How to build for your market, not the next deal
Most startups are idea-rich and resource-poor. Founders and product managers are constantly bombarded with feature requests, so a lack of ideas is rarely the biggest problem. At the same time, startups typically try to achieve something ambitious with limited resources. Startup success is thus heavily dependent on what you say yes and no to and how you prioritise these initiatives against each other. I encourage teams to focus on complex problems faced by many rather than those faced by few. This is the best way to differentiate your product and find product-market fit.
It can be challenging to determine how in-demand a feature will be. Early-stage startups typically rely heavily on the domain experience of their founders (one of many reasons why founder-market fit is crucial), feedback from early customers, and much guesswork. A more mature startup has a customer base that is more representative of its market, so it can instead rely on quantitative data from its customers to understand the market. Building for your market rather than specific customers is critical to getting real ROI from constrained resources. Startups that build too many customer-specific solutions may never achieve product-market fit. They end up with many complex and custom configurations (no two customers look the same), competing priorities that are difficult to manage (e.g., customers of one profile urgently require one thing, customers of another urgently require something completely different), very long customer onboarding cycles (because each new customer requires special attention and customisation), and a terminal lack of focus. In contrast, startups that focus on market solutions (and avoid customising their product based on the needs of individual customers) grow faster (because each new feature improves their product-market fit and they can onboard new customers faster), stay focused and have an easier time prioritising future opportunities.
In the early days of building a product, prioritising solutions for the market over solutions for individual customers is much easier said than done. Because your product is immature and may not do enough to satisfy the average customer in your market, it usually feels like every new customer has some custom request you need to acquiesce to in order to close the deal. While startups with comfortable runway may have the luxury of saying "maybe later" to all of these requests and instead growing slowly towards product-market fit through a strong commitment to only building solutions for the market, many startups get their first few wins and keep the lights on by tolerating custom requests. While either approach can work fine, SaaS solutions must commit to their market as early as possible.
Complexity is another essential dimension of opportunity prioritisation. The best way to differentiate your product is to solve complicated and intimidating problems for your market, but many startups get caught up on commodity features. While commodity features solve challenges for your base, they are so simple that others have already solved them. It may make sense to build these solutions eventually. Still, startups that focus too much on commodity features tend to find their only opportunity to differentiate is through lower pricing, and they tend to grow pretty slowly. They also struggle to resource the more fundamental problems their market faces because their resources are spread too thinly across many small solutions. By prioritising the most significant and most complicated problems faced by your market, you can become the most valuable product in your customers' stack. This focus makes your product sticky, highly valuable, and easy to sell.
Combining these two dimensions of prioritisation can make it easier to determine how to spend your time:
- Complex problems pervasive in your target market will differentiate your product. It would be best if you spent as much of your resources as possible solving these problems.
- While it may make sense to tackle simple problems that your target customers commonly experience, try to outsource this to the ecosystem through partnerships with and endorsements of other solutions.
- Addressing complex problems for only a tiny market segment is usually a waste of valuable resources. Often, you can indirectly solve these problems by building outstanding APIs that enable customers to solve them themselves. However, this TAM-expanding initiative should come after you have achieved product-market fit. Diverse B2B markets sometimes have many segments with specialised needs. In these cases, building outstanding APIs may not be enough. You might need to foster an ecosystem of third-party professional services developers that can create solutions for your customers with your product at the core.
- Simple, unique challenges don't need to be addressed.
You need organisational discipline to focus on the right things and not be distracted by the wrong opportunities. You also must be capable of determining how common and complex the problems you are prioritising are. For this, domain expertise is critical in the early days, and as your startup matures, you need to build operations to measure and challenge these assumptions.