Lessons Learned in Growing a Product Business | Des Traynor, Intercom | BoS Europe 2015

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“My talk is about lessons learned thus far in growing a product-based business”.

It’s no accident Des Traynor and his co-founders at Intercom have been growing so fast – from 4 people in 2011, t0 over 120 in 2015. Des has an uncanny ability to nail down what is right for the customer and for the business as it grows. At Business of Software Europe 2015, Des shared some of the lessons he’s learned on Intercom’s journey.

He covers, amongst other things:

  • Vision
  • Product Strategy
  • Product Management
  • Customer Acquisition
  • Funding
  • Road Maps
  • Emerging Trends in Silicon Valley
  • Growth and scaling

Video, AMA & Transcript below




The Intercom World Tour 2016 Des mentioned – details



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Des Traynor, Intercom: Thanks. It’s wonderful to be here in Cambridge. Quite the antidote to where I was yesterday, which was San Francisco. It’s, they’re slightly different places.

My talk is about lessons, I guess, lessons learned thus far in growing a product-based business. So, my career in the sort of linked in bullet point is, I worked as a consultant for a consultancy in Ireland working on large, you know, government websites, library websites, that sort of stuff. And started consultancy with a boat load of folks and we built web products for startups. We did that for like I guess, three or four years and that got me a lot of raw experience with the true binary outcomes of startup. We probably, four or five products we worked on went on to have like multimillion dollar acquisitions. And for a lack of a better, cleaner, phrase the rest kind of netted out to zero. That’s typical of how startups play out. Since that, we built a product, sold a product and then built Intercom which is the business we’re all in today.

We were four people in August 2011, we’re now about 120.

You know, in a lot of ways we’re a classic Silicon Valley company, $30 million raised, lots of hyper growth. You know, 5,000 customers, etc.

And Mark asked me to talk about lessons learned. A lot of these lessons are gonna focus on the product.

I firmly believe that you can really mess most things up if you get product really right, and you can kind of clean them up later. Conversely, you can have perfect financials, and perfect accounting, and beautiful marketing, but if your product is terrible, you get found out. Reality really goes about last. So, rather than talk about Intercom as it is today, and how our company’s structured, we’re gonna talk a little bit more about like, what we learned when Intercom was more like this, this sort of very, very small embryonic idea that we were trying to turn into potentially a big business. And the first sort of common trait I see across startups that make it and they don’t, is they differ on this.

Your vision for what you’re actually trying to achieve is actually the ceiling for your success.

If you want to build the world’s fastest time tracking software, you’ll build the world’s fastest time tracking software. And that’s exactly what you’ll do. But you won’t necessarily have a transform or shift on how businesses are conducted, or even how time is tracked for that matter. You know, visions are really, really important. They’re kind of like, they’re the guiding principle for your entire company. I really like this scene from Alice in Wonderland which I’ve said before, but like Alice comes across to the Cheshire cat, and the Cheshire cat sits at a crossroads and Alice says, “Which way do I go?” And the cat says well, “Where are you going?” And she says, “I don’t know.” And he says, well, then it doesn’t matter.” Because if you don’t actually know what you’re trying to achieve, all roads are equal. Under equally optimal or equally terrible. But you don’t really care because you don’t actually have the sense of like, a grand destiny that you’re going for. Without having a vision, you’ll flip flop frequently cause you don’t actually know, you know, what you’re trying to do.

But it’s easy to sort of talk about vision in a really high sort of waffley level that kind of is, you know, best sort of visualised in PowerPoint Clipart. But what I really like, you know, in terms of specific things when I’m talking to companies and I ask…I never actually ask what your vision is. I ask specific questions that I think are indicative of how you see the world. Like what does the future of your domain look like, or what are the tech trends that are making your product possible today? And sort of some sense of like what is it you want to do? Like, so, yes, we can all desire to make cash but when you’re done making cash, what have you actually made? And that’s kind of what I really wanna see when I talk to younger companies. It’s kind of, you know, the answer to this question really distinguish people who are playing startup from people who really wanna grow a business. And with this sort of relative ease of access to capital, relative ease of developing software these days, a lot of people are definitely playing startup. Whereas, I think they should be thinking a little bit more to break into these components like. The future of your domain really is, it’s a real like important question. But like if someone says I’m gonna build project management tool. I say like, right, what’s changed in project management such as this tool is needed? And if their answer is ‘it’s basecamp Ui is little bit older’, I’m just like, pssh, that’s not a thing. Like, you know it might be true but that’s not gonna be a driving force behind any sort of significant shift.

If you’re building commerce, what’s changing in commerce?

Well, on-demand purchase is changing. Anything that can be delivered real time wins. Subscription purchasing is changing. We’re now at a time where, remember the dude who did the dollar shave commercial? Right, his business is now at $316 million. So, the joke’s on us, you know.

But that’s what he saw was the rise and the growth of subscription services for recurring commercial purchases by consumers. And he basically piggybacked that trend for a very specific recurring purchase for guys. If you’re building a messaging app, like again, these sort of questions are, to me are like, you know, what’s changing in messaging that creates an opening for a product like yours? Or in marketing, what’s changing in marketing to create an opening for a product like yours? And if you don’t actually have this, it’s usually signed over to the domain expertise and that often means like, you’ll hear people like say things, Oh, we’re gonna make a medical play. I’m like, OK, well, what’s changing in medicine? And they’re like, I don’t know. I don’t see any software there. I’m like, well that’s like it’s not enough to kind of to base something on. Similar, what tech trends are you gonna, are you gonna bet on like? So, your product doesn’t exist in isolation of technology surprisingly given that it’s a technology product.

So, what trends are worth betting on is worth considering. So like, you know, does the watch mean anything for us? Or does the connected home mean anything? You know, this connected home idea that your television can make toast, and your toaster can call you and turn off your thermostat. But like, you know, if this is true like, you know, does it affect the domain of what’s possible. And like similarly, wearables are there as well. What’s, you know, another interesting thing to think about is like, independent of hardware changes or also software changes. So, it’s now like cheaper than ever to build software, deploy software, to store information, to compute information, to retrieve information. Band width, hosting, storage, computational costs are all falling off a cliff thanks to the prevalence of technologies like Amazon, Microsoft, etc.

And that enabled a lot of stuff that previously just did not make sense. It enables things like will hold a terabyte of your photos for free, and will work at a different way to make money. It’s a whole new type of business that’s supported by this type of stuff. Interestingly, like, one of the common arguments as to why we’re not in a bubble right now, is predicated on this idea which is that, before you had to raise money to go and buy a fleet of service and buy a load of database, or higher a load sys admin to set it all up. All of those costs are now no longer upfront capital anymore. They’re all subscription capital. Which means that when you’re raising money these days, you’re not actually throwing away the first two million into like hardware. You’re actually putting it all into product. Obviously the cost of building a product has gone down as well which means you’re actually putting it usually into like growth or scale.

But when you see all this, or you see for example, like the prevalence of all these messaging up. I really like these slides. Everyone single one of these is a, every single one of these is a messaging up. Someone took the time to color code them. Funnily, like obviously, you know, in most regards, this is kind of a joke slide. But there are like four or five multi-million businesses on there who are not necessarily jokes. So, you see, like this is what all this has freed up. Like, the idea that 30 people can build WhatsApp and take down the entire global SMS network by outpacing other speed like 6 to 1, and selling the business for $19 billion dollars, that’s possible today. That just wasn’t possible in 2000. That’s the type of things that are possible today. But, you know, if we forget about money for a second and we just think, like, you know, when you’re actually setting out to do all this, the fundamental question, the piece that will last, cause you could have commercial success and if you’re done then, you’re done. You won’t have the motivation to keep fighting.

The question is like, what change you actually wanna make? And I think it’s a really, really important one to reflect over. Because as I said, like, you know, if things aren’t going so well, right, and your only motivation is cash, your inspiration is just to walk out the door and go get a job at Google. And if things are going well and you get the cash, then your inspiration is to stop doing things and retire. So, you’re real determined desire to change is actually the thing that keeps you going.

Why do you exist other than to make money?

And like for me, when I ask people like, what are you actually trying to do? And I don’t wanna hear like, Oh, we’re gonna be like, we’re gonna do 10 million in revenue, or we’re gonna like be the number one, or the leading provider of hosted.net, whatever. I’m just like, right, grand. They’re all like stepping stones to what? And, you know, it’s best captured in short statements like, with Intercom we want to make internet business personal. Stripe want to increase the GDP of the internet. Instacart wanna build the best place for anyone in the world to shop for groceries. Uber wants to make public transport as reliable as running water. And it’s fair to say, London cabbies do not. And I say that only because I’ve had way too many 200 sterling taxis from Heathrow.

So, if you are doing this, it’s crucial to start small. So, like one of the guiding principles for us at Intercom is like to have an insanely big idea but to start with an insanely small step. And that mirrors what I spoke about before which is Gall’s law. And Gall’s Law says loosely that, a complex system built from scratch will fail. It can’t ever be made to work. The only way you make it work is to build a simple system and evolve to complex. If you find yourself with a complex system that isn’t working, throw it away. You cannot pivot or iterate or hire another 100 engineer. There’s no recovery. You are in trouble. I’m choosing my words carefully based on the age group.

So, and like what this plays itself out as, is like if we take something like Salesforce for example, right? Here’s Salesforce, and Salesforce you could argue either complex or not. But one thing you can’t really argue is that, they have, by anyone’s standards, a fair market product. And the point being, Salesforce are now a complex system but they didn’t start that way. They started on something that was much, I guess, smaller, right? Here’s Salesforce initial launch page. They have like two highlights. One of them is free membership. And the other one is that you can forecast the pipeline. And literally, this is what they shipped.

This is what they…they have a testimonial here from Joe Shmoo from Cocomo. There some other funny traits about this but the key point being again, like they absolutely did start with a very small offering. And using their end goal, as your starting point is a really, really messy way to look at it because actually, if you’re modeling yourself off one of the big successes like Salesforce or Microsoft, start where they started, not where they finished.

Microsoft Word today, Microsoft Word where it started. So and if this looks complex, that’s just cause somebody launched the About box. [The actual thing behind it just says, the quick brown fox, or a lazy dog, whatever. But it’s worth reminding, like, most significant complex software systems that are commercial, Word is like a whipping boy up like UX designers. But it’s also, I think, the second most commercially successful piece of software of all time. So, I always like to use that for my UX designers. Maybe, you all don’t know what you’re talking about.

But it is fair to say like, that, you know, if you wanna sit down and build a Word competitor today, you don’t start here. You start somewhere like here. And if you wanna see what that really looks like, have a look at the first release of Google Docs. Which is exactly all it was, and now look at where they are today and you’ll sort of see that shift evolve. So, starting small is really, really important.

What kinda feeds that is that when you know your problem well enough, you can distill the solution down to small set of workflows which you then build features to enable. What that means is that like, your first release should be like the smallest product that solves a problem for your user.

Des Traynor intercom io Business of software Conference Europe Product Strategy

Now the biggest fallacy you can fall into here is the next feature drop

Which is like, I know no one is using it now, but we’re just one more feature away from mass adoption and it kind of a fallacy. If that is true, it means that you didn’t start from the right place which means, you probably don’t know the domain well enough. And if you can’t get adoption of your first release, you either don’t understand the problem, or your execution’s broken but neither of those problem is worth ignoring. And it’s the easiest thing in the world to do is to fall into this sort of death trap of like, no one’s using our product. So, why don’t we ask people why they’re not using our product? Oh, well, we’ll find out. And then they’re gonna tell us, Oh, well, here’s another 10 features, so I just daydreamed while I was doing all this work for you. We build those features and even less people are using our product.

That’s kind of like the death trap described by Andrew Chan which it’s literally what ‘happens when, you know…the key point being, if you can’t distill the problem you’re trying to solve down to an initial release that people actually do want and do value, forget about like expanding it, you know. Lord knows we don’t need more software when no one’s using the stuff you have, you know.

And another point I see a lot of people like sort of barf on or mess up on when they decide to launch a beta, and a beta is obviously the trial period where you know, you’re basically trying to see if things are going well or not. It’s kind of as a default tendency of startups that they all just kind of, they see how betas look and they think well, it’s a pretty straight forward thing to do. You just basically collect email addresses, make a vague pitch and see how many people respond. But a beta is something you have to manage just as much as you manage any other release of your software. You don’t get to wave some sort of flag of, it’s OK that it’s crap. We haven’t started charging yet. That’s not the right thing to do. Sure putting a crap landing page is very easy. There’re whole products that will do this for you. Like you put up some vague background image, some vague piece of text and collect email addresses. And you might consider yourself a success. You might even go and print up business cards saying you’re an entrepreneur having doing such a thing.

But like, you know, it’s important to realise, that’s not actually doing anything per se. A small list of target users beats a big list of non-customers, or even a big list of some customers mixed in with a load of people who don’t really care either way. So, like the traps I see here is like things like, you know, one trend I really hate is this idea of like, oh, we’re gonna give away a free blah to grow our list and like give away a free Apple watch if you wanna grow a list of people who want Apple watches. That’s what giving away a free Apple watch does. Now, if you happen to sell Apple watches, that’s a great list to have. So, Apple should totally do this.

If you happen to sell software that works on Apple watches, that’s an OK list to have. Although, it does by definition mean most people on your list don’t actually have one. But what’s certainly not useful is if you’re trying to build like, you know, the next generation of photography tools or project management. You’re like, I’ve got these 10,000 people who are psyched about an Apple watch. I’m just like, that’s not really relevant. You may as well like, hand out flowers at your local church for your software. It’s like, there’s no consistent pattern that unifies these people.

The other thing people do with beta is they go for this sort of like; they build really vague sort of pitch for their product. So, this is one I made up, or two. It’s photography reimagined. I guarantee there’s like, there’s like whatever like, couple hundred people here. You all have a different opinion about what photography reimagined does, right? Some people are thinking, what if there was no camera? While a lot of people are thinking, we should bring back that filter in Instagram they removed.

You know, like there’s various different opinions about what this means. If you offer a really big vague pitch for your product, what you’ll get is a big set of vague customers for your product—or would be customers for your product. And what that will get you is a sugar load of, of like wide ranging feedback for loads of different problems that exist only in people’s head. So, like, one person wants to sell their photos and to them that’s what that means. Another person wants to collaborate with their art director. Someone wants to export to Instagram. Someone else wants filters. And, of course, you know, if you don’t really check yourself, you will literally wreck yourself. You’ll go and build such a tool. Here’s R2 dashboard. And now you can see that this is a photography tool where promotion, collaboration, messaging, eCommerce, calendars, filters, faves.

And like that’s the danger you fall into but like that’s what happens when you run a beta that tries to include everyone. Like by definition, your product has to exclude people. I don’t mean not from a like sort of bullying or like typical exclusion sentiment. What I mean is that like, if you’re selling photography tools, people who aren’t photographers, shouldn’t be interested in your product. You know that’s just the nature of it like…or like if you think they should, then maybe you’re trying to literally redefine like, you know, make photography more accessible for everyone, or whatever. But what I mean is, building stuff to satisfy your entire beta list when it consists of a really varied group of people will get you a one-size fits none product.

Good beta users will give you good data to let you know when you cross this mythical, good enough to use line.

And bad beta users will tell you that forevermore you’re still just one feature away and that’s the end for that previous trial. But what they won’t do specifically, you’ll never get email beta user saying, hey, I’ve just been like kicking the tyres and all that, and I think you’re good to go. You should start charging me.

Like literally, that never happens. If that happens to you, like you’re one of the lucky few. Because most people are just kind of like, you haven’t even built account reset L.dot configuration yet. How could you possibly exit beta? You know, that’s more likely to be the sort of nonsense you’re going to hear.

It’s, you know, like, I like this quote from Ron where he says, when you say, iterate, I try to hear working until it’s great. Not working cause, we don’t know what done looks like. And that’s the trap you might fall into frequently.

Another example of this was Steve Jobs’ quote like which is…He was describing, I think was the iMovie Export Flow. And his quote was basically, he came into somethings. He was probably a load of wire frames on the wall, it was probably analyst reports and all that sort of stuff. And he’s just like, what is all this junk? Here is the new application. It’s got one window. You drag a video into it. You click burn. That’s it. That’s what we’re gonna make. And like that’s the sort clarity of thought that actually lets you know what done looks like.

Another example, people probably don’t know who this is. This is Lora Michaels who is the creator of Saturday Night Live. The very popular American show. It’s lasted many, many years. And I love this quote from Tina Fey’s book, where she like on her early days as a writer, comedy writer on Saturday Night Live, she said like, well, if…it was maybe like 9 o’clock on a Saturday night. She said, “We’re not quite there yet. The jokes aren’t exactly ready. And she was just used to that being OK to even say. And he was just like, “Ready?” The show doesn’t go on cause it’s ready. It goes on cause it’s 11:30 on a Saturday night. We don’t get our own definition of ready here. They’re like 15 million people about to start watching this. It’s ready, you know.

And, but the key point is like, you know, you have to exit your beta by a feature set which is the Steve Jobs model. Here’s what it is, and here’s what we’re going to do. Or you exit by a deadline which is, whatever we’ve got by August 1st, that’s what we’re gonna try out with our users. If it’s not in by then, c’est la vie. But above all, get out of beta. Don’t do this sort of Web 2.0 thing that was perpetual betas that was cool for ages.

The real reason for this is that betas are horrible sign-up flow. If you think of like how you design a sign-up flow, and think a lot of times people spend optimising these things. A beta design flow looks like this. You visit a website, sign up to be notified, get an email address. Then a long period later, you get an invite email. You create an account, completes free trial and signs up for a real account. You’ve introduced this incredibly lousy step, with usually like a one to six week gap in it for no reason. And you’re gonna lose a lot of potential customers while you’re in beta cause they sign up for something when they’re motivated to use it. And then they just forgot about it. And then you come back to them and you’re like, hey, welcome it’s that thing we talked about. And they’re like, what archive and then that that’s customer’s gone.

What you’ll see is like the, you know, the actual attrition is horrible, especially in consumer products but also in B2B products. Cause consumer products is kind of like people are just goofing around on the Net and they stumble upon this thing, and it sounds cool, so they try to use it, and they can’t. In business product what you’ll see is, people have this need to solve this problem. And they actually can’t wait seven weeks while you decide to rollout invite list number four because they actually have a problem today. So, they’re just gonna go and use somebody else’s that solves the problem.

So another classical example of this, by the way, is like, to do this sort of send out these like, welcome to Snap Cycle, you’re invites here, and people are like, “What the hell does Snap Cycle do. Was I stoned? You know. It’s really a good idea to remind people what your product is and what it does when you’re actually inviting them to use it.

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Another thing is like just to keep quite while in beta. A lot of people kind of think, they get this thing where they just wanna be a enfusive of all the great things they’re gonna build. And it’s like, talking is so cheap. It’s easy to sell all these new things that are coming in the future, in the future. And you know, when Tech Crunch wanna talk to you, of course, you’re like, “Yeah.” Wait until I give you this laundry list of ideas. And all it is you’re really doing is like getting attention that you can’t capture, and you can’t make any use of. That’s you know, you’re setting yourself up for kind of to be a disappointment in the eyes of your customers. And especially, there’s nothing worse than a non-existing disappointment.

The less you say, the more people listen. The press only cares about new.

So, your best angle is when you launch…now the irony is AirBnB launched three times or four times, because basically if you launch and no one notices, that fine. The worse thing that happens is you launch, and people do notice and they don’t like your product because it’s not ready or whatever. And then you’re like, “Oh, Oh.” You know, then you’re kind of, kind of you’ve spent your only sort of like PR credits you have.

You’re probably wondering why there’s dog food here? Another sort of classic thing I see is, you know, like when you actually do go to go to market and someone tries to sign up and they act confused as hell, and someone says, one question along the lines of, “Did you guys not do any QA?” So, we don’t need to. We used or own product, or we’re dog fooding. Or some nonsense like that, that basically translates to, “We forgot to actually try and use this thing like real people.”

Interestingly, like signing up for your product is like the one thing that every user will do. By that definition alone it’s like, your widest adopted feature if you like, right? So, it merits a lot of effort, a lot of reconsideration, a lot of improvement, consistently. It’s the only thing that everyone’s definitely gonna do. And conversely, like the disappointing part here is that, most product owners sign up for their product once. And they think that’s fine except for when they did sign up for the product, it looked like this. Right? This is how most entrepreneurs sign up for their own product. They do it as this byproduct of creating an SQL database. And as a result they, like they will meander through all of these, sort of, like they don’t…they kind of forget how junky it can be to have a seven step sign up flow or how annoying it is to have to click all these boxes, or enter all your friends or any of those sort of flows.

The other cost if you’re not doing it frequently, is that like your product turf, you have one which you might not even, will go out of date. Your docs will go out of date, your welcome emails, your videos. All that sort of stuff is out of date because no one in your team is actually doing this recurringly, so you forget to realise, oh, you know the way we say Step 2 is to do blah, well that Step 2 is gone actually. We got rid of that. And you’re like, OK. So all your Help docs are junk now. Your entire flow is basically broken because no one’s job is to actually consistently do this.
If you are like generally dog fooding, like most people you should feed your dog every day. Similarly, you should never stop signing up for your product.

Like in Intercom we have a growth team. And one of their core things to do is to consistently innovate on what it feels like to start using it Intercom. It’s phenomenally high impact team. And like doing this, and like specifically never…an undying focus on what it means to become an Intercom customer has been hugely valuable for the company. And honestly, I just wish we had done it like years earlier.

When you do get out there into the market, another piece you will see a lot of is, competition. And there’s a very sort of a naïve view people have about competition which is, you know, I’m a time tracker on the web. Therefore, my number one competitor is other web-based time trackers. And that’s only true when your customers are people who refresh product into time tracking category. But most customers aren’t like that.

Similarly, like, if you’re selling flowers, you might think that your competitors are all the other people who sell flowers and that’s a fair assumption. But then I’d ask you, “When the flowers and chocolate compete?” Mark, have you ever had a dilemma between flowers and chocolates? Does anyone share that answer? When do flowers compete with chocolate? Valentine’s Day. Apologies. Like lots of similar things. But like, yes, it’s a general gift of sorts. And there are a lots of times when these two products one of which believes it’s in like, you know, I guess the fast moving consumer edible industry. And the other one which, I would presume, belongs in like, you know, the gardening industry. They’re like two different industries. Two different categories. Two different everything but they’re probably direct competitors for certain jobs.

Similarly, when does Twitter compete with games?

Twitter competes with games every time you’re bored, basically. And you’ll play whichever is quickest. And like it’s a very simple thing. But like, you know, people like again, like Twitter, like, you know, will say, oh, no one actually says, should I use Twitter or Facebook, I’m kind of bored. They say, should I use Twitter or Facebook or Angry Birds or Monument Valley or any of these sort of millions of things that I can do to entertain myself. Or like, should I start a conversation with that stranger, or should I read the newspaper, or should I pick my nose. These are all like sort of similar things. What really competes with Trip Advisor is it like asking people or is it Yelp.

The way I think about this and it’s useful to think about is like, you have direct competitors and direct competitors do the same job in the same way. Then you have indirect. So, direct competitors are like McDonald’s and Burger King. You have indirect competitors which do the same job in a different way. So like Skype versus business class travel, for example. And then you have like sort of territory competitors and they do conflicting jobs. So, Weight Watchers and McDonald’s are actually competing for the same customers quite often. And only like, there’s only one unit of purchase to be had there. You’re either doing one or the other but the customer, you know, but they’re both fighting for the same person.

A point I often make to people who do project management or like a to-do-list is like, realise that a Post-it on a monitor is probably still your number one competitor. And I say this like for a very, real case. Like I have a friend who works on a to-do-list app. I tell him like, just leave a Post-it and realise all the features it has. And he was like, Des you’re…again, have you been smoking weed or something? I’m like, no, seriously, give it a try. And tell me like, so I left like a Sharpie and a set of Post-its on his desk. And I was like, we’ll see if you use them. Who was right there. Lo and behold, he had to use them. Why did you use them? Well, cause it was actually quicker than using building a house. Oh, so speed is actually and attribute taking a note, is it? He’s like, also I wanted to give it somebody else. I’m like, oh, so sharing is an important trait as well.

And then it was like I needed a physical reminder. It’s like as soon as I put one in the center of my monitor, so that I can’t do anything else, I’m like, oh, so there’s a blocking element here as well. You don’t even want to see the rest of your list. And that’s important to realise. We take all these things for granted. And like never in a millions years, he’s literally like a project planner. His road map did not have these types of trait on it. It was also about like we need to build an API. I’m sure you do but bear in mind you’re still losing to 3M here.

Similarly, like email, specifically Gmail. But email is a ferocious competitor. Like all your customers already have it. So, in that regard, they don’t even need to fight. But sending an email to yourself is, I mean, how many people send emails to themselves? Right. How weird is that, right? For the sake of the camera I’ll say that every single hand went up here. But, like, why do you do that? Well, you know, unlike your entire people…like deluded entrepreneurs out there that are denying this behavior. They can go, people aren’t going to email themselves. My tool is way better than that. It’s way cleaner to log into mine, connect your Facebook thing, add a note, and then like stick it into two lists, and then set up notifications, sort of pings your phone. And I’m like, yeah. That’s dead easy, you know. Like, you’re competing with a Post-it and an email here.

So, I say all this to just say like basically, you have to understand your competitors, and your real competitors. And that’s what lets you understand switching behavior. Switching behavior is when you actually think you have a superior product, understanding how people will get there. And as I said, like your competitors don’t necessarily, they not the people who are like in the same crunch category as you, whatever. Switching behavior is like what takes you from the old to the new. And there’s some really good research on it that I’ll just quickly walk through, but like, it’s kind of very easy to remember.

Bob Moesta from the Rewired Group presents this.

He calls it like the four forces. And I think it’s a really interesting sort of simple formula but basically, what we have is there’s two reasons why you would change to a new product. And they’re the green arrows here. And there’s two reasons why you would not make the change. And they’re the red arrows here. And the two green ones here are, the first one which is the top left is, problems with the current product. So, why are you considering changing your email client? Well, because mailbox is a bit blah, or it doesn’t have this feature. So, what are the actual problems with your existing solution? Where do Post-its fail, for example, right? Does the attraction of the new product, which is your product? So, what are you trying to sell? And how do you make yourself seem as attractive as possible as like, as smooth, and slick, and sharp, and modern and fresh? And all of these that are sort of traits that people desire?

You can control the attraction of your product. Then why don’t people switch? Well, one of them is anxiety, or the uncertainty of change. They’re like, if I switch to yours, will you still have my slack plug in or my ghetto plug in and all these other things that I need, that my whole work flow depends on, will my team adopt it? What happens if they don’t? Will I look like a fool having to roll back on the decision?

And then lastly, there’s existing habits and allegiances which is like, well, you know, I’ve already bought this enterprise plan. And we’re already taken all these training courses and we’ve already bought the manuals. And in the world of phones, it’s like well, I’m already after buying the car plug, and the lamp plug, and all these other things that make my phone work really well.

But basically, the way a switch happens is, if the green forces are both aligned or have the red forces below the line, somebody will switch to your product. If that’s not the case, they won’t. Basically, the switch is not worth the risk. So, you wanna maximize the top forces and minimize the bottom ones. And what does that mean? Why you wanna tell people your current product is terrible. Remind them of every single problem that they have with their current set up. Maximize your attraction which is, look as good, as fresh, as modern, as fast as problem-solving as much as possible. Then you wanna minimize the anxiety, so they might worry that you’re not gonna work with all of their files, and they might worry you’re not gonna integrate with all of their tools, whatever. Demolish that straight away by saying, well, here’s all the things that we can do. And here’s all the ways we could solve all those problems. Don’t even let that enter their head.

And then the last one is their habit.

Either work at a way to like solve their habit by things like exporters. Like just connect your account and we’ll pull all your data in. So, don’t even worry about the fact that you have all that data stored up there. We’ll take care of it. Or remind them that their habits are old and outdated and useless. The best campaign that ever did this, in my opinion, was the, I’m a MAC, I’m a PC campaign. And what this did was like, it presented like the MAC as being this young, cool, attractive, popular thing, and the PC as being this old buffoon. And then do…what they run whole ads, so like if you were the MAC, we talked about, hey, you know, the PC guy would be like, well you can’t be used for any office software. And he’d be like, all the Microsoft stuff works on this. And like, ooh. And you realise exactly what you’re doing. You’re just attacking every single fear that people ever had. And what do they call that campaign, does anyone remember? The switch. That was…the entire thing was specifically done.

Another thing to consider, I read this paper recently, is what they call the 9x effect.

And basically, like when customers are evaluating what they have, there’s three reasons that leads them to over evaluate. And they typically over evaluate their current work flow. No matter or bad or good it is, they over evaluate by about three times. There’s the endowment effect, status quo bites, and gains and loses theory which basically translates to like, I already have this. I don’t like changing things. And also, this just sounds like a risk to change. And sadly a company has over valued their benefits by three as well. So, when they’re looking at you and saying like, why won’t you come to our product? Most companies think their product is about three times better than it actually is. I think, you know, that three is definitely a variable in some cases.

But like either they designed it themselves, they didn’t focus on like the exact job that they solved. They got too obsessed with the category. They built something that only matters to a few niche cases. They’ve built a sugar load of features that certain people don’t really want. But like in their heads they’re like, 45 features. And people are like, I only care about two. So, those other 43 that you’re really excited about, I literally couldn’t care less. So, that’s just, you know, like I playfully like to think, you may have heard the term, your new product should be 10x better.

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And I think all these things are pseudo numbers and fluffy sort of talk but like, I think there’s truth in this. I think most customers will tolerate junky work flows, like emailing yourself way more. And they’re just happy to do that. And most people who’ve gone and built this whole, you know, rather than emailing yourself, why don’t you just log into our tool and add a to-do-list to your whatever. Or like their virtual Post-its products you see. Most people overvalue what they’ve built 3 times as well. So, I think you really need to understand where your competitors are, and understand these dynamics to actually get people to switch.

Be insanely diligent with your roadmap.

So, this is my second last piece. So, roadmaps are a fight. They are a mess. They’re usually, the cause of people to like break down and fight, alcoholism, all sorts of things could be caused by roadmap discussions. And like I’ve presented this diagram a few times. So, I’m just gonna skip over this piece quickly. But suffice to say, it’s important to be able to understand and answer this. And this is basically a question of who’s using your product, and how often are they using it? And every single time I talk to entrepreneurs, who’re like, you know, I don’t know what to build next. My product’s kind junky. I’m getting bad feedback. I say, OK, well, let’s sit down and talk about it. What have you built? They’re like we build a project management tool. I’m like, cool. Let’s talk about it. So, I draw this axis. And by the way, this isn’t a literal tool and you should never expect software to do this for you. This is a way to think about your product. I say like, on one axis we’re gonna say, how often do people usually use your product? Use a feature? Very little or all of the time. And then the other axis, we want to say, how many people have used it out of those that can? Very few, or all of them? And we’re just gonna try and place your features along here. And lo and behold most people do that and their first guess is almost always wrong. And you can actually tell the sense of delusion. Product managers or owners will have based on how wrong they are here. Like they’re like, everyone uses our photo filters. And you’re like, OK, cool. Let’s just test that theory for a second. Can we go to a database and run like out of those who can use photo filters, how many did? And you’re like, four percent. And I’m like, is that everyone? And like that happens way frequently. You’d be shocked.

But basically, I’ve come to the conclusion that guesses and intuition and all that sort of stuff when I…when you actually have the data, and I’m not a data-driven person at all, but like, when there’s actually facts to be had, don’t let them be overridden by opinion. And the fact is, do people use this feature. And like, there’s a lot of like biases that will force you away from answering that one honestly. Which is, I spent months on that. It doesn’t matter. It really doesn’t matter.

So, a simple way to think about this is like, the features that are in the top right, that’s actually your core product. Anything here is something that is not used that often by your customers. It doesn’t mean it has to go but it does mean you should question why it’s not used more. And if that’s a desirable behavior, still it looks like you’ve tiptoed into consulting where you built a feature for a specific customer and it’s just really them that use it. And now you have to maintain it and no one else cares. And, you know, there’s hard questions you have to ask about removing those features, or trying to get them better adopted. Which is basically what it comes down to, it’s like, you have to be insanely diligent about your roadmap.

And this is one of the things that isn’t true for startups. It’s just true. You have four times the work you’re gonna do, like improve a feature, that is make a feature better for those who are currently using it. Get more people to use the feature. Get people to use the feature more. And then add a new feature to support a new workflow. And there’s nothing else, you can say bugs, bugs you can either categorise them as number one or just call them a force of nature that needs to be dealt with separately. But like in terms like things that should go into your roadmap this what’s there.

When you’re improving features, you have to understand there’s tradeoffs between the quality, the importance, the satisfaction, and frequency when you’re improving things. And what that looks like is quality. How the well-executed is it currently. Importance, how important for users is it? So, like, is tagging photos really that important versus uploading photos? Satisfaction, how happy are users with it today? And frequency, which is how often are they actually using it? And you can sort of realise, if you’ve got something that’s frequently unsatisfying, that’s gonna upset users. If you’ve got something that is like unsatisfying but not important and infrequently used, it’s probably fine. As I often say to people like, you know, you know you forget password form? Whenever I see people have really put in some nice slick animations and stuff like that, I’m like, right. Either you guys have a sincere problem with people forgetting passwords, or you’ve just, you know, you’ve just thrown away a lot of many, many weeks of a development effort to polish something that no one very wants to use.

Anthony Ullwick has a very simple framework for this which he calls the important satisfaction opportunity. So, basically, for any given product here, let’s say like, be aware of any problems with any of my projects. He assigned an importance from the user’s point of view. Like how important is it that they can do it? And maybe give that like 9 out of 12, or 9 our or 10, or whatever.

Satisfaction, how happy are users with it today? And then he calls the opportunity which is basically it’s equally importance plus the data between importance and satisfaction. I see people taking photos. You’re more than welcome but I will give the slides at the very end of this. So, just, if I do skip, because I’m gonna speed up a little bit. Cause you all need coffee. So, his, it’s a simple framework. And again, I don’t believe necessarily in this science behind any of these. Just like the whole 3x, 9x thing, but what I do believe is that they present really good ways to rationally think about your product. For example, while Anthony’s point here, is that the opportunity for working on any given feature has got to do with how important it is, and how much it sucks relative to how important it is to customers. And that’s a very simple way to think about it. The temptation, by the way from any of these frameworks, even going back to mine with the thing with the two axis, is that you’re gonna go and draw up a list. And, you’ll be like, alright, these are all the things you’re gonna work on.

It’s just worth saying like, be careful how you use list in your product map. I’m like this sounds like kind of a stupid meta point, or whatever but I see this happen a lot where like, you know, people do some research and they come up with something like this, here’s a list of things we need to work on. And here’s our team. I’m like, OK, cool. So, what does our roadmap look like? And they do something simple like this. Like, alright, let’s just go and ship all of the things that matter. That seems somewhat rational but you’re ignoring a lot of things here. You’re ignoring how important any of these projects are and how hard any of them are as well.

The guy from Google Doc, I can’t remember his name but he wrote a simple article about this. He said, you know, Google Docs did the exactly this, and what they did, they were basically doing this like for like a year and then eventually they met some actual customers. And they said to customers, hey, we’re working on everything that matters. And they’re like, OK. But the customer is really upset. So the users, the Gmail guys, sorry, Google Docs guys, they said, alright, we’re gonna give you each 100 like dollars and you can choose where to spend all your efforts. So he gives me two hundred dollars, and said, alright just drop it in the bucket of whatever feature you want. And the most incredible thing happened. This was back, by the way, when Google Doc sucked. Back when you couldn’t do like bold, italics, underline, whatever without getting warped and messed up. So what happened, the funniest thing was one user when over, dropped their 100 into the bold, italics, underlining and formatting box, opened up their wallet and put in another 100 of their own cash.

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Now, that’s, you know, that’s hilarious but it touches on something that’s not actually well captured in lists which is, where your users care has actually nothing to do with the list of things as you’ve prioritised them. And if you actually knew that, you would do as Google Docs did. Which is you’d say, well, actually let’s get everyone on that until that problems gone away. And he calls this like the Babe Ruth problem. Which is like, you know, if you can sort all baseball players by all time, it will look like Babe Ruth’s number one and someone else is number two. But the gap is huge. Just like if you ranked the solar system by habitability of planets, you can’t be like oh well, we should probably go to Mars cause Earth is probably a bit pack. You know, it’s like, it doesn’t work like that. Like, you know, sometimes there are binary, very significant players on your list.

So, going back to this for a second. If you have a feature here, so we just talked about improving a feature. We can talk now about like how could we get people to use the feature more? Well, the simple tricks here which are relevant are things like, how can we create habits, or use triggers or create rewards, or use smart defaults, or smart contacts, or more ways to get people to use this feature. So, for example, like if we take something like, I want people to refresh their Twitter feed more. Well, we could either put more stuff in it. We could trigger them to send them notifications. We could send them more triggers. We could make it refreshable and mobile. We could send them an email list of it. We could make them refresh it on their watch. But like all of these things make it easy to use the feature more.

Another example would be like, let’s say, if you take the push for pizza example, which is a popular app in SF at the moment. It just has one button, you push it and it will order some pizza for you. What they’ve done is that they’ve used smart contacts to where it defaults to make it very easy to do something frequently. So, when you’re sitting there thinking, do I want food, you now know you could actually have a pizza show up in 20 minutes if you just press a button. You’re gonna do that more than you are going to go to the Domino’s pizza configurator and go through a 5-Step wizard asking you all these various question. So, it’s just, you know, when you’re looking for frequency, these are the things you need to think about.

When you’re looking for adoption, the question is, what is stopping people from using it?

So, if most but not all people are using this, what’s, what’s going on there is your question. And the best thing to do is work on why they’re not using it. And you specifically isolate these people. So, you say hey, most of our users use or data visualization tool but you don’t. I’m interested to know why. And they might say something like, well, I don’t need it. And you’ll say, why? And they’ll say, well, I don’t get any value out of it. And you’ll say, why? And you’ll like keep going until you get to something that that is actually actionable for you. In this case, it could be like, you know, it doesn’t, I can bring a printout out of it to a report, to a meeting or something like that. And obviously, you don’t just take one customer’s word for it. You do actually chase it down.

Now remember, all you’re interested in here is like, what is stopping you from using this feature. Not do you want to use this feature. So, if someone says, I literally, literally, literally do not ever want to do this, you’re like, grand. Don’t take their feedback because they’re not the right person to talk to. But as you get this, you can then, you can then basically rank and resolve these things as being reasons that customers aren’t currently using our feature. And you’ll see things like, I don’t know how to share them. I don’t know what to use it for. It doesn’t work on mobile, it doesn’t work for me, or whatever. And these are all the reasons why all the people, why all your users aren’t using it. And every single one of you has unadopted features in your product, guaranteed. Where like most people would use it if they just knew what the hell it was. What they could do with it? Why they should use this?

And an interesting point is to not like, much as I open up this talk and talk about the importance of product, sort of, above all else, it’s worth saying like, the deploying code isn’t always the solution when these things happen. Sometimes, for example, you can actually like, you know, use communication to make these points. So, if someone says, I don’t know what to use it for, well then maybe the first time they go to the screen, you should start a conversation saying, here’s three cases that people actually do with this thing. Or maybe if somebody says, I don’t how to share, you could show off your sharing tool. Any of those types of things. But like, I guess, what I’m really saying is like, don’t fall into product blindness, which is we need to feature our way out of this. Sometimes it can be just like we just need to communicate our way out of this. You know, people…you can’t fix the problem with code when it exists in your customer’s heads. If they don’t know why they should bring your report to a meeting, that’s the problem you need to solve sometimes. Otherwise, they’ll never use your report.

And the last type of work is new features.

And new features are like kind of the sexiest part of software. The ones that you get the marketing push and the drama. And, you know, you get to do like your whole write up, and the whole team gets to celebrate and all the sort of stuff. Most features flop. That’s the sad reality of software. One of my favorite stories on this for what it’s worth is a, it comes from Microsoft, who have the wonderful press page where they make this really interesting boast. In a recent customer survey, we asked users, what they wanted from Microsoft Office. And more than 90 percent of the features that they asked for, were already in their product. For some reason, they were, they were kind of happy about this. And you can sort of see why. I’m sure if some left brain person was like, see, I knew we were right. We built all those things. And they never actually joined the second dot and then Jesus Christ, what happened?

And like what happens is interesting. Most new features, even if you build them well, polish them well, and they’re actually represented, a real need of real customers, they can still flop pretty badly. A few things that help are like, sell what the feature lets the user do, not what it is. So, we can easily sell the ingredients of a feature. And that’s actually the bios for most people. Let’s break it down by, here’s all the things we built to enable this, and here’s what it is. And you spend so much time describing almost in like, minute details stuff that only the developers care about. So, it’s got a really fast API and all this. Whereas, what the user actually care about is what can I do today because of this? And if you haven’t answered that question, what they’ll do is they’ll archive their email and jump to the next thing that they have on their plate. Because you haven’t given them any new power. So, capability, when you’re selling people what you can do, that’s the best thing to be able to say to users. What it does, slightly it’s, slightly worse but it’s still there. The worse thing is what it is. Cause what it is, is just never exciting.

Another thing is like, to announce features in context.

So, I guarantee you that when Microsoft Word or Office, like launched all these features, I’m sure that they did put it into a manual somewhere. And maybe it was on their blog, on their marketing site. It might even have been in the Help notes of their product. But that’s, none of those places are you likely to be when it occurs to you, oh, I need to insert a table of contents. Instead, you’re gonna be like, oh well, I wish Microsoft had a table of contents. If you announce it in context, like tell someone to try our new date picker by showing to them when they’re in your product looking to set a date. That’s the useful thing to do. Emailing them on like a weekend to say, hey, we just launched the new date picker, it’s like, so what. I don’t care. So, announcing it in context of the time when users are likely to have the need, is always really impactful versus the alternative.

And another thing is to think about tomorrow’s customers.

So, if you launch something today, and you do a big furore, and you do a big press launch and all that, that’s all great. That will tell all your existing customers how something works. And then somebody signs up tomorrow. And they didn’t see any of this because they weren’t your customer. So, how are they ever gonna find out about this feature? You have to have a plan for this too. Oftentimes you’ll see this like, you know, Spotify is great for this, they’re like, every time you relaunch like, check out all this new stuff. And you’re like, oh, cool, thanks. But if you’re a new customer signing up they don’t bother explaining it all. Cause they think, oh, well, if you’re new you must already understand it for some reason.

Lastly, following up

After you launch like, it’s, it’s so important to fight for usage. Like people just think that once it’s gone out the door it’s done, my job is over. But you actually have to fight for usage. Talk to people who are using it. Be like, does this do what you hope it would do? And talk to people who aren’t using it and be like, hey, I noticed you’re not using this feature. What’s up? You know, did we miss the mark, or is it just not for you, or whatever.

So they’re actually sort of tips to actually help you launch new features with some elevated degree of impact. That was the four types we talked about. So, it’s like improving a feature, adding a feature, getting more people to use it, getting people to use it more. It’s worth saying that your balance for those is kind of defines what company you are. But it really shifts over time. So, like when you’re starting out, you’re mostly building new features cause you don’t have any features. So, that makes sense, right?

If, for example, you do a big release, then you’re gonna be like chasing adoptions. So, you’re gonna be like trying to get more people to use the feature you built. If things are going well, and like, you’re kinda like, you’ve launched, and loads of people are using it, you’re gonna spend probably a lot of time improving the stuff you’ve built. Right? But like this is kind of, your roadmap has broken down, it’ll shift it over time. But it should be a cognitive, sorry a cognitive shift. Not something that kind of happen by happenstance.

The last piece in the talk, I just want to talk about is revisiting assumptions.

So, startups move ridiculously fast. That’s, I mean, I know this is kind of, you know, a trite thing to say and certainly, you never hear like CEOs, of like, you know, Fortune 500 saying, our goal is to move really slowly as a company. We do not wanna innovate. But like it is true startups move fast. And what that actually looks like is you make like, phenomenal amount of decision, where you don’t know the right or wrong answer but you have to make a decision to move on. So, you do it. And you pick a particular decision path and that’s basically, you know, that’s the history of your company to-date. And then the sad part is like someone comes along and they something like the social network or whatever. And they kind of say, hey, and here’s the A to Z story of why Facebook was inevitable. Except they do even better. They kind of present this as linear narrative. And whenever you kind of read about any sort of startup that’s been successful, whether it’s a Twitter or whatever. You’re kind of reading this perfect narrative of the inevitability of their thesis. And as the Founder and CEO of the person who’s actually ringing the bell on NASDAQ, of course, you kind of wanna be like, you know what, you’re right. I was actually right about everything I ever decided to do in my life. I’ve never made a mistake. God, no one’s ever put it to me like that before. Thanks.

But like, and like because we’ve got this deluded sense of past, we built this into a deluded sense of future. So, what that looks like is we plan our roadmap to be something like this as well. Because, of course, we’re not ever gonna revisit a feature. Because we’re gonna get it right the first time, and everyone’s gonna use it. Why would we look back? That’s a waste of time. The thing is, looking back is actually really useful because it does tell us that like, we shouldn’t really plan. In Intercom, we kind of have like a three months and three year perspective. Like we kind of, we know what we’re doing, and we know where we’re trying to go. But trying to talk about what we’re doing next February is a waste of time. It’s just a waste of time. We don’t know because, what we do this month could keep us busy for a year. Or it could keep us busy for a week. So, it’s worth thinking about that.

The piece that pops out of all that is when you’re making all these decisions, you’re actually getting smarter over time. So, you know a lot more about your company, and your domain, and your team and everything. Here, done you did when you made this decision here. People often say, hindsight is 20/20. And I’m like, yeah, I know it’s awesome. We should use more of it, right? But it’s, for some reason we just think, oh, hindsight’s 20/20, therefore what? Therefore, ignore it. Well I’m like, it’s a pretty good site, it’s much better than the future site, we don’t even have that. When you get new information, as you get more aware of your domain over time, you may change your opinion and you should act on that change. So, if you knew then what you know now, would you still have built that feature, would you shift that into integration, chose that architect, or design that screen, structured your company that way? You know, hire that person?

The point I make is that the mistakes you know about, what you aren’t correcting, are just mistakes you’re making every single day. So, it is as I said, there’s a lot more going in companies and product for sure but products what I’m closest, I’m most aware to. What I wanted to do was talk a little bit about bringing you from here, like, to the sort of like more complex messy stage when you’ve got much bigger and messier problems. And if this talk brought you anywhere along the way, that’s been great. If you wanna get the link from this talk or the slides, this is bit.do/destraynor.

If you wanna keep up, it’s destraynor.com. I hope this has been useful. Thanks very much for your time.

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