Over the last 4 years I've become deeply engrained in the tech + software world. I've built and sold a variety of different products. Some sold well. Some did not.
These are some of the lessons I've learned. Most of which were learned via painful mistakes!
Apply these solely in a B2B software context. I don't claim anything below will be relevant to consumer businesses.
Think fast & slow - Thinking fast and slow by Daniel Kahneman is such an insightful book when applied to new products. When I first started building products I was 100% directed by a System 1 approach. I moved very quick. Came up with some idea and built it.
I'd do it over and over. This turned out to be a great way to get comfortable with a variety of different languages and really learn what I was doing but it resulted in a lot of wasted code + time. If you are thinking about building a new product ensure you spend more time on a system 2 approach. Be methodical, develop your thoughts and think deeply about the assumptions you are making in your product.
Never move forward on a product idea without validating a few key assumptions first. You will save yourself a lot of time and/or money.
Thinking about the solution - Solutions are not invented. They are iterated. They are slowly teased out through many conversations. You must approach the PROBLEM without assumptions of how the problem might best be solved. Get in the room with (or phone if not possible) your potential customers.
Don't come with mockups. Don't even think about the solution.
You don't know enough yet to solve. You need to iterate. Have a conversation about pain points. Lean in to understanding why those pains stick out. Empathize. Ask a lot of questions. Ask why they haven't already solved that problem. Ask what happens if they don't solve it.
The goal of these conversations is to learn. To get an understanding. To begin to be educated on the problem. If you discover a problem and solve it very well you reasonably will be working on that singular problem for the next 5-10 years of your life. You will want to really understand it before moving forward :)
Not monetizing - This is one of the most dangerous on this list. It is incredibly easy to lie to yourself and think you can build this in later. It might be possible but I've never had good experiences doing so. If you want to build a business you will need monetization. And in fact, when you deliver a good product people want to pay you for it!
You will need to charge for value delivered. Working on this from day 1 is the only way I've been able to do it. Others might have a different approach but listen to Patrick Campbell talk and model some experiments after his insights. Depending on what you are building these value metrics might be different but from my learnings you can build something really special if you build a product for businesses that:
- users use daily
- problem is large (and thus, not likely to switch to another product)
- willing to pay at least $15/user/month
P.S. There is a lot of debate over whether per user pricing is the right value metric. The above is a heuristic and only meant to simplify progress towards building a sustainable business. Adjust as you see fit.
The next feature fallacy - This is stolen from Andrew Chen at a16z but its top 3 on most insightful things I've read in the last year. I was guilty of this multiple times while building and you should avoid this mistake.
The lifecycle of a product will be directly proportional to the value you deliver. The largest mistakes I've made on products have come from messing up 1-3 on this list, and then trying to build features to dig myself out of the hole. The next feature fallacy is the achilles heel of passionate entrepreneurs.
You are so engulfed into this thing you've been building, and none of your users are using the product (or paying for the product) but you mistakenly believe that 1 additional feature will right the ship.
You will continually chase this. Until one of two things happen:
- You run out of money
- A mentor/advisor/investor sits you down and tells you the business you built will not work. Start over.
A lot of times these two occur within a few months of each other.
You can build features all day. But no one buys software for a feature. They buy for a benefit. When you catch yourself chasing features you most likely are not solving a problem that is serious enough with a benefit customers want.
If you didn't do your customer interviews, go back and do them now. I have tried to will my way through without doing these and every time I have made incredibly bad decisions. If Rahul Vohra spent a year doing 500+ customer interviews AFTER having a successful exit under his belt, you should too.
Learn to ask better questions - This will pay you for the rest of your life. Not just in building products but also in selling them. In your personal and professional relationships. It is such an underrated concept. But I didn't learn how important this was until I had made years worth of mistakes.
The value you deliver will be a function of the questions you ask. Ask better questions and you will have a reasonable chance at delivering more value. When I first got started I asked dumb questions like:
- "Would you use this product?"
- "Would you pay for this?"
These kinds of questions will give you false hope and lead to lots of wasted time (and thus, money). Never, ever, ever ask leading questions. Everyone will tell you yes I'd use your product. Yes I'd pay for it. They say this because they want to say what you want to hear. Almost like how you answer questions differently in a job interview because you're filtering for what the interviewer wants to hear.
You need to ask questions like:
- "Why have you not already solved this problem?"
- "What do you currently do to solve this problem?"
These questions will give you a lot more signal than noise. You want to know (BEFORE BUILDING) why, if this problem is so big, your potential customer has not already solved it?
If a small business owner complains of not being able to track leads and you think your new CRM powered by artificial intelligence and machine learning and animations and social media blockchain is going to fix that problem for her, I'd suggest you slow the hell down.
If this problem is important to this owner, why has she not solved it already?
Often times you will get responses like this:
- "Oh it's important but I just haven't gotten around to it"
- "I know I should but paying for a service is not in the budget"
- "Its just not top of mind right now"
If you hear any of these I'd strongly suggest you find another prospect. These statements are telling me this owner doesn't see value in investing in her business, is not very focused in on the problem to solve and if you delivered software she wouldn't use it.
Get Mentors/Investors/Advisors - Take this as you please. If you're anti-investors I am not telling you to raise money. In the last few years I have closed some blind spots (learning to sell, learning to understand problem before building) but I still have a lot. I'd argue everyone does, no matter experience or age.
Utilizing mentors to help me see around corners before I get there has been incredibly helpful. Things like how long a hacked together tech stack might work, signal amongst the noise of customer feature requests, when to shut down vs pivot, etc.
I have relied on this network over and over again and they have delivered. Find the best ones you can and really really work on convincing them to help you. These people will have lots of options and little time so you should apply the above (ask good questions) to figure out what they care about, are interested in and relate that to what you're working on. (I've never raised money so this is more in a sense of convincing mentors taking an hour coffee with you once a month is worth their time!)
If I were to repeat the last 4 years of my life I'd spend a lot more time on this specifically.
Don't lie to yourself - This game is incredibly easy to get wrapped up in. You see the highlights of Facebook, SalesForce, Box, etc and believe you are god's gift to business. You are not. Do not let that go to your head. I've seen and done a variety of dumb things over the last 4 years in lying to myself.
- We're monetizing later once the product is good so it's ok we have $0 MRR
- I know what to build so I don't need to talk to customers
- It's ok I have no idea where to find customers they will find me
In fact, the best advice I've heard on this was Jesse Lipson recording videos of his goals at his previous startup Sharefile (that Citrix bought for a boatload of money). This is brilliant because it is so easy to lie to yourself and fit what happened to what you thought would happen after the fact (read The Black Swan by Nassim Taleb) to learn more about this.
Lying to yourself will cause your product to fail. The first glimpse of not being able to find customers is an existential crisis. The same with monetizing later or any other sort of red flag that comes up. When you are building new products you must look these red flags ASAP.
"It will raise red flags. It might give you an answer you don't want to hear but you need to hear. It might give you an answer you would have found out in 3 months that wasted time" - Steli Efti from Close.io.
You must discover these red flags. Even if you don't want to hear them.
And not lie to yourself along the way. It will save you tons of time (and money)
Alright, these are my top 7 mistakes in b2b products. This took me many years and lots of wasted money to learn!
“True power as an entrepreneur comes not in having a perfect track record—it comes from effing it all up to the point of no return, then quietly reflecting and coming back with a smile on your face, happy that you’re getting a second shot.” - Hiten Shah from Usefyi.com
The above quote by Hiten should make you feel way better about all of this. I've made every mistake in the book and the sooner you realize there is no undefeated in entrepreneurship the faster you can start again!