Portfolio of products vs. focus focus focus? // When audience-first is silly // Worldviews for growth
I always enjoy hearing the opposite advice (if credible) to my default beliefs, since it points toward another path (and sometimes even a whole alternate worldview).
So here’s some credible advice that very much violates the “focus focus focus” principle of scalable startups:
As you’re figuring out your first product, start thinking—even at that early stage—about products number two, three, and four that you can offer to the same buyers.
Sometimes the conclusion will be to make the product, and sometimes it will be to buy (i.e., partner on) the product.
But in all cases, this line of thinking is the key to creating raving fans that will stick with you for a very long time.
—Brian Kurtz, Overdeliver📕, Chapter 9 (edited for clarity)
This quote is from the world of direct marketing, a field forged in the harsh gauntlet of paper mail promotions (imagine paying for a stamp and envelope for every newsletter recipient).
Anyway, what’s happening here is a flipping of the crucial variable:
In scalable startups, you get one product and aim to scale the audience.
In direct marketing, you get one audience and aim to scale lifetime value (per customer) by creating more products for the same people.[1] Which brings us back to the opening quote’s apparent violation of “focus focus focus.”
If your product can scale, then this is simple math: if you’re investing units of effort x and y, you’d MUCH rather have (x+y)² (i.e., one scalable product with double effort) than x²+y² (i.e., two scalable products with split effort).
But imagine a world where the maximum upside of any given product won’t scale beyond some hard upper limit, no matter how perfectly you’ve built it. In that case, you’re now choosing between either max[(x+y)², $1m] or max(x², $1m)+max(y², $1m), in which case you’d clearly want to be splitting your effort into multiple products.
Nassim Taleb identified this dichotomy way back in The Black Swan📕, observing that we’re all always operating in either “Extremistan” (with the possibility of disproportionately impactful exponential results) or “Mediocristan” (where results tend to be linear and/or clustered around a standard distribution).
The “direct marketing advice” (i.e., multiple products to the same audience) is correct when you’re operating in Mediocristan, and your audience won’t scale with a successful product. While the “hypergrowth advice” (i.e., focus focus focus) is correct when you’re standing in Extremistan, with limitless upside from one big hit.
It’s not conflicting advice so much as it is two guiding principles for two different contexts.[2]One thought is that you get to choose your context. (I.E., consider choosing a context/idea that suits the approach/environment you want to operate in.)
A second thought is that this framing can help untangle the thorny question of whether to invest the (substantial) effort into up-front audience-building.
To start with, audience-first is clearly over-represented in the conversation. Of the nineteen (19) scalable growth channels in Traction📕, only two (2) have anything to do with audience-building (i.e., email marketing and community). Consider that you don’t know about companies like Dropbox, AirBnB, or Pinterest due to any sort of audience-building by founders Drew, Brian, or Ben. Rather, you know about those founders—if you even do—due to the success of their products. (We normally hear about this dynamic from the VC’s viewpoint of valuation, but a nice framing from the creator’s perspective is @jackbutcher’s: “make work that’s more famous than you.”)
Audience-first makes sense if you don’t expect your products to outgrow you (i.e., they don’t have their own traction channels) AND if you intend to build multiple products/offerings for the same audience.
In other words, these three approaches are locked together: direct marketing worldview + portfolio of non-scalable products + single audience of repeat buyers.
If you grab just one of the three pieces without consideration for how it’s all supposed to fit together, then you’ll end up building a fresh audience for each and every product (and/or trying to tell the original audience about a bunch of follow-on products they don’t care about), thereby sacrificing the whole point of the model.
And given how costly it is to build an audience, using audience-first in the wrong context has got to be one of the worst misallocations of resources imaginable.
[1] This line becomes blurrier once companies in either category grow large enough to push up against the upper limits of their respective approaches, but it’s broadly correct through the early years.
[2] Where founders get into trouble by following advice that isn’t intended for their particular context/goals. (And where advice-givers get into trouble is by overgeneralizing their advice and pretending that it will apply in every context.)
(PS. Kurtz’ Overdeliver📕 is very good. It’s not so relevant for scalable tech startups, but if you’re interested in a portfolio of products and/or audience-first, it’s a must-read. I am taking lots of notes.)
Comments (6)
question about that last sentence: using audience-first in the wrong context ...
Community building is audience-first by definition, correct?
More specifically to my current project, if I'm building an info product (online course) and a community around it, then I'm building an audience-first product. Not sure if I'm understanding this correctly though.
Assuming my understanding is correct though, then building multiple products for the same audience would be a good thing to invest in. Using myself as an example again, I'm building an online course teaching IoT with a community around that. However, I'm building not just one course, but a series of courses where the community is key aspect to the course. I'm guessing that thinking about the sequence of courses, i.e. other products, at this point would help with the narrative of the overall online school?
Really clear thinking and spot on! Congrats Rob, what you are doing with your reading is working!
Audience-first is a strong trend in the bootstrapper world. Build an audience before you build a product. Two of the top references there are Amy Hoy (30x500; paid course) and Arvid Kahl (book embedded entrepreneur, now a course on building our audience on twitter). See also the trends.vc report on this.
Also , if you go for the 'no upper limit' single product, wouldn't you be a in a winner-take-all market then? I know you are trying to avoid that so that you can take it easy (I want that too). The problem is that for the audience-first multiple small products route you have to work like a madman (and effectively) to produce enough traction for each audience.
It's a bit of a catch 22.
Winner-take-all markets and uncapped upside are strongly correlated, but not identical, and you can find businesses with only one of the two characteristics.
E.g., while infrastructure-as-a-service like AWS and Azure certainly benefit from economies of scale and favor huge companies, the category doesn't benefit from other strong network effects, so the market seems willing to (and even motivated to) support multiple valuable contenders. Plus, even if it behaves as an oligopoly-through-scale market at the top, there's still plenty of room for pricier niche competitors to coexist alongside without being completely decimated.
Similarly, some industries are simply so big, complicated, and multi-faceted (e.g., biotech), that there's always room for plenty of arbitrarily large winners in adjacent spaces.
So there are ways (I believe) to get it right at any scale, and assuming you're willing to fully play (and win) the game that you're entering.
But the classic mistake that's being made by indiehackers and bootstrappers is to take the worst of both worlds and/or half-ass it in a way that's doomed to fail, e.g., a market that's both small AND burdened by winner-take-all dynamics, so they have to go fast but also can't raise VC, so they end up failing to ever get going.
The best "portfolio products" are ones where your customers are your customers, and their only reason to switch to a competitor is because you're messing up, so they're insulated from competitive dynamics not because you're the biggest, but because that's simply how the market works.
A classic real-world example is pizza shops (lots can co-exist because each is right for their local people), and a classic internet-world example is paid newsletters (where as long as you're doing a good job, folks will sign up to multiple rather than unsubscribe from yours).
IMO, anyway. Still working through this cluster of ideas ;)
Sequence of courses is a perfect fit. Or a stairstep of book(s)->course(s)->productizedservice->SaaS. (Or however else you want to arrange it).
One way to think about it is that an audience is always going to have a (substantial) cost to build it. So the more stuff you create for that audience (that they are excited to pay for), the more valuable and leveraged your audience-building investment becomes.
Lastly, one distinction I'm going to be making soon is "audience-first" (i.e., before any products) vs. "audience-alongside" (i.e., while building/growing your early products).
Audience-alongside makes sense for WAY more people, because (1) it's not delaying your actual products and (2) there are a bunch of positive externalities to your product like increased customer learning, access to alpha/beta testers, etc.
My objection isn't with ending up with an audience as the result of doing good work and putting it out there (almost always useful), but with prioritizing audience-building at the expense of your actual goals/products/business.
For most people, audience should be a side-effect of good work, not a goal in and of itself. IMO.
“ "audience-first" vs. "audience-alongside" ”
This post, These distinctions, and this whole comment: please put it in the OOC book. Worst case: in the appendix.
It seems like a small thing, but it turned off a constant dithering on my part. 🙏
“For most people, audience should be a side-effect of good work, not a goal in and of itself.”
This could be the first words in the book tbh. or of a chapter.
Ps. I'm getting that book by the way. Would it be possible for you to have a book recommendation list/space/collection/doc, that you update with books you'd recommend? Or just links at the top of this space 😄