Des Traynor on how to create a product first company
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The document discusses the evolution of the software industry, highlighting significant milestones and trends from the 1960s to present day, emphasizing the rise of 'product first' companies. It outlines the importance of user-centered design, viral distribution strategies, and the shift to recurring revenue models in the software as a service (SaaS) market. Key strategies for success include a focus on product impact, feasibility, ruthlessness in prioritizing features, and careful measurement of metrics to manage customer churn.
Des Traynor on how to create a product first company
- 2. The only constant for us is change
- 3. 1968 - the first software patent is issued
- 4. 1969 - IBM ‘unbundles’ its business into software & hardware
- 5. The most important software event in ’69 - effectively starting the industry
- 6. 1976 - ‘Letter to hobbyists’ by Bill Gates outlines a need for professional software
- 7. The floppy disk was how consumer software was distributed
- 8. Whereas B2B software looked more like this
- 9. CEO END USER Software was ‘procured’ through the org chart
- 11. CEO END USER Sales The buyer didn’t use it…
- 12. CEO END USER The user didn’t buy it.
- 13. 💩 So the software was typically….
- 14. IBM Unbundles 1969 Bill Gates Letter 1976 World Wide Web Started 1989 Birth of SaaS 1999
- 15. 1999 - Salesforce starts selling access to software online
- 16. …with a complementary Zig Ziglar tape!
- 17. The only thing that changed was everything
- 18. The buyer The seller Cost of distribution Go-to-market strategy Core business metrics The business model The price Customer support Customer success Shipping Software development The role of UX Billing cycle
- 19. The first change: What was once in your server room is now in the ‘cloud’
- 20. Your old server box from the server room
- 21. It’s X but in the cloud. “Works from anywhere” “No install needed!” Sign up ‘online’
- 22. Once you signed up it was the same junk software
- 23. The next change: Designed with the user in mind
- 24. The iPhone changed the acceptable standards of product design
- 25. The entry point for a new SaaS app is very high
- 26. For some product categories it’s near impossible to stand out
- 27. The third change: Bake distribution into the product
- 28. Facebook friendships in 2005
- 29. Facebook friendships in 2014
- 30. Your goal is to get one person to be passionate about your product
- 31. If they tell three other people…
- 32. …it’s game over.
- 33. Focusing on product tends can help most business problems TractionRetention Marketing Conversion Engagement
- 34. Traffic to Intercom website before formal Sales and Marketing team
- 35. Slack Daily Active Users 3,000,000 14,600 February 2014 May 2016
- 36. Thousands of paying customers on a $0 marketing budget
- 40. Sales first – work out what we can sell, and then try build it. Different types of companies Marketing first – work out what creates buzz and then try build it. Technology first – create something new, and then try to sell it.
- 41. – solve a real problem with a great product.Product first
- 42. Product first It’s not just what you do first, it’s what you put first. It’s the lens through which you see all your problems.
- 43. Three mega trends have enabled product first companies to grow so rapidly
- 44. The market is growing fast 1
- 45. This is what the world looked like, when I was a teenager
- 46. This is the world today.
- 47. The market demand for software is ballooning Tiny start-ups Massive companies
- 48. Tiny start-ups Massive companies More companies at every size & scale buying software
- 49. SaaS is outpacing On Premises (2.8%) 17.6% 100% 0% 80% 60% 40% 20% 2013 2014 2015 2016 2017 2018 OnPremises SaaS 2013-2016CAGR Source:
- 50. Even ‘niche’ markets can hit ~$10M ARR
- 51. 0 200 400 600 Energy Financials Healthcare Industrials IT ExxonMobil GeneralElectric Microsoft Gazprom Citigroup BankofAmerica RoyalDutchShell BP HSBC Pfizer Largest listed companies in the world (in $BN) Sept2006 Source:Bloomberg
- 52. 0 200 400 600 Apple Alphabet Microsoft Facebook Amazon BerkshireHathaway ExxonMobil Johnson&Johnson GeneralElectric Tencent Sept2016 Largest listed companies in the world (in $BN) 0 200 400 600 ExxonMobil GeneralElectric Microsoft Gazprom Citigroup BankofAmerica RoyalDutchShell BP HSBC Pfizer Sept2006 Energy Financials Healthcare Industrials IT Source:Bloomberg
- 54. CEO END USER Sales We don’t do this anymore
- 55. me You sell to me
- 56. my team If I like it, I’ll tell my team
- 57. my org If they like it, they’ll spread to the organization
- 58. buy before you try has become try before you buy
- 59. Companies today can be started for near $0 and distributed to an ever expanding market that will happily adopt and evangelise the product. What’s new about now?
- 60. Recurring revenue is the new norm 3
- 62. How to create a product first company
- 63. 1 Your product’s impact must be core to your company’s success
- 65. What does the future look like because of us What are we here to do What specific outcomes are we aiming for What is our plan to get there What means are we using What are we doing day to day Vision Mission Goals Strategies Tactics Activities
- 67. to make internet business personal
- 68. to increase the GDP of the internet
- 69. to build the best way for people anywhere in the world to shop for groceries.
- 70. 2 Your product must always be feasible, viable, and desirable
- 73. cake base filling icing cupcake cake wedding cake versus
- 74. 3 You must be ruthless when focusing on product work
- 75. ALL OF THE TIME MOST OF THE TIME SOME OF THE TIME VERY LITTLE OF THE TIME FEW OF THE PEOPLE SOME OF THE PEOPLE MOST OF THE PEOPLE ALL OF THE PEOPLE Track Time SMS Alert Enter Milestones Search for Files Search for People Use Calendar Import ICS Setup Time Tracker Post Message / Reply Create Project Add / Complete Tasks View Dash Schedule Meeting Add Team / Company Archive Project Change Permissions Account Settings Edit Project Merge Projects
- 76. ALL OF THE TIME MOST OF THE TIME SOME OF THE TIME VERY LITTLE OF THE TIME FEW OF THE PEOPLE SOME OF THE PEOPLE MOST OF THE PEOPLE ALL OF THE PEOPLE Track Time Enter Milestones Search for Files Search for People View Dash Schedule Meeting Add Team / Company Archive Project Change Permissions ! Kill any features that few people are using very little ! ! ! !
- 77. This is the core of our strategy. It’s hard work. It’s meaningful work. It works.
- 78. When a good org is mature, there’s not a lot of work here. We need to stay way out of here. Avoid snacking on low impact, low effort work This is the core of our strategy. It’s hard work. It’s meaningful work. It works.
- 79. 4 Charge for the value you create
- 80. Not every good product creates a good business
- 82. HIGH VALUE PER ACCOUNT LOW/NO TOUCH ONBOARDING LOW VALUE PER ACCOUNT HIGH TOUCH ONBOARDING ✓ ✕ ✓ ✓
- 83. 5 Follow meaningful SaaS metrics
- 84. $500K 0 0→$500K (MRR) in 18 months
- 85. But beware of churn – it is literally the make or break factor
- 86. New MRR + Expansion MRR Cancelled MRR + Contracted MRR The Quick Ratio Can you reliably grow revenue?
- 87. Product first companies need to worry about churn more than growth. Your bet is that most people are loving your product.
- 88. 6 Be Patient for Growth
- 89. Intercom’s revenue growth 2012-2014 Q2 2012 Q4 2012 Q2 2013 Q4 2013 Q2 2014 Q4 2014
- 90. Have a strong vision Keep a feasible, desirable, and viable product Ruthlessly focus your product work Capture the value you create Measure your business Be patient
- 91. Thanks @destraynor from @intercom For more articles like this:blog.intercom.com