January 7, 2019 – When entrepreneurs approach me to discuss issues related to their product development or sales & marketing strategies, I generally tend to have one of two discussions with them.. Are you creating a vitamin or a painkiller AND are you creating a feature, a product, or a company? Both of these topics came up during ITEN Office Hours so I felt the need to dedicate a blog post to walking entrepreneurs through these discussions.
What I have found is that most entrepreneurs are so passionate about the products they are creating that they tend to have “blinders on” or have a serious case of tunnel vision when it comes to developing their products and planning their path to commercialization. Which tends to result in entrepreneurs hearing only what they want to hear and underestimating obvious commercialization issues.
While this unbridled optimism, blind passion, and intense focus are required for entrepreneurs to endure the inevitable bumps and downturns along their journey (when it comes to product development and commercialization strategies), the best entrepreneurs are able to step back and take an unbiased view of the landscape before they continue to push forward.
I’ll dive into the Feature/Product/Company discussion in a future blog post.
Vitamin vs Painkiller
This is an analogy frequently used by investors to describe how your customer views your product, i.e. your product market fit. It comes from the question investors like to ask entrepreneurs- if your customers problem was toothache are you selling them a vitamin or painkiller? While there is nothing wrong with selling vitamins, when your customer has a toothache, they need a painkiller not a vitamin.
Painkillers are “need to have” products, products that directly address core problems/deficiencies in your customer business. Vitamins are “nice to have” products that can enhance your customers business but your customer could still have a successful business without your product. The biggest problem with vitamins is that when a business has a down quarter or two or the market undergoes a recession and businesses begin to cut costs- vitamin products are the first items cut from the budget.
Eric Ries, author of The Lean Startup, refers to this as the value hypothesis, which “tests whether a product or service really delivers value to customers once they are using it.”
How to determine if you have a painkiller product?
The short answer is that you will know if you have one. Your product market fit will be so strong that your sales team will be flooded with incoming leads- either through organic searches or word of mouth from your current customers. Which will create a situation where the rest of your team won’t be able to keep up with your sales team since their close rate will be extremely high within your market. Additionally, your customers will rave about how well the product satisfies their immediate needs and how they can’t imagine running their business without your product.
How to determine if you have a vitamin product?
- With a SaaS product you will see a high churn/low retention rate
- If you have an enterprise solution you will see slow adoption of your product throughout the company and engagement with your product will drop over time instead of increasing over time
- Your sales team will struggle with longer than expected sales cycles, and the inability to find internal champions
- Your current customers are not referring their peers to you and when you ask them about how they like your product you get ambiguous answers like “the product is good and we like some of the features”
If you believe your product is a vitamin and you would like to determine if you can pivot to a pain killer I would highly suggest checking out Steve Blank’s Customer Development movement and reading the following blogs and books:
- 12 Things about Product-Market Fit by Tren Griffin via Andreessen Horowitz’s blog
- The Four Steps to the Epiphany by Steve Blank
- The Entrepreneur’s Guide to Customer Development: A Cheat Sheet to The Four Steps to the Epiphany by Brant Cooper & Patrick Vlaskovits
- Lean Customer Development: Building Products Your Customers Will Buy by Cindy Alvarez
- The Lean Startup by Eric Ries