{"id":10137,"date":"2016-08-15T09:44:51","date_gmt":"2016-08-15T16:44:51","guid":{"rendered":"https:\/\/blog.intercom.io\/?p=10137"},"modified":"2022-04-12T10:57:39","modified_gmt":"2022-04-12T09:57:39","slug":"good-products-bad-businesses","status":"publish","type":"post","link":"https:\/\/www.intercom.com\/blog\/good-products-bad-businesses\/","title":{"rendered":"Not all good products make good businesses"},"content":{"rendered":"<p class=\"opening_paragraph\">We like to believe that if you solve a real problem with a good product, a successful software business is magically created. That\u2019s never guaranteed.<\/p>\n<p>The popularity of product-first businesses has led to short-sightedness around what\u2019s necessary to create a sustainable business. I\u2019m reminded of this triangle I frequently draw for founders; no two sides are sufficient.<\/p>\n<p><img decoding=\"async\" class=\"small\" src=\"https:\/\/intercom.com\/blog\/wp-content\/uploads\/2016\/08\/Not_All_Good_Products_Inline_01.jpg\" alt=\"Triangle showing how product-first businesses need to have viable, feasible and desirable products\" \/><\/p>\n<p>There are a few very specific traps I often see founders fall into and struggle with. Rather than name names, I\u2019ll share the general principles that I encourage.<\/p>\n<h2 id=\"1-beware-of-small-rare-problems\">1. Beware of small, rare problems<\/h2>\n<p><img decoding=\"async\" class=\"small\" src=\"https:\/\/intercom.com\/blog\/wp-content\/uploads\/2016\/08\/Not_All_Good_Products_Inline_02.jpg\" alt=\"Products that address small, rare problems, will not make a good business\" \/><br \/>\nYou can build a great product to address problems in any of the above quadrants, and there\u2019s three that will work well for you:<\/p>\n<p class=\"quote\">Some problems persist because they\u2019re quite simply not worth solving.<\/p>\n<ul>\n<li><strong>Big, frequent problems<\/strong> e.g. collaborating on a document, communicating with customers, chatting with teammates, etc. This is a great place to be.<\/li>\n<li><strong>Small, frequent problems<\/strong> e.g. scheduling a call, sharing an image, recording an expense. This is a good place to be.<\/li>\n<li><strong>Big, infrequent problems<\/strong> e.g. running an employee survey, booking complex business travel, preparing in-depth reports. This is a good place to be.<\/li>\n<\/ul>\n<p>It\u2019s the fourth quadrant where the risk lies. Small, rare problems might be desirable and feasible, but just not that viable. People won\u2019t pay you a lot for it (if anything at all) and you can\u2019t easily monetize through ads or sponsorship because by definition your engagement is quite rare.<\/p>\n<p>Ultimately, you can succeed as a product but still fail as a business if you find yourself in this trap. Some problems persist because they\u2019re quite simply not worth solving.<\/p>\n<h2 id=\"2-beware-of-offering-a-cheap-complex-product\">2. Beware of offering a cheap, complex product<\/h2>\n<p><img decoding=\"async\" class=\"small\" src=\"https:\/\/intercom.com\/blog\/wp-content\/uploads\/2016\/08\/Not_All_Good_Products_Inline_03.jpg\" alt=\"The low value per account and high touch onboarding quadrant is not a good place to be\" \/><br \/>\nTo have a successful product business based on a very cheap product, you need to follow a particular set of rules to keep your unit economics healthy.<\/p>\n<p>If you\u2019re only charging $5 per month:<\/p>\n<ul>\n<li>you can\u2019t justify any real <a href=\"https:\/\/www.intercom.com\/blog\/customer-acquisition\/\" target=\"_blank\" rel=\"noopener noreferrer\">customer acquisition<\/a> costs (positive word of mouth will probably be real important)<\/li>\n<li>you can\u2019t afford to provide much support (so your product must be relatively bug free and very intuitive)<\/li>\n<li>and of course new customers signing up shouldn\u2019t need your help (so you\u2019ll need to design a zero touch onboarding process)<\/li>\n<\/ul>\n<p class=\"quote quote-left\">Unit economics don\u2019t care about hand-wavey justifications, they just sit back and spit reality at you<\/p>\n<p>Customer-focused founders struggle with this. Everyone wants to do right by their customers, they want to help them adopt their product, and support them using it. But unit economics don\u2019t care about hand-wavey justifications, they just sit back and spit reality at you.<\/p>\n<p>If it takes 4 hours to set up a new customer and you charge them $19\/month, it will realistically take well over a year before you make money on that customer. And that\u2019s before you factor in <a href=\"https:\/\/www.intercom.com\/blog\/what-is-customer-acquisition-cost\/\">CAC (Customer Acquisition Cost)<\/a> or the likelihood they churn out. If you\u2019ve modelled this out and financed yourself accordingly then this can work, but if you\u2019re bootstrapped you\u2019re toast.<\/p>\n<p>The key point here isn\u2019t \u201calways build a zero touch onboarding\u201d; that\u2019s not always possible. Some tasks require manual intervention, and you can\u2019t control that. But you can control your price, so that\u2019s how you address it. If you conclude no one will pay for it, and it\u2019s not automatable, then maybe it\u2019s a problem not worth tackling.<\/p>\n<p>You should do lots of things that don\u2019t scale, but building a business model that doesn\u2019t isn\u2019t one of them.<\/p>\n<h2 id=\"3-beware-of-solving-problems-people-dont-know-about-or-dont-care-about\">3. Beware of solving problems people don\u2019t know about or don\u2019t care about<\/h2>\n<p>When I see the umpteenth \u201cAll your [Files|Accounts|Social Profiles|Images] in one place\u201d type product, I worry. Consolidating workflows is generally a good thing, but consolidating unrelated data is rarely as useful, and pitching these types of products from a feature-first perspective exacerbates this.<\/p>\n<p>You can&#8217;t sell a solution to someone who hasn\u2019t bought the problem. Most people deal with inefficiencies and contradictions in their lives, and are okay with simply remembering which photos they posted to FB and which they posted to Instagram.<\/p>\n<p>For many products the problem isn\u2019t the quality, it\u2019s the priority of the problem in the customer\u2019s lives. If your potential customers don\u2019t care about solving their problem, it\u2019s a good sign you shouldn\u2019t either.<\/p>\n<h2 id=\"4-beware-of-solving-problems-you-cant-experience-yourself\">4. Beware of solving problems you can\u2019t experience yourself<\/h2>\n<p>The best software is created and consumed in parallel. Its makers are its users, its users are its makers. This means there are certain types of problems that can\u2019t be solved by founders early in their career: If you have only worked in very small companies you\u2019ll struggle to build a wiki, or an intranet, because you\u2019ve never experienced the frustrations they attempt to solve. If you\u2019ve only recruited in ones and twos then you\u2019ve never needed recruiting software, and if you\u2019ve never dealt with a headcount in the hundreds you\u2019re ill-equipped to build a HR system.<\/p>\n<p>You can educate yourself, you can do a lot of research, and you can deeply immerse yourself in the domain, but it might not be the best <a href=\"http:\/\/cdixon.org\/2011\/06\/20\/foundermarket-fit\/\">\u201cfounder\/market\u201d fit<\/a> for you. I have a pet theory that these types of problems are best solved in one of two ways:<\/p>\n<ul>\n<li>A small group spinning out from a company, hell bent on replacing the worst tool they had to use in their previous job.<\/li>\n<li>A large-ish team with a struggling product who built an internal tool to solve a problem, and realise it\u2019s potentially more valuable than their original product idea.<\/li>\n<\/ul>\n<p>Raw experience of the problem is an essential ingredient in the solution.<\/p>\n<p>Products match problems, so if your understanding of the problem is vague (e.g. \u201ccompanies need to share information internally\u201d), then your solution will be equally vague, and in this case would end up looking like a blog, and your poor marketing team will struggle to make a case why it\u2019s more than that.<\/p>\n<p>If your understanding is sharp (e.g. \u201cCompanies need to store &amp; share FAQs, Policies, Legal Documents, and How-Tos. They need to keep them up to date. They need to announce any changes, and have to control access to some information \u201d) then the solution and its product marketing becomes so much more sharp.<\/p>\n<h2 id=\"quality-isnt-enough\">Quality isn\u2019t enough<\/h2>\n<p>You can tackle any of the the above problems with great products which have phenomenal aesthetics. Everything will be pointed in the right direction except for the business. But sustainability is an important feature. If a product can\u2019t fuel a business then its quality will disappear as its value erodes and competition emerges. And that\u2019s something a lot of great products forget: survival is the best product strategy.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>It&#8217;s easy to assume that solving a real problem with a good product magically creates a successful software business. Sadly that\u2019s never guaranteed.<\/p>\n","protected":false},"author":5,"featured_media":10141,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"category":[5],"tags":[175,12945,363],"coauthors":[348],"class_list":["post-10137","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-product-and-design","tag-business","tag-product-market-fit","tag-product-strategy"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.3 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Not all good products make good businesses - The Intercom Blog<\/title>\n<meta name=\"description\" content=\"It&#039;s easy to assume that solving a real problem with a good product magically creates a successful software business. 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Sadly that\u2019s never guaranteed.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.intercom.com\/blog\/good-products-bad-businesses\/\" \/>\n<meta property=\"og:site_name\" content=\"The Intercom Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/intercominc\" \/>\n<meta property=\"article:author\" content=\"https:\/\/www.facebook.com\/destraynor\" \/>\n<meta property=\"article:published_time\" content=\"2016-08-15T16:44:51+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-04-12T09:57:39+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.intercom.com\/blog\/wp-content\/uploads\/2016\/08\/Not_All_Good_Products_Logo.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1968\" \/>\n\t<meta property=\"og:image:height\" content=\"932\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Des Traynor\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@destraynor\" \/>\n<meta name=\"twitter:site\" content=\"@intercom\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Des Traynor\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.intercom.com\\\/blog\\\/good-products-bad-businesses\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.intercom.com\\\/blog\\\/good-products-bad-businesses\\\/\"},\"author\":{\"name\":\"Des Traynor\",\"@id\":\"https:\\\/\\\/www.intercom.com\\\/blog\\\/#\\\/schema\\\/person\\\/eca2beed88876408030509097abe63c2\"},\"headline\":\"Not all good products make good businesses\",\"datePublished\":\"2016-08-15T16:44:51+00:00\",\"dateModified\":\"2022-04-12T09:57:39+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.intercom.com\\\/blog\\\/good-products-bad-businesses\\\/\"},\"wordCount\":1157,\"publisher\":{\"@id\":\"https:\\\/\\\/www.intercom.com\\\/blog\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/www.intercom.com\\\/blog\\\/good-products-bad-businesses\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.intercom.com\\\/blog\\\/wp-content\\\/uploads\\\/2016\\\/08\\\/Not_All_Good_Products_Logo.jpg\",\"keywords\":[\"business\",\"product market fit\",\"product strategy\"],\"articleSection\":[\"Product &amp; Design\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.intercom.com\\\/blog\\\/good-products-bad-businesses\\\/\",\"url\":\"https:\\\/\\\/www.intercom.com\\\/blog\\\/good-products-bad-businesses\\\/\",\"name\":\"Not all good products make good businesses - The Intercom Blog\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.intercom.com\\\/blog\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/www.intercom.com\\\/blog\\\/good-products-bad-businesses\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/www.intercom.com\\\/blog\\\/good-products-bad-businesses\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.intercom.com\\\/blog\\\/wp-content\\\/uploads\\\/2016\\\/08\\\/Not_All_Good_Products_Logo.jpg\",\"datePublished\":\"2016-08-15T16:44:51+00:00\",\"dateModified\":\"2022-04-12T09:57:39+00:00\",\"description\":\"It's easy to assume that solving a real problem with a good product magically creates a successful software business. 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