How do you Build a Million-Dollar Product?
I am a product manager. I’ve been one for over a decade, and I absolutely love it! Building new products, and building them from scratch gives me a huge boost! Interestingly a few of these products have crossed the million-dollar mark; so I wanted to share a few of my secret mantras that can help you get your next million dollars.
The “easiest” part of building a product is building the product. It’s true: once you know what to build, creating mock-ups and writing code is the easiest bit in building successful products. The harder part is what happens before and after building the product. I’ll focus on the “before” in this article, and if you like it, then maybe I’ll get motivated to write another one on the “after”.
What’s the standard punchline for new products? “Don’t just build a product, build it if you have sufficient evidence that it would solve an existing problem; and, the problem is large enough that it justifies a solution.” Well, I think this definition is now old school, if you want to make a million dollars.
When it comes to technology, we live in a cutthroat competitive world. There is hardly a day that goes by where we do not hear about a new product, or a new technology (yesterday, for instance, I learned about Tensorflow, an open-source software library developed by Google, that I’m going to pounce on for my products). Building a product that “just” solves a problem is not enough.
1. Build Your Barriers to Entry
The first mantra is that you should build “barriers to entry”. Right from the outset, think about creating a competitive advantage, and keeping it for the lifecycle of your product. In other words, how do I stop the rest of the world from copying my product and making a product that is better than mine?
A barrier to entry may not always be a patent. As an example, let’s say if a specific data source is a core constituent of your product, you might be able to build a barrier to entry by creating an exclusive partnership with the data source provider. Suddenly you have blocked any new entrants from becoming your competition.
Ask yourself, why is Slack successful? There are 100 other communication tools, providing the same communication capabilities as Slack. In fact, I read an article on building a Slack clone with less than 1,000 lines of code. So why is Slack the market leader? Right from day one, Slack focused on integrations. Even in its very early days, Slack was integrated with every popular productivity, cloud storage, and project management application. What’s more, Slack created an open API for any third party to come and integrate with them. Today, the list of its integrations runs into 100s. And all of us love these integrations, don’t we? (GitHub and Google Drive are my personal favorites). This long list of integrations has created a huge barrier to entry for any of its competitors.
2. Have a Clear-Cut Revenue Strategy
How will you make money? It’s not enough to have a brilliant product, you must also have a very clear sense of its revenue strategy. There are a million-plus apps on the Apple Store, but how many of them generate revenue? I use more than 50 apps on my phone, and I (honest confession) don’t pay for any of them.
Is your product so relevant and valuable that your customers will pay for it? It is important to identify who will buy your product, and how many of such people exist. Is their pain-point sore enough that they will pull out their credit cards to subscribe to your service? Tons and tons of products start with huge enthusiasm, but eventually fail as they do not have a well thought-through revenue strategy.
3. Nail Down Your Early Adopters
One last mantra, and this one is interesting, as most of us neglect to tackle this till after the product is built: how do I plan to build my customer base? A newbie product manager would say (and this is me saying this some 10 years back): “Oh, I’ll put in some cash, I’ll do some digital marketing, and I’ll get customers.” This is how most of us think, and this is why most of us fail.
Turn around and rethink… how did Facebook get started? Brilliant product, yes, but how did it all start? It was the “Harvard campus”, an immediate set of early adopters, turning into promoters, and the aura of exclusivity. Then only the Ivy Leagues had it, which pushed the other schools to crave for it, and then the entire world was being driven by a massive set of promoters.
It may very well be your network, or the contacts you have through your friends and foes, or it may be your customers from previous gigs, but it is imperative to find your early adopters. I have learned the hard way, that even if your product is stellar, even if your product is better than Facebook, you will need your early adopters. You will need a critical mass of customers using your product (and hopefully paying you for it), and you must have a well thought-through strategy to lock them down before you start writing your first line of code.
Before you Build
So, once again, in summary – build your barriers to entry, think about your revenue strategy, and have a rock-solid plan to get your early adopters on board. Do this before you build your product, and then glory shall not be far away 🙂