Entrepreneur, technologist and investor. CEO of Fundraising. Helping global startups grow through fintech and innovation financing.
Name a startup that has become a household name and you’ll hear a story of a successful core product. Yes, their branding might be great, their marketing brilliant and their sales teams well-oiled machines, but at the heart of their success is a product that customers love.
Sometimes these products create categories and revolutionize society, sometimes they just do a little thing really well. Interestingly, great new businesses are often not amazing breakthrough ideas, but rather incremental improvements or a fresh look at what others have done (or haven’t done) before.
Developing your core product
Building and continuously improving your core product is critical to your company’s strategy, journey and ultimate success. Your product is the foundation on which you can build your growing business.
The first step to discovering your core product is probably, or was, the light bulb moment that got you started your business in the first place. You saw something others didn’t, you identified a need in a market that you are familiar with, or you built on a concept that you are passionate about. Many of us know the story about how Tom’s shoes came to be, and I’ve seen hundreds of similar but unique stories in my time helping fund startups.
My first piece of advice is to take the time to work on your idea and test it. Many new founders fear that their brilliant idea will be ‘stolen’ if they share it. The fact is, even if it did, are they in a better position than you to build it? And do they have your drive and passion to see that idea go from concept to reality? In my experience the answer is no.
Avoid the shiny new thing and focus
Most stories of successful businesses start and sometimes end with one thing done very well. As a founder, it’s tempting and natural to cast your eye on the “gleaming new thing” that could potentially grow your business. The key to getting this right is both a customer focus and making sure the timing is right for your business.
Past success stories (and failures, of which there are countless) tell us that allocating resources to building your core product is a better strategy than diversifying early, especially with limited key resources. There are already mediocre solutions on the market, why add more?
Even global giants are focused on the point of obsession with their core product. Love it or hate it, McDonald’s is a great example of quality and consistency around the world.
My own company was initially focused on creating a product aimed at serving early stage businesses better than anything else we saw on the market. From there, we developed sales, operations, creditworthiness and technology to support this. Only after our customers were satisfied with what we offered and how we delivered it did we diversify our product portfolio to meet their needs. Allocating resources between continuous delivery of excellence in your core product and expansion becomes even more important as your business grows and matures.
Serving a niche
Finding an unmet need or underserved gap in a niche market where you can provide a solution to a smaller group of people or businesses is another common strategy and a common path to success. Focusing on a niche provides clarity about the product, CX, technology requirements and pricing.
This is why many successful founders have experience in the market they want to serve with their concept. Understanding your customer and their problem is key, and the goal is to create a business that serves them better than anyone else.
Big companies don’t stay in their niche forever, but they continue to focus on filling that unfilled gap.
Will it scale?
Think about how your core product will scale. Is the scope limited to a local or very specific niche or are your ambitions bigger?
When you’re ready, expanding revenue streams with new products is an excellent source of growth. For example, Wealthsimple started offering robo-advisor portfolio management, and now they offer multiple financial products. Xero used to be cloud accounting software in Australia and New Zealand, but is now a global accounting marketplace. Perhaps, even more famously, Uber was a ride-hailing giant before moving on to delivering food. They all did one thing right, built a loyal customer base and grew from there.
For tech and SaaS companies, the question is becoming more about building for global first and creating the operations needed to make it happen.
Well-equipped companies use big data to inform and drive business decisions. Almost 35% of Amazon’s annual revenue comes from collaborative filtering engines (CFE) that analyze a customer’s history, purchases, wish lists, and reviews, then use that data to recommend similar purchases. googleThe People Analytics department helps the company make important HR decisions by collecting data from employee surveys and performance reviews. Data drives decision-making in companies at every level, from marketing to HR.
You may not have the same data lakes and the same power to handle it, but you have one thing in common with the big boys: you know your customers. Asking questions. Request feedback. Accurate data collection can reveal blind spots in your product and processes. You may have great instincts about what the best product might look like, but the ultimate judge is the market.
Prototyping, testing and building the feedback loop
There’s no point in analyzing user data and collecting feedback from your customers if you’re not using it. Creating a system of continuous feedback, prototyping, testing and incremental improvement will accelerate your growth and customer experience.
Prototyping or conducting “live experiments” gives you real-time feedback that you can use to improve product development. It’s your chance to create a product that really fits your customer, fixes any errors, fixes functionality and makes incremental improvements. By building a continuous loop of feedback between the customer, data and product team, your product will ultimately be fit for purpose and better serve your customers incrementally.