Published (updated: ) in Product Engineering, Startups.
It was once sufficient to build software based on features. Buyers compared functionality and picked the product that did what they wanted, or what they thought they wanted. This worked when software was new. It’s what we have in Word, Excel, Outlook, and is why they maintain their market lead despite the bloat. Everyone uses Excel because it is so flexible.
It was also once sufficient to build software based on the delivery model. In the early 2010s, SaaS was new. Most software was still on-premise and licensed. This was what made my company, Server Density, different from all its competitors – server monitoring as a service. Today, SaaS is the default. No modern company wants to run software outside of a few specific niches related to security and IP protection e.g. source code management. Even then, you can’t do security better than Amazon, Google and Microsoft.
A startup cannot hope to compete with the features of the incumbent products. SaaS is the standard.
So how do you differentiate today?
Make opinionated software
Word, Excel and Outlook do not have an opinion about how to use them. You can do anything you like, your own way, even the wrong way – Word has only just started highlighting double spaces as grammatically incorrect.
This is mainstream software targeting the masses, but there are still market opportunities. The software market is now so large that even niches are highly lucrative.
Basecamp is one of the oldest examples. The co-founders, David and Jason, are very vocal about many issues from remote work to raising venture capital. They also believe in opinionated software and have adopted a specific approach to how they build their products. If you use Basecamp, have you ever contacted them to request a feature? Don’t bother.
Having an opinion doesn’t mean ignoring customers. It means having a vision and then building a product for people who share that view.
Our apps have followed a similar path. They don’t try to be all things to all people. They have an attitude. They seek out customers who are actually partners. They speak to people who share our vision. You’re either on the bus or off the bus.– Your app should take sides
Making opinionated software is the way to break into a crowded market with something unique. You can’t build an Excel competitor by copying all the functionality of a product that has been around since 1987. So how do you innovate?
Office 365 has come a long way but if you’ve ever had to work on a Word document with multiple people at the same time, you will have experienced merge conflicts, upload errors and weird bugs. Contrast that with Google Docs which has flawless sharing and collaboration. It might come nowhere near the level of functionality of Word, but there is nothing better.
Google’s opinion is cloud-first. This shows in their other products.
For example, AWS allows you to configure everything and anything. This is why its APIs and Console are so complex. Contrast with Google Cloud which gives you relatively few options but is best in class for large scale computing products that it pioneered, like Kubernetes.
Google Cloud is built for customers who want to run their infrastructure like Google. AWS is built for customers who want to run their infrastructure how they like.
Airtable is a startup innovating on the spreadsheet. They have considered the common uses of Excel – calculations – and databases – storing information – then combined them. They are not targeting finance, who do need Excel for modeling. Or developers, who will still use Postgres or MongoDB. Airtable is the spreadsheet database for non-technical users. Note how their use cases are defined for non-technical teams like marketing, UX and project management. A redefined audience for an existing product group.
E-mail is not done
E-mail is seeing a similar wave of innovation. You might think that e-mail is “done”. Everyone uses GMail or Outlook. These are mass market products catering to billions of users which work well if you don’t get many e-mails. But what about people who spend hours in their inbox? GMail is slow and doesn’t help you organise messages very well. Outlook is bloated and has a confusing UI.
This is where Superhuman stands out. It is laser-focused on people who spend more than 3 hours on e-mail per day, and has gamified the inbox so users aim to get through their messages as quickly as possible to hit Inbox Zero only using keyboard shortcuts. Superhuman is a product for the prosumer willing to pay $30/m to be more productive. It’s working well.
But e-mail still isn’t done.
The Basecamp team announced Hey.com, another e-mail service. It hasn’t launched yet so there are no details on what it looks like or how it works, but they have posted a manifesto of 25 issues with e-mail today. This ranges from complaints about poor subject lines to annoyingly long threads and they have been successful in generating buzz from tech influencers:
Will they convert most GMail users? No, especially since it will be a paid product. But it doesn’t need to. They can compete with the incumbents and co-exist with other startups because enough people hate their email in the same way. That’s the power of having an opinion.
What does that mean for your new startup?
Incremental improvements are insufficient. Startups don’t have the resources to compete on features and SaaS is not innovative. Tackling an existing market requires a unique opinion that can be the company mission. As explained by Jobs Theory:
Creating the right experiences and then integrating around them to solve a job, is critical for competitive advantage. That’s because while it may be easy for competitors to copy products, it’s difficult for them to copy experiences that are well integrated into your company’s processes.– Christensen, Clayton M., Competing Against Luck
This follows the classic insight from Peter Thiel:
“What important truth do very few people agree with you on?”– Masters, Blake & Thiel, Peter, Zero to One
“Very few” can be relative. It can still amount to hundreds of thousands of people. Can you build opinionated software based on that important truth?