The prosumer software commercial go-to-market approach
Published in Startups. Tags: Startups.
“Prosumer” has had several definitions. Broadly, it can mean someone who both consumes and produces a product. This is used in energy to refer to someone who both consumes and produces their own electricity.
It can also mean a “pro” or “power” user of a particular software tool. Someone who uses that tool so often that particular features are designed to help them be more efficient can be called a “prosumer”. It is this definition that this article focuses on.
As a buyer segment for existing products, prosumer software has been around for some time:
A couple of years ago the “prosumer” model was really hot among SaaS investors. Prosumers ( professional + consumer) are individuals who buy “professional software” either for their use or their activity as freelancers / solopreneurs.SaaS: What happened to the “prosumer” model? by Clement Vouillon.
Think Photoshop for amateur photographers or Final Cut Pro for YouTubers. These are professional-grade products but used by amateurs to get professional quality output. They can be purchased by amateurs (helped by the industry trend away from high one-time licenses to monthly subscriptions), but are not specifically designed for them. Sometimes the output becomes popular, and the user may graduate to being paid professionally for their content.
As discussed by Clement Vouillon in his 2017 post quoted above, this segmentation of customer has its challenges. Scaling user acquisition is hard, virility is crucial and the “expand” aspect of “land and expand” for B2B sales is very difficult.
Pure prosumer products
Conscious of those challenges, a new trend is emerging – pure proconsumer products. Instead of creating a segment (and pricing/feature package) of an existing product, new products are being developed purely targeted at the prosumer.
Prosumers are not the mainstream user. They are the top % who use a product extensively, often for hours at a time. These are the users where marginal improvements to things like speed and efficiency have a meaningful impact on their time and productivity.
As an industry, we first witnessed the consumerization of the enterprise. As consumer software became increasingly polished and delightful, we then came to expect the same of our business software. We are now at the start of a new wave: the prosumerization of the enterprise. It does not matter whether I was CEO, corporate executive, or general partner — my needs as a prosumer have been ignored for years. And yet there are tens of millions of power users just like me. Now, a new category of prosumer tools can give these users superpowers.Superhuman by David Ulevitch.
The email startup, Superhuman, is a good example. They are focused on people who spend hours in their inbox. This is a renewed approach to software design focused on product features such as speed, specific workflows, keyboard shortcuts and minimal design. The opposite of the trend towards heavier websites.
Product development is just half of building a successful startup. A common mistake I see startups make is a failure to think about the other half: commercial go-to-market approach. The best founder teams have both commercial and technical founders.
New things in new ways is the default for startups. This is always said with a sense of caution as cloning an existing product but doing it in a new way such as mobile or cloud, but without a unique point of view of what a product can do is generally a high risk/low value strategy. This is one reason why as a startup you need to do more than simply have a SaaS offering of an existing feature set in order to have a sustainable moat. While new/new is a good ingredient for a moat, it does not necessarily lead to one — a go to market strategy needs to be part of this as well.New Things In New Ways, or Same Old Things In Old Ways? by Steven Sinofsky.
Given how important this trend, I wanted to look at the pure prosumer software commercial go-to-market approach in more detail using two new prosumer email products as case studies: Superhuman and Hey.com.
If you remember the launch of GMail, it was originally invite-only and each user has a limited number to give out. I remember invites being sold on eBay for large sums of money! This limited access helped to build buzz around the product because of its scarcity. If you had access, you weren’t likely to keep quiet about it.
Using a wait-list has multiple benefits:
- As a technical measure to avoid overloading your service on day one. Gradually let people in to ensure your systems scale.
- So you can show off about how many people you have waiting for access. This is a great way to demonstrate demand to investors.
- As a way to reduce the chances of early user churn. Let people in gradually then get their feedback and improve before allowing others to join. This prevents everyone signing up at once, being disappointed, and never coming back again.
- Allow existing users to offer invites to their friends. That makes the inviter feel like they have special access and feel smug about helping their friends skip the queue. It’s like being on the guest list at a club because you “know someone”.
- You can see who is on the list and prioritise access based on their audience size to create influencer buzz.
Creating influencer buzz
Word of mouth has always been an important discovery channel. In the past that meant a small group of early adopters sharing links. Today it means audiences of hundreds of thousands or millions following particular individuals they trust. Whether that is mkbhd for his tech gear reviews, Tim Ferris for his health and productivity hacks or Oprah Winfrey for her book club, individuals now have promotional power like never before.
If you combine this with a wait list and limited details about the product then you can generate significant buzz that is both targeted to a specific audience but widely distributed due to the audience size.
For example, Hey.com hasn’t even launched yet but they have over 40,000 people on their waiting list. Basecamp, the company behind it, have their own audience built up over years of strong opinions and writing on topics such as VC investors and remote work. However, they can still broaden their reach using tech influencers.
Note how the tweet mentions the product and how they think their audience will love it, but does not contain any real information. It’s the definition of a teaser!
Keep people guessing
As Superhuman has grown, they have shown more and more of the product, but their website is still a single page with very few details.
The Hey.com website is even lighter, focusing on the problems they want to solve without (yet) explaining how they are solving them. This helps readers think about their problems and build up an expectation about how they think Hey.com will solve them.
In the lead up to the launch, drips of information have been let out.
Just a small screenshot here:
Asking Twitter what they would like to see:
Before posting another screenshot there:
Influencer buzz creates a large, one-time surge, so regular snippets of information keeps people engaged and builds up the excitement over a longer period if time. Jason has been good at responding to questions, often in a non-committal way without revealing too much but at the same time expressing specific opinions about how the product has been designed.
Have an opinion
Knowing what not to build is as important as knowing what to build. Trying to build software for everyone is too difficult for startups to tackle.
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.Opinionated Software by David Mytton.
This will mean having strict eligibility criteria based on your target customer and turning down people who want specific features. Maybe you will add them later:
Or maybe you will never do it:
Either way, you need to know what the first version will do and ensure that of the few things it does, it will be the best.
By focusing on only a few core features in the first version, you are forced to find the true essence and value of the product. If your product needs “everything” in order to be good, then it’s probably not very innovative (though it might be a nice upgrade to an existing product). Put another way, if your product is great, it doesn’t need to be good.If your product is Great, it doesn’t need to be Good by Paul Buchheit.
Strict eligibility criteria
Designing for a specific user allows you to get a small number of highly engaged, evangelist users. This is the purpose of customer success – ensuring that once the product is bought, it is deployed and used. In the early days, that means strict filtering based on eligibility criteria.
The onboarding process for Superhuman requires you filling out a lengthy form which asks questions such as what OS you use and whether you use multiple inboxes for multiple accounts. These are based on the product capabilities, because it doesn’t yet support Windows or a unified inbox. Anyone who needs those features is flagged and told they will be in touch when the product supports their needs. This avoids disappointments because of missing functionality and helps reach product market fit.
Not everyone wants to go through rigorous onboarding though. Knowing your audience allows you to pick which of these go-to-market approaches make sense.
For example, developers are notoriously against opaque sales processes and prefer to self-serve. Linear is an issue tracking product built around similar principles as Superhuman, but for engineers and techies. The product is similarly focused on minimalist design and speed, but has avoided high-touch onboarding.
For new startups, think about the type of person you want as a customer, what characteristics they have and what problems you want to solve for them.
The world is awash in problems. Problems you care about are just so much more rewarding to work on, and they pull better work out of you. Problems experienced by people you care about quintuply so, because if you start a SaaS business you’ll spend much more time talking to customers and getting in their head than you will be on e.g. modeling their workflow in Ruby or optimizing your AWS spend.
So I’d suggest most people asking this question instead ask “How do I find a user population that buys software that I would enjoy having in my life five days a week for 5~10 years?” My answer for that, after a lot of soulsearching, is “I enjoy helping software people a lot more than I enjoy helping undifferentiated professionals. Maybe I should just do that. Maybe no maybe.” Your answer may vary.patio11.
Then figure out what your product will and will not do. Filtering users based on those criteria will ensure you get the best fit with the early adopters. Knowing what users want the product to do in the future helps direct your roadmap and gives you a ready-made list of people to contact when/if those features are released.
Prosumers have both the means and willingness to pay for the product. Superhuman doesn’t even let you sign up for their onboarding without entering a credit card. You get charged on day one, although they offer a refund guarantee if you’re not happy.
Mainstream users are used to getting software for free, although they are paying in other ways. Usually their privacy, or through ads. Prosumers are people who will pay for software (and probably expense it). This is an important filter. If your product offers significant value, such as making it fast to power through your email, users will be willing to pay. Anyone who complains about the price is not a good fit.
Today, Superhuman costs $30 per month. But being twice as productive is worth much, much more to me than that. I can imagine almost every manager feeling the same about themselves and their teams, and every company tooSuperhuman by David Ulevitch.
Traditional wisdom says that you should make it easy for users to sign up – minimal form fields, don’t ask for a credit card, self-service access. Prosumer software flips those around. Long eligibility criteria. Pay before you can access. Manual onboarding.
A startup has two equally important components: product and commercial. Each is necessary but not sufficient by itself.
Equal time should be put into the commercial go-to-market approach and the product design and development. Startups need both technical and commercial co-founders. Indeed, this is one of my strict investing criteria for the startups I’ve invested in.
Superhuman has demonstrated that there is a large market for specialised, prosumer software and Hey.com is a case study in how to launch something new into a crowded space.
Products cannot be successful without a deliberate commercial go-to-market approach. Pure prosumer software might be new but the fundamentals haven’t changed.