How do you know if you're Creating a Product-First Company? Is there a Secret Formula?
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What does it mean to have a product first approach for your company? It’s not a brand tagline or value statement, but a culture that your company has embraced by placing innovation and customer happiness above everything. So how do you know if you’re creating a product-first company? Is it naturally in your DNA? Is there a secret formula that you could follow to get there?
Some factors are common to product first companies, tying them together. They face similar challenges and team backgrounds. Whether you’re developing a disruptive new product in a young startup or driving a well-established large scale company, the product-first mindset is equally helpful.
So, here’s what what it means to have a product-first company, both from my experience as an entrepreneur-investor, and that of others.
3 essentials to a product first company
Product minded leadership team
Product companies are generally dominated by product teams - product managers, engineering, user experience, etc. This is why it’s important that the company’s leadership has a background in product instead of business or sales. This is important to distinguish because product-driven founders will have contrasting priorities to a sales founder.
A sales founder focuses on driving new customer acquisition while creating strategies to scale and penetrate markets. They will focus on hiring experienced sales and marketing teams first to communicate and sell the value. They will channel funds towards large scale TV ads, without hiring a team of talented engineers to constantly improve the product. This works in some cases and fails in others.
In contrast, a product founder loves the thrill of perpetually innovating the product and keeping it miles ahead of the curve. Steve Jobs and his approach to Apple is a perfect example. He built Apple with a complete focus on delivering the best products! Product-first leaders have a strong, clearly communicated vision. They focus on hiring people who value this product-first approach, nurturing this as the company scales.
Related: How Steve Jobs Saved Apple
This is why most product first companies have founding CEOs. This is because innovation is the core of any business, and founding CEOs, like Steve Jobs, build their company by facing hundreds of hurdles on a daily basis. They still continue to push innovative ideas to the forefront. They are the first believers in their product, they understand the technology required, what code base was needed to make it happen, and how to overcome market challenges, to make their idea a reality.
A product-driven leadership team will do just this — they will leverage the knowledge at their disposal and ensure that the product stays ahead of the curve by keeping innovation alive.
Product engagement = Sales conversions
Product-first companies have faith and trust in what they’ve created and, as a result, they offer a low barrier to entry for the target audience. This is why they often choose to run on a freemium model. They trust that if their target audience uses and experiences the product, they will buy the “pro version”. They focus on creating a long-term product that has a lasting impact instead of short-term gains. To achieve this, they will have flexible pricing terms, month-to-month EMI payment options, and free trials.
The end result is that product-first companies are beloved companies! They have to be. Since there’s no immediate pressure on the users to start paying just to access basic features and in turn drive conversions, these companies automatically build trust and loyalty. Once users see value in the product, the conversion is generated by creating an experience that turns users into customers and customers into influencers. Leveraging these influencers, product-first companies can scale rapidly through organic channels.
Cross-Company Alignment on Mission
If you want to create a product-first company, you need a clearly defined, laser-focused mission at the centre of all decision making. Creative thinking, collaboration and a thirst for disrupting the existing solution are encouraged throughout the organization. Customer feedback should be given importance and incorporated into the roadmap when it aligns with the mission.
While every feature in the company roadmap is designed to delight users and create better experiences, your leadership teams must make difficult decisions to keep the product ahead of the competition.
One of the most difficult decisions as a product first CEO is that instead of shaping the product to appeal to the needs of a high-paying customer, product-first companies have the strength to say “no” if the request doesn’t match their core mission.
Good leadership will always focus on building features that complement the mission of the company. They know when to compromise and how to avoid derailing the roadmap if it doesn’t make the product a better solution to the problems of their primary audience.
The advantage of any product-first company is that, if properly executed, there’s an opportunity to scale significantly faster than sales-driven companies. In fact, product companies will see higher margins and returns because the product will sell itself. The end result of this approach is that you will create a brand worth talking about. Your brand will have a compelling mission that solves a problem and differentiates your company from the rest. All of these reasons are what make this approach worth the passion and courage that it takes to build a product-first company.