowed the company to charge users thousands of dollars a month for access to it.
Build a Beachhead
When building LinkedIn, Reid Hoffman famously understood that while at the outset they were little more than an online resume platform, they had the potential to be so much more. Their initial product was used primarily during periods of professional upheaval in an individual’s life, but beyond that, it could be a way for everyone — whether job-hunting or gainfully employed — to put forth a public representation of their professional self to the world. With that in mind, the team at LinkedIn understood that it was critical for them to find a way to transition into becoming a more prominent part of their user’s daily lives. In doing so, LinkedIn became more than just a place to display your online resume — it became the place where you could do all of your professional networking.
The two spaces (job hunting and professional networking) tend to involve the same people and similar behaviors, so being the destination for the former at the onset was the beachhead LinkedIn needed to become the destination for the latter. This process of laddering up into a more valuable market was only possible because of the rung on the ladder that they were able to occupy preceding it. In becoming the business networking tool of record, they successfully made the transition from a once-a-month product to a once-a-day product, and so too did the business transition from a several hundred million dollar company to a multi-billion dollar one. The point? When building your business plan or minimum viable product, understand that in most cases, products ladder up into becoming deeply ingrained into their users lives, they do not start that way.
Don’t be afraid to start by building a product with lower use frequency (or lower rung) with an understanding of the ultimate goal of being a daily use product (at a much higher rung on the ladder). In many cases you can only get to the end goal by starting with something else beforehand.
Create FOMO in your product
Social pressure is a powerful motivator, and it applies to nearly every product we use. Scott Galloway, the founder of L2 and a marketing professor at NYU Stern, has famously professed that, “Apple is sex.” That is to say, it provides a powerful form of social proof that we self-identify with and use as a means of building social currency and credibility within our peer groups.
Companies establish the value of products that we can’t go without in two major ways: by making the products visible to others (think of how prominently most people display their iPhones), or by going one step further and effectively publicizing the success and satisfaction of people using the product to those who have yet to get on board. Think of nearly every marketplace technology product using newsfeeds today — these products don’t just facilitate transactions between multiple parties but publicize the deals that are taking place on the platform to others.
Create a sense amongst your user base that something is happening regardless of their activity — and make that something of value such that they feel pain at the prospect of missing out. Users’ activity will be driven by a desire to simply not fall behind. Companies that have mastered the ability to tap into this mindset have shown relentless focus on creating small increments of value in their products and displaying those in a highly-motivational fashion.
Gamification and Reward Systems
There are droves of research — both academic and with real-world applications — that support the notion that gamification is a highly effective mechanism to drive engagement. Uber has perhaps found a more ingenious means of this than anyone when it comes to incentivizing their drivers. Leaving moral quandaries aside, they have gamified their driver program such that they show drivers just how close they are to different reward tiers to encourage higher usage rates or bonuses for desired behaviors, like driving during periods of higher demand (what we’ve come to know as those periods where we get hit with surge pricing). It is important to note that ultimately, gamification and reward systems do not work if the underlying product does not create value, but they are a powerful tool for businesses that have had success with the preceding endeavors.
Tying It Together
So it’s ultimately pretty simple:
- Define who your target users are.
- Rigorously ask yourself what key feature of your business or product is going to make it indispensable to users on a daily basis.
- Build out that feature, understanding that you may have to start with a piece of it before laddering up into the full concept.
- As you build your product, create mechanisms that induce FOMO when a user isn’t actively engaging with it.
- Finally, once you have succeeded with the preceding items, use gamification and rewards systems to further encourage desired behavior.
Always keep in mind that the product you initially launch with, and even the first handful of features that build your initial place in the market, do not necessarily need to be the next killer app or the most FOMO-inducing element right off the bat. The key is to make sure that you are building up your product with that single question in mind: “How do I make this part of my user’s daily life?” In hindsight answers, like the newsfeed for Facebook, might seem awfully intuitive simply because of how familiar they have become. But at the time, they most definitely were not. Don’t fret if the answers aren’t there immediately. Instead, simply build your beachhead and row in the general direction while making this key entrepreneurial question a part of your daily life, and in time, you too will find your own Facebook newsfeed.
About Colin Darretta
Co-Founder at DojoMojo and Founder at WellPath, former Private Equity at CI Capital and Investment Banker at Goldman Sachs. Occasional Angel Investor and Writer.
