Don’t build a Swiss Army knife

One of the most common pitfalls for Israeli startups is trying to provide everything to everyone. Perhaps the reason for this phenomena is that many of the Israeli startups are led by teams of strong technologists who invest heavily in product capabilities and feel pride when their product outperforms competition in EVERY angle and feature. Moreover, it is often not a single competitor that some startups try to outperform, but they offer the functionality of several different companies combined into one product offering.

Many of these startups have great technology and an extremely ambitious vision. The entrepreneurs intuitively think that by building a product that can solve many of their customers’ needs they are providing more value and therefore increasing their ability to sell. Furthermore, the product is often so robust that it is designed to serve different kinds of customers in multiple areas. In their mind the entrepreneurs are increasing the number of potential customers and by that are increasing the TAM (Total Addressable Market). This leads entrepreneurs to believe they are building more value for the startup and reducing the risk.

While this may sound great on paper, in reality it is rarely the case.

When customers buy your product, 99% of the time they buy it for one or mostly two specific pain points it solves. These are the pain points that are hurting them the most and they care much less about the rest. All the other capabilities and features that your product offers are just less relevant and you will not earn any bonus points for building them. Moreover, these extra capabilities will mainly generate noise, making it more difficult for the customer and your sales team to focus on the really interesting stuff. In addition, being able to do many things well most likely means that there is no one thing your product does really great. Finally, it is very difficult to ‘tailor’ a thoughtful solution that is easy to use when you are focused on solving all the issues your customer may ever encounter. What you typically end up with is a long “laundry list” of features and a pretty generic User Experience (UX).

So what should you do? Stay close to your customers (which is more difficult when you sell through channels as discussed before) and try to identify what is the top pain points on their list. Then build a product that solves only these pain points but solves them really well. Also, identify early on who is your likely customer and which market segments you should focus on (and more importantly, which ones you should not focus on). Only much later on, when you have built a large customer base and significant revenue, start expanding the product to serve other needs your existing customers might have. At this point, you will already be entrenched in your customers which will help you better know what they really need and will better position to sell additional adjacent products and features.

Many of the biggest enterprise SaaS companies started this way. For example, it took Zendesk six years and more than $50M in revenue to introduce the Help Center product which is a very natural extension to their ticketing product. In the consumer space, WhatsApp barely introduced new features from launch until the day it got acquired by Facebook. When your product solves a real problem, you just don’t need to.

So don’t try to build a Swiss Army knife. Choose your best weapon and double down on it.