Build a Product That Scales Into a Company

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What we are going to talk about today is how to build a product that scales into a company.

It is super common that when you start a company, you start with the product. So for those of you starting companies, did you have a bolt of lightning where you said “I’ve got a product idea,” and that was the genesis of the whole thing? Or did you spend time deep in an industry, understood a problem, and then decided to explore different products? Who started their thinking with a product, as opposed to a market?

Most people start with the product. I am not implying that is the wrong way to do it. It is a perfectly right way to do it. But it does not always scale into a company. And so what we want to talk about is how you take that product idea and, from the very beginning, build in the things like go to market and pricing, all the stuff that turns it into a big company, as opposed to just thinking straight about the product.

The core question: is it a feature, a product, or a company? As a VC, this is exactly how almost every entrepreneur who approaches us quickly gets qualified. So start asking yourself, in terms of how you frame your own idea: is it just a feature? Is it something you really believe could be a big product? Or, more importantly, is it something you are willing to invest your life in to build a company?

Let me challenge you with five things: messaging, photo sharing, check-in, directory. Each of these has turned into something.

• Is messaging a feature, a product, or a company? Lots of people say feature. But messaging is basically all that Twitter does. They took SMS and moved it online, and quite a lot of people use that. It is certainly a product, and some people think it is going to be a very big company.
• Check-in. Any mayors in the room? Is that a feature, a product, or a company? Most say feature. Everybody is onto the Foursquare example. But even if it is a company today, does that mean it is going to be a long-lasting company?
• Directory. A directory of friends. If somebody said “all I’m going to do is give you a directory of friends,” you probably would not have thought it would become a billion-user network called Facebook.
• Photo sharing. I intentionally did not quiz you on this one. I would never have expected photo sharing to go from zero to a billion-dollar valuation in a little company called Instagram at the pace it did.

That is the whole challenge: any one of these things might start as a feature and turn into a company. My favorite example is the iPad. When it was first announced, a lot of people wrote it off: “Oh, it’s just a big iPod, it’ll do nothing significant. What a crazy name.” It became the most successful single consumer device ever, and it changed almost everything we do. We now talk about the post-PC era because of the rise of the tablet. Steve Jobs, by the way, declared he never even asked audiences about it. Some people have that kind of vision in a very visionary way, other people have it in a very disciplined way. There is no one answer for how you turn a feature into a product into a company. But it is worth stepping back and trying to figure out what we can learn.

Shift happens. That is my polite way of saying it. You might have a great idea as you start building your product or company, but things change dramatically, markets in particular, and the pace at which they change is sometimes phenomenal. The mobile world is probably the fastest-changing market segment I have ever seen, just by virtue of the adoption curve it is on. What you do not want to do during that period is find yourself dropping into a gap, where you have developed something fantastic but it does not take off like the iPad, and now you have a lot of investment behind you, maybe your life savings, and you just do not have the momentum or the runway to get across.

So here is the agenda for today. We start with something we call the product-company gap. Then we talk about how we actually design products from the get-go to span that gap. That involves designing for product go-to-market fit, and by go to market I mean you can actually design products to make them easier to sell, which is super important. Then you architect a business model on top of that, which helps you scale your selling: pricing and all of that. We will talk about all of that today.