Why Great Products Don’t Make Great Startups

I’ve met and worked with awesome founders, from those using AI to enhance satellite imagery for petroleum companies, to those creating natural alternatives to medicine that are just as effective, with no side effects, to others slightly improving what’s already in the market, and let me tell you that every time I talk to them, I see the same pattern:

They are deeply attached to their products and truly believe that once they expose them to the world, everyone will fall in love with them and start using them right away.

Whether they link it to introducing something new to the market, solving functional problems, or providing better alternatives (often in terms of price, quality, or speed).

And even as they begin to explore branding or marketing, they tend to consider only the tangible benefits their products offer.

Don’t get me wrong, having an innovative and unique product is a competitive advantage if utilized correctly. However, products alone don’t create great startups. Let me break this down for you:

To organize this article, let me share and analyze the beliefs of the founders I’ve worked with and talked to about products, and address them one by one. Sounds fair? Let’s begin!

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It’s all about being the first in the market:

To answer this, let’s focus a bit here on tech products, go back in history, and see what the market used to look like before the rise of product-focused companies.

In the pre-90s, tech companies could succeed simply by introducing new technology. Back then, tech was new, and the thirst for technology was intense. By the early 2000s, however, technology had become accessible, and tech alone wasn’t enough to stand out. A wave of startups began to emerge, and we saw the huge successes of companies like Amazon, Facebook, and Apple…

These companies understood that success requires more than just new tech, and they shifted their focus from tech to product. They weren’t the first to come up with the technology, Amazon wasn’t the first online bookstore, Facebook wasn’t the first social networking platform, and Apple didn’t invent the smartphone.

But what made technology drive success at one time and not another?

Rory Sutherland, the famous marketing guru, has a quote that might help us understand:

People like new technology not necessarily because it is better, but because it is different.

In other terms, it’s what we call being disruptive. Because think about it: Who could resist joining a social network like Facebook, buying and renting books or movies online without the hassle of going to a store, or accessing the internet on the iPhone?

These startups did a good job understanding their users and disrupting the regular way they do things.

I’m pretty sure now that you can see that introducing new technology or being the first in the market isn’t what makes startups great.

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I’m Building a Product with Good Functional Impact:

Another misconception that becomes more apparent, especially when working with founders to explore our target audience, the problems we solve, and the value we provide, is that they limit it to the tangible ones.

Understanding the problem you solve, or the value you provide, is key to everything else that will follow. Focusing on the wrong questions will eventually lead to the wrong answers. Let me explain this in a way that’s easy to grasp.

Have you ever wondered why novels are so successful? What makes us buy fiction knowing that it doesn’t have any tangible value?

Keith Oatle sheds light on this in his book, The Psychology of Fiction, and says:

Fiction can be thought of as a form of simulation, not unlike a flight simulator, a means by which people can understand others and themselves in their dealings with the world. The simulation that fiction provides is a safe place in which we can learn lessons at low cost. The understanding we gain from these simulations can be applied directly to real-life situations.

Humans are complex species, and the fields of branding and marketing seem to be the best at using psychology and human behavior to decode our needs and the decisions we make (which can sometimes appear illogical).

When building your startup or business, neglecting to fully understand the people you’re targeting — the ones for whom you’re solving a problem — is like burying your head in the sand.

A great example I often use during the target audience discovery phase with my clients is Dunkin’.

Dunkin’ Donuts is a chain known for selling coffee and doughnuts, with over 12,000 locations in 42 countries.

What’s interesting about Dunkin’ and shows how they went very deep in understanding their buyer personas, is that the beverage and food they provide is just part of the puzzle.

Dunkin’ strategically places its stores in high-traffic areas to target mainly people on the go.

They’ve designed their service to meet customer needs by heavily investing in operational efficiency, ensuring fast service and quick delivery of their products.

Not only that, but they went all the way and designed their menu to be quick and convenient, crafting products that are easy to carry for those in a hurry.

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To see how strategic their decisions are, let’s reverse engineer this to see their deep understanding in action:

Imagine ‘Person X,’ working on a Monday morning, in a rush to catch the subway, needing breakfast but unable to cook at home. Their problem isn’t just about getting breakfast or quelling hunger — it’s about avoiding the embarrassment of being late on a Monday. Thus, the solution isn’t just food; it’s a quick, on-the-go, easy-to-carry breakfast that mitigates the other consequences of being late.

Another great example is Mark Cuban, who took the Dallas Mavericks from $285 million to $2 billion between 2000 & 2021, explained in an article he wrote on his blog, how he went beyond the product and beautifully said:

“The NBA does not sell basketball! We in the sports business don’t sell the game, we sell unique, emotional experiences.”

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Cuban shows clearly why the functionality and tangible value of your product aren’t enough to build a successful business/brand today.

Products are everywhere, and you need to delve deeper into understanding your market’s “deep” needs.

Cuban is a great example of someone who has mastered understanding his market, the value the business is providing, and the needs the brand is answering.

Because, think about it, people could watch basketball at home, but what makes them buy a ticket and go through the trouble of waiting in a long line just to get into the stadium?

It’s the live game experience — the excitement, the screaming, the shared moments with loved ones, perhaps even rekindling childhood memories.

I hope these two great examples will be enough to push you to see beyond tangible benefits, and see that functional impact isn’t enough.

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My product is of better quality, faster, or cheaper:

I believe that these can be good competitive advantages as well, but after you study your market and understand the needs and alternatives.

Starting with the solution or the tactic without a deep understanding of the problem isn’t the best approach to building or positioning your startup/product.

I’m sure you’re familiar with brands, businesses, or startups that have the best quality, the fastest products or services, and the cheapest prices, but they still couldn’t make it.

And even the best brands sometimes don’t have the best products, take Apple for example — LG’s cameras are better, Apple’s phone batteries are not the best, and it has the highest prices. Similarly, Zoom became the go-to video conferencing tool during the pandemic despite its security and video quality issues, and the list goes on.

Note also that these companies face monthly, if not daily, copied products, Apple sued other companies for copying its designs; and features have been copied even from the biggest companies, like what happened when Instagram copied Snapchat’s ‘Stories’ feature.

Cheaper prices, better quality, or faster service can provide a competitive advantage, but they do not replace the need to thoroughly understand the “people” you’re targeting and make decisions that effectively solve their problems.

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Final thoughts

I’m pretty sure that you can now see how limiting your focus to the product alone can prevent you from connecting on a deeper level with your customers or clients.

Shifting your focus from product to people can help you:

• Understand the deeper problems you’re solving, which your competitors most probably don’t.
• Reposition your brand and redesign your product to better meet the needs of your customers or clients.
• Go beyond the product and actually craft a whole experience.
• Craft the right messaging that speaks to them in a noisy world where attention is the most expensive currency.
• Build long-lasting relationships with them.
• Redefine your distribution strategy to meet your customers or clients where your competitors don’t.
• Allow for less investment in advertising and better results.

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